The Web of Wealth: Resiliency and Opportunity or Driver of Inequality? Hannah Thomas, Tatjana Meschede, Alexis Mann, Janet Boguslaw, and Thomas Shapiro. July 2014.  Institute on Assets and Social Policy (Brandeis University)

“Families often help each other out financially. A brother lends a few hundred dollars to cover a late household bill. A grandparent puts $1,000 away each year into a college fund for their grandchildren. A parent writes a $10,000 check for their adult child’s first home down payment. In the short-term, financial help limits those in the network from economic collapse or a serious decline in their standard of living. Over the long-term, extended family financial support can provide a steppingstone to better opportunities, such as going to college, starting a business, or purchasing a home. Financial transfers can also be much larger, fundamentally changing a family’s lot in life. These large financial transfers often arrive in the form of inheritance upon the death of a relative. This network of extended family financial assistance is a “web of wealth” that, in the U.S., profoundly shapes individual family members’ social and economic trajectories beyond their own achievements in work and education. A web of wealth depends on the financial resilience and affluence of its members. Some wealth webs are packed with prosperous individuals. Others have fewer wealthy members whose resources get spread thin within the network. Many family webs have no wealth, especially low-income, African American, and other family of color networks. Across generations, historic policies have contributed to this inequitable wealth distribution. A legacy of slavery and racism has produced limited access and opportunities especially for African Americans to build wealth, while the federal government has invested in the wealth building of the wealthiest Americans. The consequences are stark. Families without a web of wealth to draw on have less household resilience in facing financial disruptions. By contrast families situated in strong wealth webs are able to remain resilient in the face of financial disruptions and can leverage opportunities for upward mobility. Inequality in the distribution of wealth webs helps reproduce and exacerbate inequities. For example, a child born into a wealthy family is 6.3 times more likely to end up a wealthy adult than a child born into a poor family. Racial inequities are also perpetuated. One study found that twelve percent of the racial wealth gap  could be explained by differences in receipt of family financial transfers. This brief explores these themes in greater depth. It describes the relative infrequency of extended family  financial assistance, the inequities in its distribution, and the consequences for household wealth holding.  It looks at how families use resources from the web of wealth, why families do not have access to a web of wealth, and what they do in its absence to maintain well-being and leverage opportunity. Finally, the brief proposes policy solutions to ensure that families without a web of wealth are able to access the same opportunities as those situated in well-resourced family networks.”