New Financial Health Data Shows Vast Disparities Across Race and Ethnicity in Chicago

 Chicago, IL – January 31, 2023 – The Financial Health Network, the nation’s authority on financial health, in partnership with The Chicago Community Trust, today released the Financial Health Pulse® 2022 Chicago Report. The report shows that nearly four in 10 (39%) Black Cook County residents and three in 10 (30%) Latinx Cook County residents are considered Financially Vulnerable compared to less than one in 10 (9%) white residents. These disparities are significantly larger than nationwide data, which show that 20% of Black Americans, 21% of Latinx Americans, and 12% of white Americans are considered Financially Vulnerable.

The core tenets of financial health – including positive cash flow, manageable debt, and ability to safeguard assets – are necessary for building wealth. The study’s findings reveal that the racial and ethnic wealth gap is not simply a product of low earnings. Even among those earning $100,000 or more, financial health vulnerabilities remain. Only 40-44 percent of Black and Latinx residents with household earnings of more than 100,000 are Financially Healthy compared to 69 percent of white residents.

The report offers the first comprehensive picture of financial health disparities in Chicago and broader Cook County by examining how individuals spend, save, borrow and plan. It also investigates how the region compares nationally.

“Our findings support the idea that the vast gaps in financial health across Chicago and Cook County are evidence of systemic barriers that prevent financial security and perpetuate inequality,” said Angela Fontes, vice president of policy and research at the Financial Health Network. “To improve financial health, multi-faceted efforts are needed to support the immediate needs of Black and Latinx residents, while also addressing longstanding barriers to wealth within these communities.”

Financial vulnerability is translating into higher levels of stress and financial hardships. The report shows that more than half of Black and Latinx respondents (59% and 52%) say that they are unable to pay all their bills on time. Additionally, nearly four in ten Black and Latinx Cook County residents (39% and 38%) say they worried about running out of food over the last year.

“These findings are a wake-up call that show in dollars and cents the effects of discriminatory policies and practices that disproportionately impact Black and Latinx communities’ financial well-being,” said Andrea Sáenz, president & CEO of The Chicago Community Trust. “We must act with urgency to change this trajectory, which will improve the lives of thousands of families and create a brighter future for our region.”

The Chicago Community Trust is focused on closing the racial wealth gap in the Chicago region because it’s the root of our region’s most significant challenges, from a stagnant economy to public safety to health to family well-being. Understanding disparities in financial health can help to identify and shape strategic priorities to help people become more financially healthy over time, charting a new course of economic mobility in our region.

To learn more about the Financial Health Pulse® 2022 Chicago Report, visit this page. Information on The Chicago Community Trust’s work to close the racial wealth gap can be found at www.cct.org/the-wealth-gap/. The Financial Health Network Policy and Research team is interested in exploring other place-based research. Visit the measure financial health page to learn more.

Top-level findings from the Financial Health Pulse® 2022 Chicago Report

Race, ethnicity and neighborhood inform financial health

• • Financial health divides fall mainly on racial lines, with Black, Latinx, and Asian Cook County residents reporting lower levels of financial health than white residents.
    • Only 13% of Black residents, 16% of Latinx residents, and 38% of Asian residents are considered Financially Healthy compared with 49% of white residents.
  • Household income alone is insufficient to explain gaps in financial health by race and ethnicity.
    • Just 40% of Black and 44% of Latinx residents with household incomes of $100,000 or more are considered Financially Healthy, compared with 69% of white residents and 62% of Asian residents in the same income bracket.
  • Financial health outcomes mirror the city’s heavily segregated geographic lines.
    • Nearly one in three residents of the South Side and the West Side is considered Financially Vulnerable. Fifty percent of North Side and 45% of Central Chicago residents are considered Financially Healthy.

Disparities significantly larger than nationwide data

• • A staggering 39% of Black Cook County residents and 30% of Latinx Cook County residents are considered Financially Vulnerable compared to just 9% of white residents.
  • These disparities are significantly larger than nationwide data, which show that 20% of Black Americans, 21% of Latinx Americans, and 12% of White Americans are considered Financially Vulnerable.
  • Cook County was found to have a significantly higher percentage of white residents considered Financially Healthy (49%) than their national counterparts (36%), further widening the disparity gap in the region.

As a whole, Chicago and Cook County demonstrate greater financial health and vulnerability than the U.S., suggesting even greater inequality than seen nationally.

• • Thirty-four percent of residents are classified as Financially Healthy (versus 31% in the United States overall), and 19% are considered Financially Vulnerable (compared with 15% nationwide).
  • Cook County residents report experiencing high financial stress at more than twice the rate of the U.S. average (21%, compared with 10%).
  • Compared with national statistics, Cook County residents report more significant challenges meeting monthly expenses, paying bills, and managing debt, and less confidence that they have appropriate protections via insurance.
    • Twenty-nine percent of Cook County residents report spending more than their income compared with 21% nationally.
    • Cook County residents are five percentage points less likely to report paying their bills on time.
    • Sixty-seven percent of Cook County residents report having a manageable amount of debt or no debt compared with 74% nationwide.
    • Only 51% of Cook County and 46% of Chicago residents are confident in their insurance policies compared to 57% nationwide.
  • In the City of Chicago, nearly a quarter of residents (23%) are Financially Vulnerable, 1.5 times the national level.

Barriers to wealth creation

The Financial Health Pulse® 2022 Chicago Report research demonstrates that households of color face dramatic barriers in multiple areas of wealth creation, including:

• • While checking account ownership is near-universal for white households (99%), the same is true for only 83% of Black households.
  • Eighty-seven percent of white households report holding at least one pension or retirement account, compared with 49% of Black households and 58% of Latinx households.
  • White homeowners report having received financial support for the purchase of their home more than twice as frequently as Black homeowners (23% compared to 10%).
  • Fifty-one percent of Black residents and 46% of Latinx residents say their households have more debt than is manageable, compared with 22% of white residents.

About the Financial Health Network

The Financial Health Network is the leading authority on financial health. We are a trusted resource for business leaders, policymakers and innovators united in a mission to improve the financial health of their customers, employees and communities. Through research, advisory services, measurement tools, and opportunities for cross-sector collaboration, we advance awareness, understanding and proven best practices in support of improved financial health for all. For more on the Financial Health Network, go to www.finhealthnetwork.org and follow us on Twitter at @FinHealthNet.

About the Chicago Financial Health Pulse

This research was conducted in partnership with The Chicago Community Trust, with funding from the Searle Funds at The Chicago Community Trust. The data used in this report were collected from a survey fielded by NORC at the University of Chicago, an independent, nonpartisan research institution. Survey data on individuals and their households were collected from a representative (margin of error +/- 1.48%) sample of 5,422 Cook County residents aged 18+ between April and July 2022. The sample was selected from an address-based sample of residents of Cook County, Illinois who were invited to participate online or by telephone. The study was benchmarked against the nationally representative Financial Health Pulse Trends Report, with data collected between April and May 2022.