Natural Disasters, FEMA Aid Widen Racial Wealth Gap

PITTSBURGH—Damage caused by natural disasters and recovery efforts launched in their aftermaths have increased wealth inequality among races in the United States, according to new research from the University of Pittsburgh and Rice University.

“Damages Done: The Longitudinal Impacts of Natural Hazards on Wealth Inequality in the United States” will appear in an upcoming edition of Social Problems. A supplement to the paper highlights the wealth gap between whites and blacks that can be attributed to natural disaster damage from 1999 through 2013 in 20 U.S. counties.

Researchers Junia Howell and Jim Elliott combined longitudinal data from nearly 3,500 families across the U.S. with governmental data on local natural disaster damages, Federal Emergency Management Agency (FEMA) aid and demographics. They followed these people as disaster damage of varying scale struck counties where they lived, and examined how their personal wealth was impacted.

Howell is an assistant professor of sociology in Pitt’s Kenneth P. Dietrich School of Arts and Sciences and a scholar at Rice’s Kinder Institute for Urban Research, and Elliott is a professor of sociology at Rice and fellow at Rice’s Kinder Institute.

“Last year the United States suffered more than $260 billion in direct damages from natural disasters — mainly from hurricanes Harvey, Irma and Maria,” said Howell, who was the study’s lead author. “And there were also numerous wildfires, floods and tornadoes. Data show that since 2000, approximately 99 percent of counties in the U.S. have experienced significant damage from some type of natural disaster, with costs expected to increase significantly over coming years. We wanted to investigate how these damages impact wealth inequality and accumulation.”

Whites who lived in counties with only $100,000 in damage from 1999 to 2013 gained an average of about $26,000 in wealth, while whites who lived in counties with at least $10 billion in damage during the same time period gained nearly $126,000.

The results among blacks, Latinos and Asians went in the other direction. Blacks who lived in counties with just $100,000 in damage gained an estimated $19,000 in wealth on average, while those living in counties with at least $10 billion in damage lost an estimated $27,000. Latinos in counties with $100,000 in damage gained $72,000 on average, and those in areas with at least $10 billion in damage lost $29,000 on average. Asians gained $21,000 on average and lost $10,000, respectively. These differences occurred even after the researchers controlled for a wide range of factors including age, education, homeownership, family status, residential mobility, neighborhood status and county population.

Counties that received more aid from FEMA saw additional increases in wealth inequality. For example, whites living in counties that received at least $900 million in FEMA aid from 1999 to 2013 accumulated $55,000 more wealth on average than otherwise similar whites living in counties that received only $1,000 in aid. Conversely, blacks living in counties that received at least $900 million in FEMA aid accumulated $82,000 less wealth on average than otherwise similar blacks living in counties that received only $1,000 in FEMA aid. Latinos accumulated $65,000 less on average, and other races — the majority of them being Asians — accumulated $51,000 less.

“It’s unclear why more FEMA aid is exacerbating inequality,” Howell said. “More research is clearly needed. However, based on previous work on disasters such as hurricanes Katrina and Harvey, we know FEMA aid is not equitably distributed across communities. This is particularly true when it comes to infrastructural redevelopment, which often has profound effects on residents’ property appreciation and business vitality. When certain areas receive more redevelopment aid and those neighborhoods also are primarily white, racial inequality is going to be amplified.”

The researchers also found that after natural disasters wealth inequality also increased based on home ownership. Individuals who owned homes in counties that experienced high levels of natural disaster damage accumulated $72,000 more wealth on average than their counterparts in counties with few disasters. Renters, on the other hand, lost $61,000 in wealth on average relative to renters in counties with few natural disasters.

Similarly, college-educated residents accumulated $111,000 more on average if they lived in a county that experienced extreme disasters compared to their counterparts who did not live through disasters. However, those with only a 10th-grade education who lived in counties that experienced extreme disasters lost $48,000 from natural disaster damages on average when compared to counterparts who did not live through disasters.

Howell and Elliott said the results indicate that two major social challenges of our age — wealth inequality and rising costs of natural disasters — are increasingly and dynamically connected. They hope the research will encourage further examination of wealth inequality in the U.S. and development of solutions to address the problem.

The researchers are now building on this work by examining how local for-profit and nonprofit organizations influence social inequality after natural disasters.

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