The “Great Recession” has left black and minority households significantly worse off than white households and the wealth gap is at its widest in 25 years, since the US government began publishing statistics by ethnicity.
According to the study conducted by Pew Research Centre
- the median wealth of white households was 20 times that of black households and 18 times that of Hispanic households
- the inflation-adjusted median wealth among Hispanic households fell 66% from 2005 to 2009. Black households suffered a 53% drop in net worth over the same period. By contrast, whites saw a decline of 16% in household wealth.
- in 2009, the typical black household had just $5,677 in wealth. Hispanic families had about $6,325 in wealth. The average white household had a net worth of $113,149.
- a third of black and Hispanic households had zero wealth, meaning that their debts were larger than the value of all their assets.
Overall, the study attributed much of the disparity to the decline in home values, which hit black and Hispanic households hardest.
“If you’re less wealthy, you’re more reliant on single assets,” says Rakesh Kochhar, a demographer at the Pew Research Centre.
“If you’re more wealthy, you have multiple assets.”
Overall black and Hispanics have been disproportionately affected by the collapse of the housing market, the financial crisis and the recession period between 2005-2009, but in particular the decline in home values hit black and Hispanic households the most.
“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.
Blacks and minorities have also lost much of their wealth due to higher unemployment during the recession.
In June the unemployment rate remained twice as high for blacks as whites at 16.2% compared with 8.1%, with the rate among Hispanics at 11.6%.
The study show that with work-hours down families are forced to rely on savings, cash up other assets or borrow to make ends meet.
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.
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