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Explore the drivers of ethno-racial wealth disparity in Michigan and evidence-based, state-level policy solutions for growing household prosperity in every community.

Explore Wealth in Michigan

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Overview

Household wealth is not equitably distributed across racial and ethnic groups in Michigan, and these stark wealth disparities have generational consequences for the economic stability and mobility of communities of color.

The key findings below shed light on the extent of these disparities and their drivers in the state.

Based on a holistic analysis of these drivers, Prosperity Now proposes policy recommendations that are specific to Michigan, providing targeted solutions to address the unique challenges faced by each community, ultimately fostering more equitable and inclusive solutions to bridge the racial wealth gap.

The Compass is a tool for advocates, policymakers, and legislators to guide each state, including Michigan, to a more equitable economy through evidence-driven, state-based solutions.

Key Takeways

Household wealth is not equitably distributed across ethno-racial groups in Michigan.

  • Income is a very small contributor to racial/ethnic net worth disparities.
  • Home equity is a large contributor to racial/ethnic net worth disparities.
  • Savings are a very small contributor to racial/ethnic net worth disparities.

Source: Calculations using data from the 2022 SIPP survey.

Notes: The ethno-racial groups shown here are mutually exclusive and collectively exhaustive. They represent a combination of race and ethnicity of the head of the household rather than the entire household. Whenever a given ethno-racial group is too small for reliable statistical analysis, it is grouped with “Other” (see Methodology for more detail). The grey bars represent the margin of error around the estimated median. Wider bars mean that there is more uncertainty around the exact value of the median.

There are pronounced disparities in wages across ethno-racial groups in Michigan.

  • Educational attainment is a small contributor to racial/ethnic wage disparities.
  • Occupation is a very small contributor to racial/ethnic wage disparities.
  • Employed hours are a medium contributor to racial/ethnic wage disparities.

Source: Calculations using data from the 2022 ACS survey.

Notes: The ethno-racial groups shown here are mutually exclusive and collectively exhaustive. They represent a combination of race and ethnicity of the head of the household rather than the entire household. Whenever a given ethno-racial group is too small for reliable statistical analysis, it is grouped with “Other” (see Methodology for more detail). The grey bars represent the margin of error around the estimated median. Wider bars mean that there is more uncertainty around the exact value of the median.

Home equity varies significantly among ethno-racial groups in Michigan.

  • Income is a very small contributor to racial/ethnic disparities in home equity.
  • Bank savings is a very small contributor to racial/ethnic disparities in home equity.
  • Non-home debt is a small contributor to racial/ethnic disparities in home equity.

Source: Calculations using data from the 2022 SIPP survey.

Notes: The ethno-racial groups shown here are mutually exclusive and collectively exhaustive. They represent a combination of race and ethnicity of the head of the household rather than the entire household. Whenever a given ethno-racial group is too small for reliable statistical analysis, it is grouped with “Other” (see Methodology for more detail). The grey bars represent the margin of error around the estimated median. Wider bars mean that there is more uncertainty around the exact value of the median.

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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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