Photo courtesy of Flickr
A report released today by the Pew Research Center finds that the Great Recession has worsened an already-widening gap in net worth between Whites, Latinos, and Blacks. Using data from the Survey of Income and Program Participation (SIPP), researchers found that between 2005 and 2009, in percentage terms, “inflation-adjusted median wealth fell by 66% among Hispanic households and 53% among black households, compared with just 16% among white households.” The report cites the burst of the housing bubble as a major contributing factor in decreasing net worth. Given that home values make up a larger share of overall net worth held by Blacks and Latinos compared to Whites (see the work of Melvin Oliver and Tom Shapiro for more information about this), these households may have been hard-hit by declining home values and rising foreclosures. You can read their full report here. To see adaptations of the report's charts displaying household net worth, please click on Figures 1 and 2, attached on the right-hand side of this page.
The Pew Research Center’s report comes on the heels of a recently published report about the widening of the racial wealth gap between Whites and Blacks. A few months ago, researchers at Brandeis University announced that the racial wealth gap measured by household net worth quadrupled from $20,000 to $95,000 between 1984 and 2007. The authors contend that years of policy practices contributed to such a wide gap – from the Homestead Act occurring during an era that actively sought to prohibit wealth accumulation among Blacks to more recent, yet subtle, reincarnations in the tax codes that unsuccessfully redistribute wealth and opportunities.
There is also evidence to suggest that this wealth gap may start early, potentially contributing to the widening gap over time. Another recently published study found that between ages 17 to 23, the savings account gap between Whites and Blacks is already 26%. In other words, 90% of Whites have savings accounts compared to 64% of Blacks. The median savings amount gap is $780 – Whites have $800 saved compared to $20 saved by Blacks. This suggests that at an early age, Blacks have very little median amounts saved – barely enough to meet initial deposit requirements and maintain minimum balances in savings accounts, let alone begin to accumulate net worth comparable to that of Whites.
The New America Foundation has been active in adovcating for policies that would help households accumulate wealth. Click on the links below to read more about the asset-building initiatives that New America has undertaken that may play important roles in helping households accumulate wealth: