One Recession, “Two Societies”
By Ralph De La Cruz, Florida Center for Investigative Reporting
Everybody’s hurting. But, as usual, the level of hurt isn’t quite equal.
Last week, the Pew Research Center released a study that looked at how white, black and Hispanic households have weathered the current financial storm.
All groups experienced significant drops from 2005 to 2009, the years looked at by Pew. But a particularly steep tumble by black and Hispanic households has pushed the wealth gap to thehighest level since the U.S Census began breaking down information by ethnicity.
The median net worth of white households was 19 times greater than that of black households and 15 times greater than Hispanic households. Asian families’ net worth actually had the steepest drop, from $168,103 (which led all groups in 2005) to $78,066 – still almost 13 times greater than Hispanics.
When the groups were first compared in 1984, white households’ net worth was 12 times that of blacks and eight times greater than Hispanic households.
That the gap has widened shouldn’t be too much of a surprise, given that blacks and Hispanics have historically struggled to keep up with the economic gains of whites. Because of that economic head start, whites have a higher level of participation in the stock market, which has performed much better in the four-year period than real estate and other investments. In the last six months of 2009, Businessweek points out, the Standard & Poor’s 500 Index climbed 21 percent.
Time magazine notes that, “the demographic groups that have perhaps lost the most in the Great Recession are two that historically lag behind the rest of the country on key financial issues like income, savings and percentage of homeownership: African-American and Hispanic households.”
The last ones lifted are typically the first ones to fall.
And nowhere is that more evident than in the housing market.
“From 2005 to 2009, the median level of home equity held by Hispanic homeowners declined by half — from $99,983 to $49,145 — while the homeownership rate among Hispanics was also falling, from 51% to 47%,” read the Pew report. “A geographic analysis suggests the reason: A disproportionate share of Hispanics live in California, Florida, Nevada and Arizona, which were in the vanguard of the housing real estate market bubble of the 1990s and early 2000s but that have since been among the states experiencing the steepest declines in housing values.”
The effect of the nation’s real estate woes is exacerbated for Hispanics by the fact that, as Dan Fastenberg reminds us on AOL.com, blacks and Hispanics are concentrated in manufacturing and construction – two industries particularly hard hit in this recession.
So a widening of The Gap during a real estate meltdown really shouldn’t come as a surprise.
But even if the gap isn’t surprising, the median net worth of black and Hispanic families should be.
The average white household had a net worth of $113,149. The typical Hispanic family’s net worth was $6,325, and it was just $5,677 for black households. That’s a total net worth of about $6,000 per family. And a third of black and Hispanic households had zero or negative net worth.
And remember that those figures are from 2009, when states such as Florida were just beginning to really feel the collapse.
Roderick Harrison, a former chief of racial statistics at the Census Bureau told the Associated Press: “I am afraid that this pushes us back to what the Kerner Commission (a 1960s presidential commission that examined U.S. race relations) characterized as ‘two societies, separate and unequal. The great difference is that the second society has now become both black and Hispanic.”
Ralph De La Cruz, is a reporter/blogger for Florida Center for Investigative Reporting, a nonprofit, digital and bilingual investigative journalism organization working to expose, corruption, waste and miscarriages of justice. To learn more about FCIR, go to fcir.org and to see the original blog click here.
