Worsening wealth inequality by race

[J. Sharpe James, J.D.]

Worsening wealth inequality by race
By Tami Luhby @CNNMoney June 21, 2012: 1:09 PM ET

http://money.cnn.com/2012/06/21/news....htm?hpt=hp_t2

The Great Recession has widened the wealth gap, and race is a major factor.


NEW YORK (CNNMoney) -- White Americans have 22 times more wealth than blacks -- a gap that nearly doubled during the Great Recession.

The median household net worth for whites was $110,729 in 2010, versus $4,995 for blacks, according to recently released Census Bureau figures.

The difference is similarly notable when it comes to Hispanics, who had a median household net worth of $7,424. The ratio between white and Hispanic wealth expanded to 15 to 1.

The gap between the races widened considerably during the recent economic downturn, which whites weathered better than blacks, Hispanics and Asians.

The latter three groups saw their median household net worth fall by roughly 60% between 2005 and 2010, while the median net worth for white households slipped only 23%.

This allowed whites to leap ahead of Asians as the race with the highest median household net worth.

CNN iReport: Are you feeling the drop in net worth?

The racial wealth divide is nothing new. Black and Hispanic Americans have historically had lower incomes, higher unemployment and less education.

That makes it more difficult for these groups to save money and put their capital to work building wealth, said Tatjana Meschede, research director of the Institute on Assets and Social Policy at Brandeis University.

The Great Recession exacerbated the problem. In 2005, the net worth difference wasn't quite as stark. Whites had 12 times more wealth than blacks and 8 times more than Hispanics.

The main reason blacks and Hispanics did not fare as well during the economic downturn is that home equity makes up more of their wealth than it does for whites. The housing bubble that preceded the collapse pushed up homeownership rates among blacks and Hispanics, who relied more heavily on high-cost subprime loans to finance their purchases.

As a result, the implosion of the real estate market had a more devastating impact on black and Hispanic communities.

Asians, meanwhile, are more concentrated on the West Coast, which was hit harder by the mortgage meltdown. And the arrival of new Asian immigrants in the last decade contributed to the decline in overall wealth, according to Rakesh Kochhar, co-author of the Pew Research Center report on wealth.

Pew found that in 2005, home equity made up nearly two-thirds of the net worth of Hispanics and 59% of blacks, but only 44% of whites.

Blacks and Hispanics are also less likely to have assets in the financial system, such as savings accounts or stocks, Kochhar said.

And these groups also suffer from far higher unemployment rates than whites, whose unemployment rate is 7.4%, below the national average. Blacks, on the other hand, have a 13.6% unemployment rate and Hispanics, 11%.

The widened wealth chasm could have major ramifications going forward, experts said.

Having less wealth and home equity means it will be more difficult for blacks and Hispanics to send their children to college, which gives them a leg up on landing good jobs, said Roderick Harrison, senior research scientist at Howard University. That will further extend the wealth gap.

"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," Harrison said.

[Make Newark Clean]

Not only has paltry black wealth in this country been decimated by this Depression, black income has been cut disproportionately through states' elimination of public sector jobs. Studies have shown that college-educated African Americans fare about as well in the private employment market as a white with a high school diploma and, in some cases, no better than a white man with a criminal record. The public sector took up some of the slack. Before the vaunted Ronald Reagan's elimination of Federal revenue sharing and other programs designed to assist in times of need, many of those public-sector layoffs would have been averted.

Another big blow against the black community is the technological revolution affecting the post office. Beyond that, however, Congress seems intent on killing postal jobs prematurely. With the loss of fair-wage manufacturing jobs like General Motors once provided in Linden, coupled with the trends described above, I worry that the African American middle class is in FULL RETREAT.

Soon they'll declare an end to this economic downturn. (Fast, if Romney is elected.) And while others will have somewhat recovered, African Americans will be laid even lower than before. It's already happening. Linden's predominantly black sections NEVER contained abandoned properties. Although not limited to that part of town, they proliferate -- sometimes several on the block. Most of those homes will remain untouched by vandals, and caring neighbors likely will not allow garbage to collect. But for how long? How soon until desperadoes take advantage of this new phenomenon and begin emptying houses of pipes and other salvagables? It's happens more frequently now. Breakdowns in comity are not genetically predetermined, but happens year after year of overwhelming deprivation. When the greedy remove everything, the poor prey on themselves. I am very worried, you might even say, "nauseated," by this unaddressed inequity.

Will there be enough alms from private enterprise to help the hopeless? Will hundreds of millions of corporate welfare enrichment of multinational corporations finally stem the tide? Will there be enough prisons to contain rising Defeatism?

[Make Newark Clean]

Here's the trend across the river:

Job Losses Show Wider Racial Gap in New York

While unemployment rose steadily for white New Yorkers from the first quarter of 2008 through the first three months of this year, the number of unemployed blacks in the city rose four times as fast, according to a report to be released on Monday by the city comptroller’s office. By the end of March, there were about 80,000 more unemployed blacks than whites, according to the report, even though there are roughly 1.5 million more whites than blacks here.

So blacks top out in unemployment and stop-and-frisks. Perfect.

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