The wealth gap between white households and Hispanic and African-American families in the United States has widened significantly, with the last recession inflicting a heavy toll on minority households, a new study said last week.
An analysis of US census data by the Pew Hispanic Centre revealed that the 2001 economic downturn deepened a legacy of economic discrimination, with Hispanics and African-Americans harder hit and taking longer to recover.
By 2002 that produced a further deterioration of the economic divide, where minorities own only a fraction of the wealth enjoyed by whites. The median net worth of white households was $88 651, or 11 times greater than Hispanic families ($7 932) and 14 times greater than African-American families ($5 988).
”We have always known about the wealth gap, but what is new and disturbing is that the gaps are increasing,” said Roderick Harrison, a demographer at the Joint Centre for Political and Economic Studies. ”What you are seeing here are the historic disadvantages of black and Hispanic populations from generations ago being carried over.”
The Pew study focuses on the damage caused to Hispanic and African-American aspirations during an economic downturn.
Between 1999 and 2001 rising unemployment reduced the net worth of Hispanics and African-Americans by 27%. That left minority families without a financial cushion, and far more vulnerable to economic reversals than white households.
”Many of them are living on the edge and more than one-quarter have zero or negative wealth,” said Rakesh Kochhar, author of the report. ”They don’t have the cushion, and that makes recovery harder.”
Harrison argues that minority families are also the last to benefit from times of economic expansion. Employers are more likely to hire whites, and whites also move more quickly to take advantage of a buoyant stock market.
That intensifies the effects of a 30% wage gap between white and minority workers, making it that much more difficult for Hispanics and African-Americans to overcome traditional disadvantage.
Crucially, minority families are far less likely to own their own homes — in white households ownership rates are 74%. Instead, a legacy of discrimination and other barriers have conspired to help keep African-American and Hispanic families as renters.
Home ownership rates among both groups is at 47%. Some families cannot even aspire to home ownership; more than a quarter of black and Hispanic households own no assets beyond a car.
”A young white couple might have the advantage of inheritance, their parents may give them a down payment for house, or the bank will look on them more kindly, but a young black family doesn’t have that. It is just a little harder to enter the mainstream, and home ownership is the key,” Kochhar said.
The Hispanic population has also been concentrated in areas with high housing costs, such as New York City and Los Angeles, making it more difficult to get on the property ladder.
But the report suggests the outlook for the Hispanic population could brighten, as the immigrant community puts down roots in the US.
A younger generation of Hispanics is becoming better educated and moving into better paying jobs; the community is also dispersing to other towns around the country, where housing is more affordable. — Â