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Wealth gap widens between whites, minorities

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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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Online:

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Pew Social & Demographic Trends: 

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“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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