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

July 28, 2011

Ever since Barack Obama was elected as President the claim has been made that we live in a post-racial society. Even amongst many liberal commentators the idea that racial equality has reached some sort of social apex because a Black family inhabits the White House.

The reality for communities of color across the US however is quite different. A new study by the Pew Research Center shows that since 2005 the wealth gap has increased throughout the US, particularly along racial lines.

In looking at census data from 1984 to 2009, researchers found that there has been an increase in the wealth gap between Blacks and Whites of 19 to 1. In 1984 the gap was 12 to 1 and as low as 7 to 1 in 1995. The biggest change has been between 2004 and 2009. The same is true in the gap between Hispanics and Whites, where in 2004 there was a 7 to 1 wealth gap and by 2009 that gap grew to 15 to 1.

Other key findings from the report:

Hispanics: The net worth of Hispanic households decreased from $18,359 in 2005 to $6,325 in 2009. The percentage drop—66%—was the largest among all groups. Hispanics derived nearly two-thirds of their net worth in 2005 from home equity and are more likely to reside in areas where the housing meltdown was concentrated. Thus, the housing downturn had a deep impact on them. Their net worth also diminished because of a 42% rise in median levels of debt they carried in the form of unsecured liabilities (credit card debt, education loans, etc.).

Blacks: The net worth of black households fell from $12,124 in 2005 to $5,677 in 2009, a decline of 53%. Like Hispanics, black households drew a large share (59%) of their net worth from home equity in 2005. Thus, the housing downturn had a strong impact on their net worth. Blacks also took on more unsecured debt during the economic downturn, with the median level rising by 27%.

Whites: The drop in the wealth of white households was modest in comparison, falling 16% from $134,992 in 2005 to $113,149 in 2009. White households were also affected by the housing crisis. But home equity accounts for relatively less of their total net worth (44% in 2005), and that served to lessen the impact of the housing bust. Median levels of unsecured debt among whites rose by 32%.

The report does not provide much data state by state, but there is some information that looks at the median home prices state by state. According to the Pew study, “From the end of 2005 to the end of 2009, median home prices decreased by more than 30% in five states: Nevada (down 49%), Florida (38%), Arizona (38%), California (37%) and Michigan (34%).

We do know that the racial break down of children living in poverty based on a report Kids Count 2010. According to that report, “Almost one of every two African American children was mired in poverty and more than one of every three Hispanic children, compared with one in seven white non-Hispanic children.”

All this data is not suggesting that the Obama administration is to blame for the increase in the wealth gap between Whites and racial minorities, especially since the data only includes one year of the current administration. What it does say is that the trend is not on the decline and according to a report by the group United for a Fair Economy the trend is even worse in the past year.

What this data should say to people who care about racial justice is that institutional racism is deeply entrenched and statistically has grown worse for African Americans and Hispanics in the last 30 years. It also suggests that the emphasis on diversity in this society is not the same as racial justice and that maybe we need to challenge our understanding of house race and class intersect in this society.

 

3 Comments leave one →
  1. Y.B. Ordinary permalink
    July 28, 2011 3:58 pm

    I found it interesting that the other four states to see big declines in housing values were also states that had seen huge increases in home prices (like 25-40% annually) in the years 2004-2009. So the recent declines in those states were more of a “balancing” of prices against unsustainable price run-ups.
    This was not true in Michigan. Our housing valuation increases were more modest, in the 10% range (still too high, but not so outrageous). Once again, Michigan leads the way in a downward spiral. To my thinking, this state (and its poorest citizens) has never recovered from the Bush recession of 2001-2002, when Bush’s tax cuts for millionaires & billionaires and corporate deregulation first began to work their magic.

  2. John Wacape permalink
    July 31, 2011 2:40 am

    Remove the Wealthiest 2% from the equation and run it again and you’ll find the ratio shrinks considerably. Look at the difference between the wealthiest Whites and rest of the Whites and you will see the same increasing ratios between the two groups

    Point being making this Black versus White and Hispanic versus White only plays into the hands of the Wealthy Elitists. The real issue here is the Wealthy Elitists against all the rest of us irregardless of skin tone or Race or any other artificial dividing lines the Wealthy Elitists have dreamed up to keep us at each others’ throats while they rape and plunder everything in sight.

    This isn’t about Race, it’s about “Class”

    Anyway that’s how this ‘half breed’ White and American Indian sees it

    And remember, it’s only called Class Warfare when we dare to fight back

    Mitakuye Owasin (We are all related)

  3. Jeff Smith permalink*
    July 31, 2011 12:12 pm

    John, I agree that this is also about class, but to ignore the fact that more Blacks and Latinos are disproportionately living in poverty discounts that there is any institutional racism. I think it is important to always have a race, gender and class analysis when looking at these larger issues.

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