Recession Made Racial Wealth Gap Wider, Study Says
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WASHINGTON – The enormous wealth gap between white families and blacks and Hispanics grew larger after the most recent recession, a private analysis of government data finds.
White households had a median net worth of greater than $88,000 in 2002, 11 times more than Hispanics and more than 14 times that of blacks, the Pew Hispanic Center said in a study being released today.
Blacks were slowest to emerge from the economic downturn that started in 2000 and ended in late 2001, the report found. Net worth accounts for the values of items such as a home and car, checking and savings accounts, and stocks, minus debts such as mortgage, car loans, and credit card bills.
Greater wealth means a greater ability to weather a job loss, emergency home repairs, illness, and other unexpected costs, as well as being able to save for retirement or a child’s college tuition.
According to the group’s analysis of Census Bureau data, nearly one-third of black families and 26% of Hispanic families were in debt or had no net assets, compared with 11% of white families.
“Wealth is a measure of cumulative advantage or disadvantage,” said Roderick Harrison, a researcher at the Joint Center for Political and Economic Studies, a Washington think tank that focuses on black issues. “The fact that black and Hispanic wealth is a fraction of white wealth also reflects a history of discrimination.”
After accounting for inflation, net worth for white households increased 17% between 1996 and 2002 and rose for Hispanic homes by 14% to about $7,900. It decreased for blacks by 16%, to roughly $6,000.
Regardless of race and ethnicity, the median net worth for all American households was $59,700 in 2002, a 12% gain from 1996.
Only white homes recouped all their losses between 2001 and 2002. Both Hispanics and blacks lost nearly 27% of net worth between 1999 and 2001; the next year Latinos had gained almost all back (26%) though blacks were up only about 5%.
The director of the Pew Hispanic Center, Roberto Suro, said the accumulation of wealth allows low-income families to rise into the middle class and “have some kind of assets beyond next week’s paychecks….Having more assets enabled whites to ride out the jobless recovery better.”
Mr. Harrison says Hispanics were more insulated from the downturn than blacks, so they took less of a hit. For example, Hispanics made employment gains in lower-paid, lower-skilled areas such as the service and construction sectors. Blacks were hit hard by job losses in the manufacturing industry and in professional fields, where they were victims of “last hired, first fired” policies, he said.