The Wealth Gap Between Races Is Getting Wider
As the world recovers from the Great Recession, it’s clear that not everyone is bouncing back at the same rate. We’ve previously covered how women are fairing better than men, but minorities, on the other hand, are hurting more than white Americans.
The wealth gap between white and black Americans has actually widened in the past few years. In 2013, white households held 13 times the median wealth of black households, while in 2010 it was eight times, according to a new Pew Research Center study, using data from the Federal Reserve’s Survey of Consumer Finances. The median net worth of a white household was $141,900 in 2013, compared to $11,000 for a black household.
The gap between white and Hispanic households is also widening — the difference increasing from nine times to 10 times from 2010 to 2013. Let’s take a look at how and why the effects of the recession are disproportionately hurting minorities.
How we got here
This isn’t the worst wealth gap the country has seen. In 1989, whites held 17 times as much wealth as blacks. It dipped significantly by 1992, when white households’ net worth was about seven times as much as black households. The narrowest the wealth divide ever got was in 1998 and 2001, when white households were six times as wealthy as black households.
But, still, by 2007, the start of the recession, white households still had a median net worth of $192,500, which was 10 times that of black households — $19,200. When the recession struck, things got disproportionately worse for minorities. According to FiveThirtyEight, “Black and Hispanic families were also hit harder by the recession. Their incomes took a bigger hit, they were more likely to lose their homes to foreclosure and they were disproportionately affected by job cuts in the public sector. The unemployment rate peaked at 9.2 percent for whites during the recession versus 16.9 percent for blacks and 12.9 percent for Hispanics.” That loss of income is having a lasting effect.
NPR points out the great financial hit that minorities took in comparison to whites. Whites went from having a median net worth of $192,500 in 2007 to one of $141,900 by 2013, a decrease of 26.3%. But, proportionally, blacks and Hispanic households lost more -– both decreasing in value by about 42%. Black households went from a median net worth of $19,200 in 2007 to just $11,000 in 2013. The mean for Hispanic households was $23,600 in 2007 and $13,700 in 2013.
Over the past few years, the worth of American households has stayed relatively the same, as the recovery is going slowly. After falling from a median net worth of $135,700 to $82,300 from 2007 to 2010 — that’s a decrease of nearly 40% — the typical household held its ground while not improving from 2010 to 2013. In 2010, the typical household had a net worth of $82,300, and by 2013, it dipped just slightly to $81,400.
Breaking it down by race, however, you’ll see the changes. White households saw an increase of 2.4%, their values rising from $138,600 to $141,900, while the median wealth of non-Hispanic black households decreased 33.7%, from $16,600 in 2010 to $11,000 over the same time period. Hispanics saw their median wealth decrease by 14.3%, from $16,000 to $13,700. For all races, median wealth is still less than its pre-recession level.
Whites have the advantage, also, of being more likely to own stocks, according to CNN Money. As the stock market recovered, they’ve seen more of an increase, while blacks and Hispanics tend to have more invested in real estate, which has not been rebounding as well. That aside, minorities are even investing in homes less as of late, most likely still reeling from recession-era loss of homes and joblessness — only 47.4% of minorities were homeowners in last year, while 73.9% of whites owned homes.
While the 2013 data is not the largest wealth gap recorded by Pew, it’s the largest in 24 years and greater than before the recession, showing an unfortunate trend. This growing financial inequality only puts more stress on racial tensions and the conversations about inequality in America today.