Federal Reserve Bank of Boston and community partners launch research effort to explore wealth divides
Early partners include the Boston Foundation, Greater Boston Chamber of Commerce, Eastern Bank Foundation, and the Barr Foundation
The Federal Reserve Bank of Boston, in collaboration with a coalition of community partners, is launching a multiyear research initiative to explore wealth disparities in Greater Boston and across Massachusetts. The Reserve Bank's findings intend to inform policy and may be used by partners, as well as a broad group of public, private, and non-profit organizations, to develop strategies that promote equity in wealth, a key foundation for greater economic opportunity.
Initial funding is being provided by the Boston Foundation, the Greater Boston Chamber of Commerce, the Eastern Bank Foundation, and the Barr Foundation, all of which will serve as partners on this research effort. Over time, the group anticipates inviting additional community partners to participate in the project.
Initial priorities of the multiphase effort include measuring family wealth, exploring wealth differences between racial-ethnic groups and across geographies, and understanding why certain disparities exist.
"The Boston Fed has long been engaged in a data-driven approach to studying gaps in credit, employment, and wealth across race, ethnicity, and gender, with an eye to informing policy discussions and actions," said Boston Fed Executive Vice President and Community Affairs Officer Prabal Chakrabarti. "The Bank's expertise gathering and analyzing comprehensive datasets will be a resource for this coalition as it works to reduce wealth disparities. Our partnership with key community organizations reflects the collaboration needed to foster a more equitable economy."
The research, Chakrabarti added, will improve on a 2015 Boston Fed report, "The Color of Wealth in Boston," which highlighted stark wealth disparities in the Boston metro area. The report spurred additional research by the Reserve Bank and others, and it sparked the creation of city and state programs to address gaps and build a more inclusive economy.
"If we are to address the underlying issues of race and class that continue to have a devastating impact on people of color in Greater Boston and beyond, it is imperative that we more fully understand both the magnitude and impact of racial and ethnic wealth gaps," said M. Lee Pelton, president and CEO of the Boston Foundation, which will lead the steering committee of partners and administer funding for the research effort. "Only then can we ensure that we are co-creating and implementing the systemic changes we need to undo them."
"Unlocking the barriers to building generational wealth is how we create a new chapter for Boston and the Commonwealth, one that is rooted in achieving transformative equity within our free market economy. The racial wealth gap has hindered Boston reaching its greatest potential - this research as well as the critical solutions and policy recommendations will champion a future where every community can thrive," said James E. Rooney, President & CEO of the Greater Boston Chamber of Commerce, and member of the steering committee. "The Chamber continues to lead and activate the business community in this work to champion an inclusive economy, founding the Racial Wealth Gap event series, which is directed by Dr. Karilyn Crockett, Massachusetts Institute of Technology Professor and former Chief of Equity for the City of Boston."
"Our economic system has, for generations, produced gross disparities in wealth across racial and ethnic groups," said Nancy Huntington Stager, President & CEO of the Eastern Bank Foundation. "The results of that program were clear in the Color of Wealth study, but the study was unable to make granular distinctions among populations of Black, Asian and Hispanic people. Nor could it highlight differences between the Boston metro area and the Gateway Cities, which feature quite different demographic makeup. We are excited that this survey is being designed to measure wealth across those dimensions, and to further probe the sources of wealth disparities for these populations."
The Boston Fed has a decades-long history of studying wealth disparities as part of its broad work to achieve maximum sustainable employment. The Bank has conducted groundbreaking studies on discrimination in mortgage lending, and it galvanized communities around solutions to the subprime lending crisis. The Reserve Bank has also developed programs aimed at identifying paths to improved economic outcomes in smaller cities and rural towns and regions.
Boston Fed researchers have recently begun the first phase of the wealth disparities research effort, which focuses on both assets (investments and housing) and debts (loans including home mortgages). This phase will also include drafting the survey instrument and planning ways to engage the community to provide feedback on the approach. While the list of research priorities for the project is still being finalized, the scope will likely include:
- Generating current, reliable baseline estimates of family wealth across rural, suburban, and urban aggregates across the Commonwealth
- Illustrating wealth differences within and between racial-ethnic groups
- Understanding some of the sources of wealth disparities
- Developing a data set that can be used to model the impacts of changes in policy or practice
- Establishing a methodology to potentially reproduce the study at regular intervals
Chakrabarti said the project will extend over roughly three years, and it will be informed by lessons from the collaboration, as partners continue ongoing efforts to address the wealth gap and identify solutions that create lasting equity.
About the Federal Reserve Bank
The Boston Federal Reserve Bank, one of 12 regional reserve banks, serves the First Federal Reserve District, which includes all of New England except Fairfield County, Connecticut. Within the district, the Bank monitors local economic conditions to aid in the formulation of monetary policy, engages in outreach to promote economic growth and community revitalization, supervises banks and bank holding companies, and provides financial services to facilitate banking operations.
Learn more about the Boston Fed on the Bank's website.