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WASHINGTON (AP) — The wealth gaps between whites and minorities
have grown to their widest levels in a quarter-century. The
recession and uneven recovery have erased decades of minority
gains, leaving whites on average with 20 times the net worth of
blacks and 18 times that of Hispanics, according to an analysis of
new Census data.
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The analysis shows the racial and ethnic impact of the economic
meltdown, which ravaged housing values and sent unemployment
soaring. It offers the most direct government evidence yet of the
disparity between predominantly younger minorities whose main asset
is their home and older whites who are more likely to have 401(k)
retirement accounts or other stock holdings.
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“What’s pushing the wealth of whites is the rebound in the stock
market and corporate savings, while younger Hispanics and
African-Americans who bought homes in the last decade – because
that was the American dream – are seeing big declines,” said
Timothy Smeeding, a University of Wisconsin-Madison professor who
specializes in income inequality.
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The median wealth of white U.S. households in 2009 was $113,149,
compared with $6,325 for Hispanics and $5,677 for blacks, according
to the analysis released Tuesday by the Pew Research Center. Those
ratios, roughly 20 to 1 for blacks and 18 to 1 for Hispanics, far
exceed the low mark of 7 to 1 for both groups reached in 1995, when
the nation’s economic expansion lifted many low-income groups to
the middle class.
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The white-black wealth gap is also the widest since the census
began tracking such data in 1984, when the ratio was roughly 12 to
1.
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“I am afraid that this pushes us back to what the Kerner Commission
characterized as `two societies, separate and unequal,'” said
Roderick Harrison, a former chief of racial statistics at the
Census Bureau, referring to the 1960s presidential commission that
examined U.S. race relations. “The great difference is that the
second society has now become both black and Hispanic.”
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Stock holdings play an important role in the economic well-being of
white households. Stock funds, IRA and Keogh accounts as well as
401(k) and savings accounts were responsible for 28 percent of
whites’ net worth, compared with 19 percent for blacks and 15
percent for Hispanics.
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According to the Pew study, the housing boom of the early to
mid-2000s boosted the wealth of Hispanics in particular, who were
disproportionately employed in the thriving construction industry.
Hispanics also were more likely to live and buy homes in states
such as California, Florida, Nevada and Arizona, which were in the
forefront of the real estate bubble, enjoying early gains in home
values.
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But those gains quickly shriveled in the housing bust. After
reaching a median wealth of $18,359 in 2005, the wealth of
Hispanics – who derived nearly two-thirds of their net worth from
home equity – declined by 66 percent by 2009. Among blacks, who now
have the highest unemployment rate at 16.2 percent, their household
wealth fell 53 percent from $12,124 to $5,677.
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In contrast, the median household wealth of whites dipped a modest
16 percent from $134,992 to $113,149, cushioned in part by a stock
market recovery that began in mid-2009.
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“The findings are a reminder – if one was needed – of what a large
share of blacks and Hispanics live on the economic margins,” said
Paul Taylor, director of Pew Social & Demographic Trends. “When
the economy tanked, they’re the groups that took the heaviest
blows.”
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The latest data come as President Barack Obama and congressional
leaders try to reach a deal to avoid a U.S. default on its
financial obligations after Aug. 2. Democrats and Republicans have
been wrangling over proposals that could cut trillions of dollars
from programs such as Medicare and Social Security; they are
divided over whether to bring in new tax revenue, such as by
closing corporate tax loopholes or increasing taxes for the
wealthy.
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The NAACP and other black groups urged Obama to resist deep cuts to
housing assistance or safety net programs, saying it would
disproportionately hurt urban areas with high poverty and
unemployment. The U.S. poverty rate currently stands at 14.3
percent, with the ranks of the working-age poor at the highest
level since the 1960s. Some analysts believe the poverty rate will
climb higher when new figures are released in September.
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“Typically in recessions, minorities suffer from being last hired
and first fired. They are likely to lose jobs more rapidly at the
beginning of the recession, and are far slower to gain jobs as the
economy recovers,” said Harrison, who is now a sociologist at
Howard University. “One suspects that blacks who lost jobs in the
recession, or who have tried to help family members or relatives
who did, have now spent whatever savings or other cashable assets
they had.”
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Other findings:
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-About 35 percent of black households and 31 percent of Hispanic
households had zero or negative net worth in 2009, compared with 15
percent of white households. In 2005, the comparable shares were 29
percent for blacks, 23 percent for Hispanics and 11 percent for
whites.
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-Asians lost their top ranking to whites in median household
wealth, dropping from $168,103 in 2005 to $78,066 in 2009. Like
Hispanics, many Asians were concentrated in states like California
hit hard by the housing downturn. More recent arrivals of new Asian
immigrants, who tend to be poor, also pushed down their median
wealth.
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-Across all race and ethnic groups, the wealth gap between rich and
poor widened. The share of wealth held by the top 10 percent of
U.S. households increased from 49 percent in 2005 to 56 percent in
2009. The threshold for entry into the wealthiest top 10 percent,
however, dipped lower: from $646,327 in 2005 to
$598,435.
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The numbers are based on the Census Bureau’s Survey of Income and
Program Participation, which sampled more than 36,000 households on
wealth from September-December 2009. Census first began publishing
wealth data from this survey, broken down by race and ethnicity, in
1984.
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—
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Online:
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Pew Social & Demographic Trends: “text-decoration: none; color: #000066;” href=
“http://pewsocialtrends.org/” target=
“-blank”>http://pewsocialtrends.org/
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Census Bureau: href=”http://www.census.gov/” target=
“-blank”>http://www.census.gov
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