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Wealth gap widens between whites, minorities

Because of the housing collapse, the spread in median net worth is the largest it's been in the quarter-century it's been measured.

By MSN Money Partner Jul 27, 2011 12:15PM

This post comes from Seth Fiegerman at partner site MainStreet.

 

The wealth gap between whites and minorities grew to record levels during the recession as black and Hispanic households were hit particularly hard by the collapse of the housing market.

 

The median wealth of white households in 2009 was $113,149, roughly 20 times the median wealth of black households and 18 times the wealth of Hispanic households, according to an analysis of census data by the Pew Research Center. This marks the largest wealth gap in the 25 years such data has been collected. Post continues after video.

As the data show, white households did lose some of their wealth during the recession, but they did not suffer nearly as steep a drop as minority households. Between 2005 and 2009, at the tail end of the recession, the median wealth of Hispanic households dropped to just $6,325 from $18,359, or about a third of what it once was. Likewise, the wealth of black households was effectively halved in those years, dropping to $5,677 from $12,124.

 

White households, on the other hand, saw their wealth decline by about $21,000, a loss of roughly 15%.

 

For all three groups, much of the wealth decline has to do with the turbulent housing market. Home equity accounted for the majority of the net worth for black and Hispanic households, with the latter being slightly more financially dependent on the value of their homes. But between 2005 and 2009, black households saw the value of their home equity drop to $59,000 from $76,910, while the value of home equity held by Hispanics was halved to less than $50,000.

 

White households experienced a fairly significant decline in home equity as well -- with housing values dropping from $115,364 in 2005 to $95,000 in 2009 -- but home equity accounted for less than half of their total wealth, meaning they had other assets such as savings, stocks and retirement accounts to offset some of the loss.

 

Indeed, the report speculates that the wealth gap could have continued to widen since 2009 as the economic recovery has helped boost stocks and other investments, which helps white households, while the housing market continues to languish, hurting minorities.

 

"Given that a much higher share of whites than blacks or Hispanics own stocks -- as well as mutual funds and 401k or individual retirement accounts -- the stock market rebound since 2009 is likely to have benefited white households more than minority households," Pew concluded.

 

More on MainStreet and MSN Money:

3Comments
Jul 27, 2011 2:14PM
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So, what's the real point of this article ? The whites are better off ? We've earned it  the hard way, just as, I might add , many ( but not enough ) Black Americans and Hispanic Americans have. Economic downturns due happen, some are prepared financially and some are not. Life goes on.
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I see these Black-white ratio household income statistics as utterly shocking. "Two cents" out of every dollar. It's a shameful figure. The Pew study is, in fact, emphaticly more evidence of how healthy and alive race discimination in America is. It's thriving in the banking industry with respect to loans. It is a powerful force in how law enforcement operates. Eight years of George Bush and the republicans have brought minorities to this point. The only way America will change and live up to its creed is for Blacks to forcefully band together in numbers on economic and social issues and demand equal opportunities. Otherwise, if this ugly trend continues America will be faced with the social unrest it deserves. Seems to me Blacks ought to be very tired of being America's whipping boy for 300 years.
Jul 27, 2011 2:55PM
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Economic downturns due happen.......Yes but this downturn was created by none other than your own U.S. govt. It all started in 2004, when the republicans controlled all three branches of Govt. The SEC which is a agency of the federal govt. created a new law, to allow the ten largest banks to write mortgages for thirty to forty percent of there capital. Trillions of dollars of mortgages were written, many to subprime borrowers. Subprime lending increased from nine percent of the total loans, to over twenty percent overnight. Then the housing bubble popped, and we had the financial crisis in 2008, when two of the largest invest banks, Lehman Bros. and Bear Stearns, went bankrupt. This started the great recession which we are still in. All of the above information can be verified by internet research.
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