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07/31/11 5:58 AM

#149345 RE: F6 #147141

Wealth Gaps Rise to Record Highs Between Whites, Blacks, Hispanics


Twenty-to-One
Released: July 26, 2011
http://pewsocialtrends.org/2011/07/26/wealth-gaps-rise-to-record-highs-between-whites-blacks-hispanics/1/


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Wealth in America: Whites-minorities gap is now a chasm

The housing crisis hit Hispanics and blacks much harder than it did whites

By Mike Brunker
Projects Team editor
msnbc.com
updated 7/26/2011 7:33:44 PM ET 2011-07-26T23:33:44

WASHINGTON — As Congress and the White House wrestle whether to raise taxes for the wealthiest Americans, a new analysis of Census data shows that the wealth gaps between whites and blacks and Hispanics widened dramatically during the recession.

The analysis by the Pew Research Center [ http://msnbcmedia.msn.com/i/msnbc/sections/news/Wealth_Report.pdf ], released on Tuesday, found that from 2005 to 2009, inflation-adjusted median wealth fell 66 percent among Hispanic households and 53 percent among black households, compared with a 16 percent decline among white households.

Those declines increased the wealth gap between white and minority households to the largest since the census began collecting such data in 1984. The ratio of wealth for whites to blacks, for instance, is now roughly 20 to 1, compared to 12 to 1 in the first survey 25 years ago and 7 to 1 in 1995, when a booming economy lifted many low-income Americans into the middle class.

The wealth ratio for whites to Hispanics was 18 to 1 in 2009, also up from 7 to 1 in 1995, the Pew analysis found.

The declines from the recession left the median black household with $5,677 in wealth (assets minus debts, where assets include items like a car, a home, savings, retirement funds, etc.) and the typical Hispanic household with $6,325. White households, by comparison, had $113,149, the study found.

Sliced another way, the data from the Census Bureau’s Survey of Income and Program Participation (SIPP), showed that 35 percent of black households and 31 percent of Hispanic households had zero or negative net worth in 2009. The comparable rate for white households was 15 percent.

The SIPP income questionnaire is considered to provide the most comprehensive snapshot of household wealth by race and ethnicity.

The Pew analysis said the housing crisis was largely to blame for the widening gulf. The median level of home equity held by Hispanic homeowners declined by half from 2005 to 2009, from $99,983 to $49,145 it found. By comparison, white homeowners saw their median equity decline from $115,364 in 2005 to $95,000 in 2009. Black homeowners’ median equity fell from $76,910 to $59,000 over the same period.

The study said the sharper decline among Hispanics happened because a large share of Hispanics live in California, Florida, Nevada and Arizona, which were among the states hardest hit by the housing crisis.

Other studies [ http://www.nytimes.com/2007/10/15/nyregion/15subprime.html ] have noted that blacks and Hispanics lost so much more home equity because they were far more likely to be sold a high-cost, sub-prime loan, regardless of their credit histories. Those mortgages now have the highest foreclosure rates.

It also noted that because whites are more heavily invested in the recovering stock market than blacks or Hispanics, the former had recovered a higher percentage of the wealth lost to the recession.

National Urban League President and CEO Marc Morial called the report a “wake-up call” that minority communities need more investment in long-term job creation.

"A paramount issue for this nation for the 21st century is to ensure the narrowing and closing of the racial wealth gap," Morial told the Associated Press on Tuesday, a day before the National Urban League opens its annual convention in Boston. "It has deep social implications. It has deep political implications."


In Washington, the wealth gap has been a major point of friction in talks about raising the debt ceiling and putting the nation on sounder fiscal footing. President Barack Obama and Democrats have sought a variety of ways to increase revenue, all aimed at those in the upper income bracket.

The president has proposed closing loopholes in the tax code, such as breaks for owners of private jets and for oil companies as well as higher income tax rates on wealthier individuals and families. Republicans have made resistance to any tax increases a focal point in the debate, arguing that raising taxes in a recession is an impediment to creating jobs. Neither plan currently under consideration contains any tax increases.

© 2011 msnbc.com

http://www.msnbc.msn.com/id/43887485/ns/business-eye_on_the_economy/ [with embedded video of Nightly News segment, and comments]


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Wealth gap widens: Whites' net worth is 20 times that of blacks


A group undergoes computer training on July 12 at STRIVE, a program in Harlem, New York, designed to prepare the unemployed for new jobs. A new study has found that blacks and Hispanics have lost a greater share of their net worth compared to whites in recent years as a result of the troubled economy.
Ann Hermes / The Christian Science Monitor


All racial groups lost ground in the recession, but blacks and Hispanics lost a bigger share of their net worth, a new study finds. As a result, the wealth gap is at its widest in at least 25 years.

By Patrick Wall, Contributor / July 26, 2011

New York

The wealth gap between whites on one hand and blacks and Hispanics on the other stretched during the Great Recession to its widest level in a quarter-century, according to a new analysis of Census data. All racial groups saw their net worth shrink during the downturn, but that of whites shriveled much less, with the result that their median net worth is now about 20 times that of blacks and 18 times that of Hispanics.

The recession, which included a collapse in home values and high unemployment, took the greatest toll on minority wealth. From 2005 to 2009, median wealth fell by 66 percent among Hispanic households and 53 percent among blacks, compared with 16 percent among whites. The losses left Hispanic and black wealth at their lowest levels in at least 25 years.

“It’s not so much that the wealthy were busy getting richer – it’s that they slipped back less than those at the other end of the ladder,” says Rakesh Kochhar, a demographer and co-author of the analysis released Tuesday by the Pew Research Center.

In 2009, the median net worth of white households was $113,149, compared with $6,325 for Hispanics and $5,677 for blacks. That gap is about twice as large as the 1 to 10 white-to-minority wealth ratio that prevailed during the two decades before the recession.

The housing crash that began in 2006 reduced home values for most American homeowners, but it hit minority families particularly hard because more of their wealth is tied to their homes.

“For nonwealthy people in the US, the huge preponderance of the wealth they have is in home equity,” says Thomas Shapiro, a law and social policy professor who directs the Institute on Assets and Social Policy at Brandeis University in Waltham, Mass.

Among Hispanics, about two-thirds of their household wealth in 2005 derived from their homes. When the housing bubble burst, their median level of home equity declined by about half – from $99,983 to $49,145 – taking much of their wealth with it. Home equity for blacks – which accounted for about 59 percent of their household net worth in 2005 – fell by 23 percent, from $76,910 then to $59,000 in 2009.

A major reason many Hispanics were hit so hard by the housing downturn is where their houses are located – disproportionately in California, Florida, Nevada, and Arizona. In those states during the housing bubble of the 1990s and early 2000s, many Hispanics worked construction jobs and bought homes. Since the housing crash, construction jobs have evaporated and home prices in those states have seen the steepest declines.

“As the housing crisis slammed into America,” says Dr. Shapiro, “it slammed harder” in those states, as well as in low-income communities. Shapiro also notes that minorities tend to be more recent homeowners, who have had less time to build up home equity.

Meanwhile, white families tend to own other assets in addition to homes, which add to their wealth.

“If you’re less wealthy, you’re more reliant on single assets,” says Mr. Kochhar. “If you’re more wealthy, you have multiple assets.”

Whites are three to four times as likely as Hispanics and blacks to own stocks and mutual fund shares, according to the Pew study. About 28 percent of white net worth in 2005 came from stocks and mutual funds, IRA, Keogh and 401(k) accounts, compared with 19 percent of net worth for blacks and 15 percent for Hispanics.

Minorities have also lost much of their wealth due to higher unemployment during and since the recession.

In June, the unemployment rate remained twice as high for blacks as whites – 16.2 percent compared with 8.1 percent – with the rate among Hispanics at 11.6 percent. Work hours and wages are also down across the board. As a result, families are forced to dip into savings or other assets or to borrow money to pay their bills.

Since the official end of the recession in mid-2009, the stock market has begun to rebound, but the housing market remains in a slump and unemployment has yet to drop much – meaning the wealth gaps persist.

“If anything,” says Kochhar, “one would suspect that the wealth gaps have increased a bit.”

Pew’s analysis is based on 2009 data from the Census Bureau’s Survey of Income and Program Participation (SIPP), which is considered the most comprehensive survey of household wealth by race and ethnicity. Household wealth, which is distinct from income, includes assets such as homes, cars, savings, and stocks, minus household debt.

© The Christian Science Monitor

http://www.csmonitor.com/USA/2011/0726/Wealth-gap-widens-Whites-net-worth-is-20-times-that-of-blacks


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How Cuts Will Change the Black Middle Class


Job seekers waiting to apply for work at the Port of Miami Tunnel. The black unemployment rate in the U.S. is 16.2 percent, compared with 8.7 percent for whites.
Joe Raedle/Getty Images


Room for Debate
July 25, 2011

Introduction

What will the shrinking of the public sector mean for the black middle class?

The black unemployment rate nationwide is 16.2 percent, far higher than the 8.7 percent rate for whites. Yet nearly 20 percent of black workers are employed by the government, according to numbers cited in an article [ http://blogs.the-american-interest.com/wrm/2011/07/12/obamageddon-coming-to-a-city-near-you/ ] by the political scientist Walter Russell Mead. With states and cities under pressure to cut back spending on public employees, what effect might lower benefits, and fewer jobs, have on the economic prospects for African-Americans in particular?

Debaters

Severe Hardship, Dashed Hopes
Michael Dawson
http://www.nytimes.com/roomfordebate/2011/07/25/how-budget-cuts-will-change-the-black-middle-class/within-the-black-middle-class-severe-hardship-dashed-hopes [with comments]

Consumers as Well as Employees
Mary Pattillo
http://www.nytimes.com/roomfordebate/2011/07/25/how-budget-cuts-will-change-the-black-middle-class/the-black-middle-class-as-employees-and-consumers [with comments]

The New Great Migration
Daniel DiSalvo
http://www.nytimes.com/roomfordebate/2011/07/25/how-budget-cuts-will-change-the-black-middle-class/the-black-middle-class-is-leaving-the-north [with comments]

It All Starts With the Vote
Katherine Tate
http://www.nytimes.com/roomfordebate/2011/07/25/how-budget-cuts-will-change-the-black-middle-class/cuts-are-palatable-because-some-blacks-are-in-office [with comments]

Look to the Private Sector
Walter Russell Mead
http://www.nytimes.com/roomfordebate/2011/07/25/how-budget-cuts-will-change-the-black-middle-class/blacks-need-to-look-to-the-private-sector [with comments]

The Vulnerable and the Comfortable
Karyn Lacy
http://www.nytimes.com/roomfordebate/2011/07/25/how-budget-cuts-will-change-the-black-middle-class/in-black-middle-class-the-vulnerable-and-the-comfortable [with comments]

Oddly Upbeat on the Economy
Ellis Cose
http://www.nytimes.com/roomfordebate/2011/07/25/how-budget-cuts-will-change-the-black-middle-class/blacks-seem-oddly-upbeat-on-the-economy [with comments]

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Related

Recession Study Finds Hispanics Hit the Hardest
http://www.nytimes.com/2011/07/26/us/26hispanics.html

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Copyright 2011 The New York Times Company

http://www.nytimes.com/roomfordebate/2011/07/25/how-budget-cuts-will-change-the-black-middle-class


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