Financial Inequality Widens: Net Worth of Minorities Has Plunged

‘Wealth gaps’ widen as net worth of blacks, Hispanics plunges

New research by the Pew Research Center of government data from 2009 shows that the median wealth of white households — the value of home equity and all other assets, minus debt — was 18 times that of Hispanic households and 20 times that of African-American households… [To express it more vividly, between 2004 and 2009, the median net worth of Hispanic households dropped by 66% (that is correct, 66%!), and Asian and African-American households by 53% (yes, 53%) compared to “only” a 16% decline for the median white household. Let’s take a closer look.] Words: 692

So says Rick Montgomery (www.KansasCity.com) in edited excerpts from an article* which Lorimer Wilson, editor of www.munKNEE.com (It’s all about Money!), has further edited ([  ]), abridged (…) and reformatted below  for the sake of clarity and brevity to ensure a fast and easy read. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement. Montgomery goes on to say:

The gaps between minority and white wealth always have been huge but they have more than doubled in breadth since the mid-1990s when the median white household enjoyed a net wealth of seven times that of the median Latino or black household. [Just look at the trend: 7 times more in the mid-90s to 18/20 times more in 2009!]

The wealth gap had been gradually narrowing since the 1980s, as more minorities acquired their own homes but the collapse of the housing market, persistent joblessness and uneven recovery since 2005 has have wiped out decades of incremental gains for Hispanic and African-American households. For minority households, median net worth shriveled by half over four years…

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The new figures reflect more than the recession punishing the chronic poor. As foreclosures, plunging home values and diminished retirement accounts battered the net worth of households across race and income categories, the very wealthy continued to pull away from the pack.

• In 2005, the top 10 percent of U.S. households held 49 percent of the nation’s wealth. In 2009 that share had grown to 56 percent.
• Net wealth of the median white household fell, too — from $134,992 in 2005 to $113,149 [-16%] four years later, Pew found but the losses to minority communities, proportional to what median households possessed in 2005, were staggering: the median worth of Hispanic households fell from $18,359 to $6,325 [-66%]. For black households, a $12,124 median worth dropped to $5,677 [-53%].
• Asian-American households — which in 2005 posted the highest median net wealth of any ethnic group, including whites — “lost their place at the top of the wealth hierarchy” by 2009, the report said. Their median net worth dropped from about $167,000 to $78,000 [-53%], leading the authors to conclude: “Like Hispanics, they are geographically concentrated in places like California that were hit hard by the housing market meltdown.”

Co-author Rakesh Kochhar said falling home values and higher rates of joblessness for minorities, including immigrants and refugees, were the major forces in driving down net worth. “People in minority communities are less likely to own their homes” than are whites, he said “but for those who do, the home is often the single dominant asset they own” [while according to] Tom Reynolds, a homelessness case manager in Mount Carmel, California,… a reversal of some progress for minorities as a whole [is due] to “the deindustrialization of America as it outsourced jobs typically held by ethnic minorities and lesser-educated whites”.…

*http://www.kansascity.com/2011/07/26/3039255/wealth-gaps-keep-widening.html#ixzz1TKuQPt9O

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Editor’s Note:

• The above article consists of reformatted edited excerpts from the original for the sake of brevity, clarity and to ensure a fast and easy read. The author’s views and conclusions are unaltered.
• Permission to reprint in whole or in part is gladly granted, provided full credit is given as per paragraph 2 above.