Census: Wealth Gap Widens Between Whites and Minorities
By The Associated Press
Washington, DC (July 27, 2011) -- The wealth gaps between white people and minorities have grown to their widest levels in a quarter-century.
The recession and uneven recovery have erased decades of minority gains, leaving white people on average with 20 times the net worth of African Americans and 18 times that of Hispanics, according to an analysis of new census data.
The analysis shows the racial and ethnic impact of the economic meltdown, which ravaged housing values and sent unemployment soaring. It offers the most direct government evidence yet of the disparity between predominantly younger minorities whose main asset is their home and older white people who are more likely to have 401(k) retirement accounts or other stock holdings.
Across all race and ethnic groups, the wealth gap between rich and poor widened. The share of wealth held by the top 10% of U.S. households increased from 49% in 2005 to 56% in 2009. The threshold for entry into the wealthiest top 10%, however, dipped lower, from $646,327 in 2005 to $598,435.
The median wealth of white U.S. households in 2009 was $113,149, compared with $6,325 for Hispanics and $5,677 for African Americans, according to the analysis that was released Tuesday by the Pew Research Center. Those ratios, roughly 20-1 for black people and 18-1 for Hispanics, far exceed the low mark of 7-1 for both groups reached in 1995, when the nation's economic expansion lifted many low-income groups into the middle class.
The white-black wealth gap is also the widest since the census began tracking such data in 1984, when the ratio was roughly 12-1.
According to the Pew study, the housing boom of the early- to mid-2000s boosted the wealth of Hispanics in particular, who were disproportionately employed in the thriving construction industry. Hispanics also were more likely to live and buy homes in states such as California, Florida, Nevada and Arizona, which were in the forefront of the real estate bubble, enjoying early gains in home values.
But those gains quickly shriveled in the housing bust. After reaching a median wealth of $18,359 in 2005, the wealth of Hispanics -- who derived nearly two-thirds of their net worth from home equity -- declined by 66% by 2009. Among black people, who now have the highest unemployment rate at 16.2%, their household wealth fell 53%, from $12,124 to $5,677.
In contrast, the median household wealth of white people dipped a modest 16% from $134,992 to $113,149, cushioned in part by a stock market recovery that began in mid-2009.
Asians lost their top ranking to white people in median household wealth, dropping from $168,103 in 2005 to $78,066 in 2009. Like Hispanics, many Asians were concentrated in states such as California that were hit hard by the housing downturn.
The latest data came as President Barack Obama and Congress try to reach a deal to avoid a U.S. default on its financial obligations Aug. 2. Democrats and Republicans have been wrangling over proposals that could cut trillions of dollars from programs such as Medicare and Social Security; they are divided over whether to bring in new tax revenue, such as by closing corporate tax loopholes or increasing taxes for wealthy people.
The NAACP and other civil rights groups urged Obama to resist deep cuts to housing assistance or safety net programs, saying it would disproportionately hurt urban areas with high poverty and unemployment. The U.S. poverty rate stands at 14.3%, with the ranks of the working-age poor at the highest level since the 1960s. Some analysts say they believe the poverty rate will climb higher when new figures are released in September.
"Typically in recessions, minorities suffer from being last hired and first fired. They are likely to lose jobs more rapidly at the beginning of the recession, and are far slower to gain jobs as the economy recovers," said Roderick Harrison, a former chief of racial statistics at the Census Bureau who is now a sociologist at Howard University.
The numbers are based on the Census Bureau's Survey of Income and Program Participation, which sampled more than 36,000 households on wealth from September-December 2009.
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