Addressing Inequity

Financial insecurity is a deep-rooted problem in the United States, with over 58% of U.S. workers making less than $60k a year unable to handle a $400 emergency and 74% of lower-income households saying their own personal financial situation is in only fair/poor shape. 

Financial insecurity disproportionately impacts Black, Latinx, and women-led households.

Commonwealth’s analysis of the Federal Reserve 2020 Survey of Household and Economic Decision Making found that while 36% of all people surveyed report they would be unable to cover a $400 expense from savings, this figure rises to 58% of low- to moderate-income (LMI) women, 70% of LMI Hispanic respondents, and 72% of LMI Black respondents.

Further, the racial and gender wealth gaps in the US are immense. The median Black household has roughly one-eighth the wealth of the median white family ($24,100 and $188,200, respectively); the median Latinx family has one-fifth ($36,100). Black married households have a median net worth of $66,000, while the median for white married households is $260,000.  

The median single woman has less than one-third the wealth of the median single man. But women of color fare worse, with single Black women having the lowest net worth; among those of working age, the median wealth of single Black and Latinx women is 1% or less that of single white women. 

The economic impact of COVID-19 has shone a light on long-standing economic, racial and gender inequities that profoundly impact Americans’ financial security. Many Americans understand this: pre-pandemic, 81% of working Americans across all income levels reported that financial insecurity is a major problem, and 50% (pre-COVID and unprecedented response to racial injustice in 2020) recognize systemic gender and racial inequities as a cause.

The Costs of Inequity

The social, economic and human costs of inequity extend to employers, financial institutions and society as a whole.

In the workplace, employees spend an average of 13 hours a month at work worrying about finances. Lost productivity due to financial stress costs American firms $250 billion a year. Racial inequity results in opportunity costs, as well; one McKinsey study estimates that a world without a Black/white wealth gap would generate up to $60 billion in additional revenue for the financial sector each year. And a majority of Americans agree that institutions have a role to play in increasing financial security; 65% think employers should do more, and 58% say the same of financial institutions. It’s no surprise that groups that have experienced systemic barriers are more likely to believe that institutions should be doing more to help.

Racial and Gender Disparities

The data are overwhelmingly clear that the distribution of wealth and financial security is not only an economic or class issue, but a racial and gender one as well. Addressing the harmful impact of systemic racial inequity and gender discrimination on financial security is critical to Commonwealth’s work of making wealth possible for all. We will continue to integrate a focus on race and gender into our work to make wealth possible for everyone, and aspire to be: 

65% of Americansthink employers should do more to address inequality.

Perceptions of Financial Insecurity in America, 2020

Data-driven

To understand how people of color and women are disproportionately impacted by financial insecurity, we disaggregate research data by race and gender. Further, wherever relevant, our insights and solutions are designed to address the specific financial barriers exacerbated by racial and gender inequities.

Institution- and system-focused

We understand that neither racism, gender discrimination nor financial insecurity can be overcome by individual actions alone; we work to ensure that the institutions and systems that shape the options people have provide the tools and access required to enable people to improve their financial lives.

Partnership-focused

We seek partnerships with organizations that serve underrepresented populations, are led by people of color and women, and/or share our goal to intentionally address racial and gender financial inequity.

Serving targeted populations

In both our research and solutions, our work is focused on those disproportionately impacted by financial insecurity—including those living on less than the median income, Black and Latinx households, women-led households, and households with children. Recent examples of this are our work on emergency funds for gig workers and addressing investing barriers for LMI Americans with particular emphasis on women-led households of color.

Also focused on ourselves

We believe intentionally building a team with diverse backgrounds and perspectives is essential for our success, and we are committed to continuing to nurture a diverse, committed, skilled and collaborative staff in its employment practices.