Recession Causes Wider Wealth Gap Between Whites, Minorities
Originally published on Tue July 26, 2011 6:21 am
New analysis of Census data by the Pew Research Center finds that the recession has erased decades of gains minorities had made in closing the country's wealth gap. That gap between whites and minorities is now the widest it's been in 25 years.
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.
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.
NPR's Pam Fessler has a longer story on the analysis. But the biggest reason for the shift is that minorities, who are on average younger, are more likely to have most of their net worth in homes, where as whites, who are on average older, are more likely to have a significant net worth in other investments like a 401 K. The markets have rebounded from the recession, while the housing market is still in a slump. Pam reports:
"Especially Hispanics, for example. Sixty-six percent of their net worth derives from home equity," Kochhar says. "And they are concentrated geographically in parts of the country such as California, Arizona, Florida and Nevada, where the housing downturn was most severe."
The result is that the average Hispanic family lost two-thirds of its wealth between 2005 and 2009, according to the Pew report. Black families lost more than half of theirs.