A Research & Policy Navigator for Racial Wealth Equity

Explore why wealth gaps persist between racial and ethnic groups in your state and how to tackle inequality locally through evidence-based policies.

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Wealth Inequality in the U.S.

The stark wealth disparities between racial and ethnic groups have generational consequences for the economic stability and mobility of communities of color.

Entrenched systemic barriers perpetuate this wealth divide, demanding comprehensive, data-driven policy solutions tailored to each state’s specific challenges.

But in order to make fully informed decisions, legislators, policymakers, and other advocates for financial equity must first understand the causes of ethno-racial wealth gaps in their state.

Compass holistically analyzes each state’s wealth divide through a framework that exposes the complex interplay of assets, debts, income, and expenses, each influenced by its unique set of underlying drivers.

Michigan

Contributors to Wealth and Net Worth

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Assets

Assets directly feed into calculation of net worth: more assets means more wealth. Assets tend to go hand-in-hand with debts (e.g., purchasing a house often involves taking out a mortgage). Assets also affect and are affected by income and expenses: some assets produce income, while a higher income-to-expenses ratio allows for greater ability to purchase assets.

Debts

Debts directly feed into calculation of net worth: more debts means less wealth. Debts sometimes (but not always) indicate an investment in an asset or future income (e.g., a mortgage for a house, or education debt for higher future income). Debts also affect and are affected by income and expenses: debts typically have ongoing expenses to pay them off, while a higher income-to-expenses ratio allows for greater ability to pay them off.

Income

Income indirectly feeds into net worth via assets and debts: typically, a higher income translates to more wealth. A higher income-to-expense ratio allows for greater ability to purchase assets and pay off debt. Income might also be affected by assets and debts: some assets produce income, while some debts indicate an investment in income (e.g., education debt).

Expenses

Expenses indirectly feed into net worth via assets and debts: typically, higher expenses translates to less wealth. A higher income-to-expense ratio allows for greater ability to purchase assets and pay off debt. Expenses are also often affected by debts via required monthly payments.

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