Minorities Fall Further Behind Whites in Wealth During Economic Recovery
By Tanzina Vega
The wealth gap between minorities and whites has continued to increase in the midst of the economic recovery, according to a report by the Pew Research Center that was released Friday.
According to the report, which analyzed data from the Survey of Consumer Finances from the Federal Reserve, the median net worth of white households in 2013 was $141,900, about 13 times that of black households at $11,000.
In 2007, when the recession began in the United States, the median net worth of white households was $192,500, or 10 times that of black households at $19,200.
For Hispanics the numbers are similar, albeit slightly higher, than those for blacks. In 2007, the median net worth of a Hispanic household was $23,600, and in 2013 it was $13,700.
“The gaps are big, and they are also persistent,” said Rakesh Kochhar, the associate director for research at Pew’s Hispanic Trends Project and one of the report’s authors. In the last 30 years, net worth for white American households has hovered around $100,000, or six to eight times as high as net worth for blacks, Mr. Kochhar said.
The survey has been conducted every three years since 1983, with the largest wealth gap between blacks and whites recorded in 1989. That year, the median net worth of white households was 17 times as large as that of black households and 14 times that of Hispanic households.
Wealth is defined as the value of an accumulated sum of assets that could include income, financial products like stocks and bonds, retirement accounts or real estate subtracted from the debt that is owed against those assets. It is built up over time and tends to increase with age, Mr. Kochhar said. This in part explains the widening racial gap, because blacks tend to earn less than whites and have less assets than whites do to pass on to future generations.
According to the Federal Reserve data, the median income of minority households fell 9 percent from 2010 to 2013, compared with 1 percent for whites. Homeownership, also a factor in the creation of wealth, fell 6.5 percent for minority households from 2010 to 2013, compared with 2 percent for whites.
A “legacy of discrimination,” including lower levels of education and depressed property values in certain minority communities, has played a role in the widening wealth gap, Mr. Kochhar said.
A slight increase in net worth of Hispanics over blacks can partly be explained by geography, he said. Hispanics are more concentrated in states with higher home values like California, New York and Florida; blacks may own homes in Southern states with lower home values.
While all American households have lower assets, the decrease has been more significant among minority households, the report said.
The Hispanic population is also likelier to be younger and likelier to be immigrants, who often take 20 to 30 years to settle into a new country before beginning to accumulate wealth, Mr. Kochhar said.