Illinois has 8th–largest racial wealth gap in the nation

Illinois in the top ten for largest racial wealth gaps. Disparities in income, education and poverty drive the state’s racial wealth gap.

The racial wealth gap in Illinois is the 8th–largest in the country, according to a new study by WalletHub. The state improved one spot from its previous ranking of 7th largest gap in 2024.

Illinois’ low ranking was driven by things such as median household income gap its homeownership gap, poverty rate and educational attainment gaps between Black and white Illinoisans.

Illinois’ racial inequality issues have remained persistent and widespread. A 2024 WalletHub study ranked the state worst for overall racial equality.

WalletHub’s rankings analyze 21 factors, including gaps in median income, homeownership, unemployment rates, poverty rate, educational attainment and uninsured rates among racial groups. Illinois’ ranking is low across most categories.

Illinois’ median income gap between Blacks and whites was fourth worst among states. White Illinoisans earn around 45% more than Black Illinoisans. Only Louisiana, Wyoming, and Wisconsin were worse.

On housing, Illinois ranked in the middle at 28th with a homeownership gap of 45.53% between whites and Blacks. This means Blacks are 45.53% less likely than whites to own a home.

The poverty rate gap in Illinois was 8th–largest. Black Illinoisans have a poverty rate 184% higher than whites.

The educational attainment gap between whites and Hispanics was 54.86%, meaning Hispanics were almost 55% less likely than whites to have a bachelor’s degree. That placed Illinois 12th.

Illinois has a wide range of policy options to reduce these racial gaps across income, homeownership, poverty, and educational attainment, including:

• Reduce income inequality and poverty by eliminating unfair barriers to work, especially occupational licensing, that hurt minorities and make it harder for them to climb the income ladder and by reorienting the state’s education system to prioritize preparing students for careers rather than attaining degrees so it’s easier for people to earn more.
• Address housing inequality by making housing more affordable by reducing harmful regulations. Restrictions on building accessory dwelling units and inclusionary policies hurts racial minorities disproportionately. Slow permitting and restrictive zoning policies reduce supply and increase housing costs.
• Opting into the Federal Scholarship Tax Credit program to bring more educational opportunity to minority students.