Wednesday, July 27, 2011
Downturn widens racial wealth gap
The wealth gap is said to be the widest in nearly three decades
The wealth gap between American whites and minorities has grown wider during the recession, according to an analysis of US Census data.
It found the median wealth of white US households in 2009 was $113,149 (£69,000), compared with $6,325 for Hispanics and $5,677 for blacks.
This left whites with about 20 times the net worth of blacks and 18 times that of Hispanics.
Those ratios compared with 7:1 for both groups back in 1995.
Asians also lost their top ranking to whites in median household wealth, more than halving from $168,103 in 2005 to $78,066 in 2009.
The report suggests Asian households were clustered in places such as California that were hit hard by the property market meltdown.
The study, compiled by the Pew Research Center from 2009 data, found the wealth gap was the widest it has been since the government began publishing such statistics by ethnicity in 1984, when the white-black ratio was roughly 12:1.
The data analysis demonstrates that the economic recession, which plunged housing values and caused widespread unemployment, widened an existing racial wealth gap significantly.
In other findings:
About 35% of black households and 31% of Hispanic households had zero or negative net worth in 2009, compared with 15% of white households
The share of wealth held by the top 10% of American households increased from 49% in 2005 to 56% in 2009
About 24% of all Hispanic and black households in 2009 had no assets other than a vehicle, compared with 6% of white households, a situation little changed since 2005
"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... are seeing big declines," Timothy Smeeding, a University of Wisconsin-Madison professor who specialises in income inequality, told the Associated Press news agency.
Between 2005 and 2009, the median net worth of Hispanic households dropped by 66% and that of black households by 53%, according to the report.
That contrasted with the median net worth of white households, which dropped by just 16%.
Before the recession, housing equity accounted for about 66% of the net worth of Hispanics and some 59% of black families. About 44% of the wealth of white families consisted of housing equity.
A geographic analysis of the study suggests a disproportionate share of Hispanics live in California, Nevada and Arizona, states which have experienced some of the steepest declines in US housing values.
Hispanics and blacks are the two largest minority groups in the US, making up 16% and 12% of the population respectively.
The figures reported in the Pew study are based on the Census Bureau's Survey of Income and Program Participation, which surveyed 36,000 households on wealth from September to December 2009.