Structural Racism and Financial Well-Being

• In Event: Advancing Economic Justice: Employment and Safety Net Approaches

Abstract

Background. Racial inequities in financial outcomes are well documented, yet few empirical studies examine their root causes—namely, structural racism. This study investigates the relationship between structural racism and financial well-being across racialized groups in the United States (U.S.). Grounded in theories of structural racism and using recent advances in the measurement of structural racism, we capture the multifaceted, interconnected, and institutionalized nature of structural racism. We establish both theoretical and empirical links between state-level structural racism and financial well-being to estimate how these associations vary across racialized groups.

Methods. We linked individual-level data from the 2021 National Financial Capability Study (NFCS), a nationally representative dataset of U.S. adults (N = 27,118), to publicly available state-level data from 2008 to 2010 on indicators of structural racism using the Brown and Homan (2024) approach. The anchor variable was NFCS participants’ state of residence. The exposure, structural racism, was operationalized using a latent construct comprised of 5 singular items capturing state-level Black-White disparities in unemployment, homeownership, educational attainment, incarceration, voting rates, and neighborhood segregation. Residents were racialized into groups by Census interviewer and population estimates were derived per state. The outcome, financial well-being, was assessed using the Consumer Financial Protection Bureau’s validated 5-item Financial Well-Being Scale.

Individual-level covariates included age and cisgender category assigned at birth. State-level covariates included unemployment rate, Gini coefficient, and percentage of the residents racialized as Black. To account for the hierarchical nature of the data, we employed two-level mixed-effects regression models with state-level random intercepts. Analyses were stratified by racialized groups. NFCS determined racialized group by having participants choose from a fixed list of categories: Black not Latine, White not Latine, Latine, Asian or Pacific Islander, and Other not Latine. NFCS sample weights were applied in all models.

Results. The severity of structural racism varies significantly across states with high levels observed in the Midwest and Northeast. Higher levels of structural racism were significantly associated with lower financial well-being among participants racialized as Black (b = -1.230, 95% CI [-2.127, -0.332], p < .01). For participants racialized as Latine, the association was negative in direction but not statistically significant (b = -0.114, 95% CI [-0.796, 0.568]). For participants racialized as Asian or Pacific Islander (b = 0.199, 95% CI [-1.168, 1.567]), Other (b = 0.891, 95% CI [-0.129, 1.912]), and White (b = 0.523, 95% CI [-0.176, 1.223]), there was no significant association.

Conclusion. These results indicate that while structural racism is widespread nationally, its concentrated in the Midwest and Northeast. Our findings highlight a meaningful link between state-level structural racism and reduced financial well-being among adults racialized as Black in the U.S. The absence of significant associations for other racialized groups suggests that the harms of anti-Black structural racism are unique in their impact especially pertaining to financial systems. These findings underscore that coordinated efforts to dismantle structural racism must be multifaceted to improve one aspect, in this case financial well-being, among Americans racialized Black.

Author

• Sicong Sun, University of California - Los Angeles
  Presenting Author