Recession

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July 26, 2011 | 11:13 AM | By

Racial Wealth Gap Reaches Historic Levels

MoneyBlogNewz / Flickr

The wealth gap between whites and minorities has always been wide, but the recession has deepened the division to a record level.

The racial difference in wealth — how much a person owns minus any debt — is the most severe its been since the government began publishing the data in the 1970s, according to a new Pew Research Center report.

Members of the black middle class have seen many of the economic gains they’ve achieved over the past few decades erased or reversed during the recession, and black households have much less wealth than other groups. But Hispanic households experienced the biggest drop in household wealth during the recession:

Median Net Worth of Households
2005 2009 Percentage Change
White $134,992 $113,149 -6 percent
Black $12,124 $5,677 -53 percent
Hispanic $18,359 $6,325 -66 percent
(Source: Pew Research Center)

The housing crisis is one of the principal causes of the gap widening, according to the report. Hispanics and blacks had more of their wealth tied up in home equity, so when home values dropped or homes went into foreclosure, they saw much of their wealth disappear.

The study examined wealth between 2005 and 2009. Since then, housing prices have risen, particularly in D.C. But an increased home value may not be enough to offset lasting effects of the recession on minorities, as NPR reports:

Tom Shapiro of Brandeis University, who has studied the racial wealth gap for years, says he’s concerned about the long-term impact. He thinks the wealth gap will likely grow even more, unless the economy turns around soon.

“If a family doesn’t have enough for a safety net for itself, it can’t think about moving forward or moving ahead,” he says.

That means fewer resources for things like education or buying a house or starting a business. Shapiro says that only puts the average minority family further behind, and less able to weather the next economic storm.

FILED UNDER: The People, Economy, Recession, Wealth
July 11, 2011 | 2:49 PM | By

Five Factors Causing the ‘Decimation’ of the Black Middle Class

Alex Wong / Getty Images

The Rev. Jesse Jackson (L) hold the hands of Angela Walker (R) in Suitland, Md. after a rally against foreclosures in the hard-hit, majority-black county. Walker is recently unemployed and facing foreclosure.

The recession from 2007 to 2009 has hit nearly all sectors and communities in the American economy, but minorities, and particularly African Americans, may have been affected the most. Jesse Washington’s recent Associated Press story about how the recession reversed many of the economic gains that took the black community many years to attain contains some grim statistics: in 2009, the average black household had only 2 cents for every dollar of wealth held by the average white household, and in April 2010, black male unemployment hit its highest point since the government began tracking it in 1972.

“History is going to say that the black middle class was decimated,” Maya Wiley, director of the Center for Social Inclusion, tells Washington. “But we’re not done writing history.”

What has led to such extreme losses? Here are five factors contributing to the “decimation” of the black middle class:
FILED UNDER: History, The People, Black Middle Class, Economy, Housing, Recession, Unemployment
April 20, 2011 | 11:39 AM | By

Are White Men this Recession’s Quiet Sufferers?

This week’s Newsweek coverage story “Can Manhood Survive the Recession?” paints a grim picture for educated, white men:

Through the first quarter of 2011, nearly 600,000 college-educated white men ages 35 to 64 were unemployed, according to previously unpublished Labor Department stats. That’s more than 5 percent jobless—double the group’s pre-recession rate. That might not sound bad compared with the plight of younger, less-educated workers and minorities, but it’s a historic change from the last recession, when about half as many lost their oxford shirts. The number of college-educated men unemployed for at least a year is five times higher today than after the dotcom bubble.

Flickr: Wirawat Lian-udom

White men are faring better than most in this recession.

If the idea is to have a competition over who has it the worst, the numbers make it quite clear: that’s one contest white men aren’t going to win. According to the U.S. Department of Labor, the unemployment rate among whites was 8 percent in January — that’s almost half of what it was for blacks, 15.7 percent. Latinos didn’t fare well either with an unemployment rate of 11.9 percent.

Here in D.C., the unemployment rate citywide was 9.6 percent in January. In predominately black Wards 7 and 8, it ranged between 20 to 18 percent, and in predominately white Ward 3, it was 3.6 percent.

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FILED UNDER: Media, The People, Newsweek, Recession