The Great Recession More Than Wipes Out a Quarter-Century of Gains Made by Blacks and Hispanics in Household Wealth
I had no idea that the recession had such a worse impact on minorities. The gap in median household wealth between whites and each of the two largest minority groups has not only gotten tremendously wide, in fact this gap almost doubled in only four years.
This is according to a report just released on July 26, 2011 by the Pew Research Center’s Social & Demographic Trends project.
During the twenty years up through 2004, the wealth of black and Hispanic households compared to the wealth of white households did not change much. But even then, before the recession, the wealth disparity between racial groups was already astounding huge. In 2004 the median white household’s assets were worth about seven times that of the median Hispanic household’s, and about eleven times that of the median black household’s assets.
But then only four years later, by late 2009, after the official end of the recession, these ratios had virtually doubled, with the white household’s assets being worth fifteen times more than the Hispanic household’s, and nineteen times more than the black household’s.
© 2011 Pew Research Center, All Rights Reserved
What is the cause of this massive increase in wealth disparity among these races in such a short time? Simple: depreciated residential housing values. Blacks, and even more so Hispanics, have their wealth disproportionately tied up in their housing.
From 2005 to 2009, the median level of home equity held by Hispanic homeowners declined by half—from $99,983 to $49,145…. A geographic analysis suggests the reason: A disproportionate share of Hispanics live in California, Florida, Nevada and Arizona, which were in the vanguard of the housing real estate market bubble of the 1990s and early 2000s but that have since been among the states experiencing the steepest declines in housing values.
White and black homeowners also saw the median value of their home equity decline during this period, but not by as much as Hispanics. Among white homeowners, the decline was from $115,364 in 2005 to $95,000 in 2009. Among black homeowners, it was from $76,910 in 2005 to $59,000 in 2009.
This Pew Research does not get into what this increased disparity among the races means for our society. I suspect it is part of the broader picture of the overall widening gap between the wealthy and the rest of us. Overall reduced upward mobility strikes at the heart of our national identity. Add to that this racial disparity, and the suddenness with which it has occurred, and we are looking at profound economic shifts with very serious consequences.Excerpts and graph: © 2011 Pew Research Center, Social & Demographic Trends Project “Wealth Gaps Rise to Record Highs Between Whites, Blacks and Hispanics” http://pewsocialtrends.org/2011/07/26/wealth-gaps-rise-to-record-highs-between-whites-blacks-hispanics