PORTLAND, BOSTON – Wealth and assets play a significant and often underestimated role in a family’s financial wellbeing and potential for future mobility, especially for households that are economically vulnerable, according to a new report co-released by the John T. Gorman Foundation and the Federal Reserve Bank of Boston.
The report, titled “The Importance of Wealth to Family Well-Being: Seeding Innovation to Address the Structural Roots of Inequality” – available here – suggests that to create more economic opportunity for families, policy makers and business leaders must develop tailored interventions that address the structures of wealth inequality. The report details the systemic forces that have fostered wealth inequality and outlines three strategic imperatives that would address those systemic forces and create more equitable opportunity for New England families:
1. Reimagine the parameters of ownership to mitigate risk and expand wealth creation.
2. Improve access to appreciable assets.
3. Protect family wealth.
“In order to create more economic opportunities for families experiencing poverty, we have to think beyond income alone – and consider the equally important role of wealth and asset development, which is often overlooked,” said Nicole Witherbee, president and CEO of the John T. Gorman Foundation. “We need to develop new tools that allow families to grow the wealth and assets they need to achieve financial stability and mobility, serving as a buffer in unforeseen emergencies and as leverage for future opportunities. This report explains the wealth gap and highlights initiatives and interventions throughout New England that are doing just that and having an impact.”
Decades of research have identified persistent and growing wealth disparities in the U.S. even as income and education gaps have narrowed. For example, the median net worth for a typical white family in 2019 was $188,200, compared to $24,100 for a Black family. Documented disparities by ethnicity, gender, and geography suggest that there would be similar trends within these groups, too, though more data is needed.
Historically, work to address these disparities has focused on increasing income and financial literacy, as well as incentivizing savings. However, the work has not addressed the larger systemic issues that make it difficult for Black Americans, female-headed households, Hispanic, Latino, and Indigenous families, as well as those living in rural areas, to build wealth and maintain financial wellbeing.
The report also points to examples of state and regional partnerships showing promising results.
The John T. Gorman Foundation and the Federal Reserve Bank of Boston are committed to creating equitable opportunities for families to achieve financial wellbeing. The goal of this brief is to lay a strong foundation for future conversation and collaboration.
To read the full report, go to https://www.jtgfoundation.org/2023/05/report-the-importance-of-wealth-to-family-wellbeing/.
The John T. Gorman Foundation is an independent foundation based in Portland, Maine, with a mission of making Maine a more equitable place where all children and families can thrive. Our mission stems directly from the philosophy of our founder, John “Tom” Gorman, a grandson of L.L. Bean who believed that his personal success was largely derived from the support he received from his family and community. More information available at www.jtgfoundation.org.
The Federal Reserve Bank of Boston serves the First Federal Reserve District, which includes all of New England except Fairfield County, Connecticut. The Bank monitors local economic conditions to aid in the formulation of monetary policy and engages in outreach to promote economic growth and community revitalization. The Boston Fed also supervises banks and bank holding companies and provides financial services to facilitate banking operations. For more information on the Federal Reserve Bank of Boston, go to bostonfed.org.