Wealth Gap Between Races Now Widest in 25 Years
Black and Hispanic households were disproportionately affected by the recession, a new report by The Pew Research Center shows. The median white household now holds 20 times the wealth of the median black household, and 18 times the wealth of the median Hispanic household. This represents the widest gap in wealth among racial groups since the federal government started collecting the figures 25 years ago.
Black and Hispanic households lost a much bigger share of their household wealth during the recession than did white households. From 2005 to 2009, household wealth for Hispanics fell by 66 percent (when adjusted for inflation), and by 53 percent for black households. In comparison, median wealth for white households fell by just 16 percent. Roughly a quarter of all Hispanic (24%) and black (24%) households in 2009 had no assets other than a vehicle, compared with 6% of white households. The chart below shows changes in median household wealth in dollar amounts by race, pre- and post-recession.
One reason Hispanics were disproportionately affected by the recession has to do with geography. Home equity makes up a significant portion of household wealth, and when the housing market tanked, household asset levels fell as well. The states with the biggest decreases in home values also have significant Hispanic populations, as shown in the table below. In Nevada, where home values fell by nearly half, Hispanics make up more than a quarter of the population. Compare that to Wisconsin, where home prices fell by just five percent over the same period and where only one out of 20 residents is Hispanic.
|State||% Change in Median Home Price, 2005-09||% Hispanic|
Another effect of the recession has been to widen the gap between rich and poor regardless of race, according to the Pew report. Prior to the report, the wealthiest 10% of households (those with assets of $650,000 or more) held 49% of all wealth. After the recession, the wealthiest 10% of households held 56% of all the wealth.
We’re all looking forward to an economic recovery, and we should work to promote policies conducive to job creation. But we should also remember that the effects of the recession are still being felt, and may be felt for years. As this report shows, some groups felt the effects of the recession worse than others, and may be slower to recover. In the meantime, we should make sure that we don’t leave behind the groups hit the hardest.