Recession has left whites far better off than minorities
Wealth gap found widest ever measured
WASHINGTON - The wealth gap between whites and minorities has grown to its widest level 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.
The analysis shows the racial and ethnic impact of the economic crisis, 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.
“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 studies income inequality.
The median wealth of white US households in 2009 was $113,149, compared with $6,325 for Hispanics and $5,677 for blacks, according to the analysis being released today 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.
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.
“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 US race relations. “The great difference is that the second society has now become both black and Hispanic.’’
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.
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.
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, household wealth fell 53 percent from $12,124 to $5,677.
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.
“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.’’
Democrats and Republicans have been wrangling over debt-reduction 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.
Among the study’s findings:
■ 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.
■ 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.
■ 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 US households increased from 49 percent in 2005 to 56 percent in 2009.