Wealth gap is widening between races
According to a CNN report, the wealth gap between white American households and those of blacks and Hispanics has doubled in the last seven years; and it is growing wider.
Whites 22 times richer
The U.S. Census bureau reports that the average black household earned $4,995 in 2010. By contrast, white households earned a median of $110,729. That is 22 times higher than their African American counterparts. In 2005, the net worth of whites was 11 percent higher than blacks.
A widening gap between the wealth of Hispanic and white households is nearly as acute. The average Hispanic family had $7,474 in 2010, meaning the average white home had 15 times as much. In 2005, whites had 8 times greater wealth than Hispanics.
Hit harder by housing meltdown
Whites fared the Great Recession better than did blacks and Hispanics. White households lost a median 23 percent of net worth between 2005 and 2010. Combined, the wealth of black, Hispanic and Asian homes fell by an average 60 percent.
Blacks and Hispanics have traditionally been less wealthy than their white counterparts. As a result, home equity makes up a greater part of their wealth than it does for whites. The housing bubble prior to the Great Recession saw ownership rates grow among blacks and Hispanics. Most of those homes were bought with high-cost subprime loans, so when the bubble burst, they took a much harder hit than did whites.
Blogger Rita Rizzo also notes a study by the Pew Institute, which, in addition to the mortgage crisis, cites massive job losses in the blue collar and public sectors as impacting blacks and Hispanics to a far greater degree than it did whites.
Blacks and Hispanics traditionally also have higher unemployment rates than whites. Whites are currently unemployed at 7.4 percent. However, 13.6 percent of blacks are without work, as well as 11 percent of Hispanics.
Since they earn less than whites, blacks and Hispanics have traditionally been less educated, leading to a racial skills gap among job-seekers. Roland Fryer, an economics professor at Harvard University, said in a National Public Radio interview in October:
“The gaps in education that you see now has been going on for some time, and it’s not getting a lot better… So as you see labor markets tighten… people are making very, very careful judgments of whom to hire home to fire… And when that happens, when people can’t afford to get a hiring decision wrong, you’re going to see gaps exacerbate as long as you have an underlying skill gap.”
The result of widening racial wealth disparity will be felt for some time, says Roderick Harrison, senior research scientist at Howard University.
“The implications will be with us into the next generation, which will have greater difficulty in getting the kinds of jobs needed to start saving and building wealth.”