The Value of Informal Support for Black and White Workers and Retirees

Analysis of the Survey of Income and Program Participation (SIPP) data reveals that Black workers are more likely than Whites to receive and provide informal support to family and friends, and most of that support takes the form of offers of rent-free housing. The value of money and in-kind housing received by White workers potentially bumped their total wealth accumulations by 7%, while among Black workers, wealth accumulations were potentially increased by 24%. When monetary support is given to family and friends, it reduces formal wealth balances by one to two percentage points among Whites and Blacks, barely impacting workers’ ability to accumulate wealth. Among retirees, the fraction of Blacks who receive and give informal support to others is almost double that among their White counterparts, and the majority of this support is in the form of rent-free housing. For the 10% of Black retirees and the 5% of White retirees who receive help from family and friends, the value of informal support makes up 38–40% of their total income. Those who do not receive support rely more heavily on Social Security, pensions, and “other” income, and among White retirees, there is also more reliance on earnings and property income.