Civic Issue Blog – March 16th

America’s Broken Criminal Legal System Contributes to Wealth Inequality

In 2019, the average wealth for households with an incarcerated family member—not counting the imputed wealth of defined benefit pensions—was $227,582, compared with $925,006 for households without a criminal justice system interaction. The respective median wealth levels were $7,350 and $177,800. That is, households with an incarcerated family member had a little less than one-fourth the average wealth and only about 4 percent of the median wealth of households without an incarcerated family member. The wealth gap associated with criminal legal interactions largely follows from the fact that affected households have much lower asset values than but debt levels similar to those of households with an incarcerated family member. For example, households with an incarcerated family member had $54,800 in median assets, or 19. 4 percent of the $282,700 in median assets of households without an incarcerated family member. In contrast, households with an incarcerated family member had a median debt level of $25,000, while households without an incarcerated family member had a similar median debt level of $25,900.

The lack of wealth for households with an incarcerated family member is therefore likely associated with greater obstacles to saving and investing and a similar need, even amid lower earnings, to borrow money. The results show that a 1 percent increase in the average chance of having a family member incarcerated reduces household wealth by 1. For households with DB pensions, a 1 percent increase in the chance of incarceration correlates with a 1. 63 percent reduction in wealth. 6 percent lower for households with an incarcerated family member than for households without one, and wealth with DB pensions is 41. The chances of interacting with the criminal legal system are higher among people of color, single women and men, and individuals with less education. People of color are more likely to have an immediate family member incarcerated, and they face more obstacles to building wealth when a family member has been incarcerated than is the case for white households. Black households make up 19. 5 percent of households with an incarcerated family member but account for 15. 4 percent of households without an incarcerated family member. 4 percent of households without an incarcerated family member. 4 percent of households without an incarcerated family member. Moreover, households with less than a college degree are overrepresented among households with an incarcerated family member, as are single women and men. Criminal legal system interactions are higher among these groups, which often face greater obstacles to building wealth because of lower incomes; greater income instability; and higher costs, including for health care, education, and family caregiving. 9 percent—indicated that they had an incarcerated family member. For African American households, this share was 36 percent, while it was only 19 percent for white households. “Many households face a number of obstacles to building wealth, but those barriers are more significant for households with a currently or previously incarcerated family member. Take income from earnings, or the lack thereof, as an example. Overall, 16.9 percent of households without an incarcerated family member have assets greater than $50,000, while the same is true for 12.7 percent of households with an incarcerated family member. At the same time, 57.1 percent of households without an incarcerated family member and incomes above $30,000 had assets greater than $50,000, while only 41.3 percent of households with incomes above $30,000 with an incarcerated family member did” (CAP)

Among single women in 2019, the share was 26. The shares for households with and without a college degree were 13. These data again highlight that interactions with the criminal legal system are more likely to happen among households that have less wealth, lower incomes, and greater income uncertainty, as well as those that face higher costs. Black and Hispanic households are more likely to have an incarcerated family member and, if they do, they are also more likely to end up with legal debt—in 24. 8 percent of cases—than was the case for white households, who had an 18. 7 percent chance of ending up with legal debt. “In general, families with an incarcerated family member have a lot less wealth than families without an incarcerated family member, and those differences are even more pronounced for Black and Hispanic families. In 2019, the median wealth of Black families with an incarcerated family member was $3,970, compared with $50,400 for white families with an incarcerated family member” (CAP). Households with less education and single women households were also more likely to have legal debt if they had an incarcerated family member than was the case for households with a college degree and those made up of married couples. The dual costs of mass incarceration—the widespread chance of criminal legal system interactions and adverse economic consequences—tend to fall more heavily on people of color, single women and men, and less educated people. Having an incarcerated family member has two likely consequences for wealth: 1) It makes it harder for households to save, reflected in lower asset ownership; and 2) it forces many households to take on more costly debt, such as credit card or legal debt, to pay their bills. Indeed, households with an incarcerated family member are less likely to own key assets than are households without an incarcerated family member. For example, 61 percent of households with an incarcerated family member had assets of less than $50,000, while only 43. 6 percent of households without an incarcerated family member had assets of less than $50,000. For instance, only 49 percent of households with an incarcerated family member reported being able to cover a $400 emergency with cash or a cash equivalent, while 67. 2 percent of households without an incarcerated family member reported being able to do so. Incarceration goes hand in hand with much less asset ownership. Black and Hispanic households in the United States have substantially fewer assets than white households. 4 percent of Black households without an incarcerated family member have less than $50,000 in assets, compared with 38. 8 percent of Black households with an incarcerated family member have less than $50,000 in total assets, while the same is true for 55. 3 percent of white households. 3 percent of white households. Even after accounting for criminal legal system interactions, Black and Hispanic households have fewer assets than white households.

America’s Broken Criminal Legal System Contributes to Wealth Inequality

Author: John Sarcone

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