Shocking Wealth Gap Between Ethnic Groups
A report released by the Pew Research Center analyzed data just released from the Survey of Income and Program Participation (SIPP), finding a large gap in the household wealth of various ethnic groups.
The report looks mainly at white, black, and Hispanic households, and the main feature noted from the data is that the wealth gap between white households and black and Hispanic households is the widest it’s been since data collection began in 1984.
Household wealth, according to the report, “is the accumulated sum of assets (houses, cars, savings and checking accounts, stocks and mutual funds, retirement accounts, etc.) minus the sum of debt (mortgages, auto loans, credit card debt, etc.).”
The most recent data collection occurred in 2009, and the last survey before that occurred in 2005. Though not perfectly in line, the two collections relatively show the change that occurred over the period of the Great Recession that lasted from 2007 to 2009.
In 2005, the median wealth of white households was $134,992. The median of Hispanic households was $18,359, and the median of black households was $12,124.
Since then, the numbers have dropped 16% for whites to $113,149, but much more drastically for Hispanics at a 66% drop to $6,325 and for blacks at a 53% drop to $5,677.
The drop, according to the report, was greatly influenced by the meltdown in the housing markets, especially for Hispanics and blacks, for whom a great portion of household wealth is housing value.
The Hispanic population took the hit the hardest, reports Pew Research, due to the fact that many Hispanic households are concentrated in states such as California, Florida, Nevada, and Arizona, locations where the housing bubble was centered.
And while, in 2009, the stock market began to recover from the recession, the housing market failed to do so. Since a larger percentage of whites own stocks than blacks or Hispanics, the overall drop for white households was minimal in relation.
Housing also accounts for much less of the net worth of a white household, the report stated, than for that of a black or Hispanic household.
Asian household wealth was also mentioned briefly throughout the report. According to data, in 2005 Asian households had a higher net value than white households, with total wealth at $168,103.
This saw a severe drop in 2009, however, to $78,066. This was, the report claims, largely due to the fact that Asian households are, like Hispanics, concentrated in areas like California where the housing market was most affected.
The gap between wealth of ethnic groups was not the only gap that widened during this period. The report also shows an increase in the total wealth share held by the top 10% of each ethnic group.
This was not, it clarifies, a result of the rich getting richer. The top 10% was also negatively affected by the recession, but not as much as the rest of each group.
In the period from 2005 to 2009, the top 10% of Asian households went from accounting for 44% of the ethnic group’s wealth to 61%.
The top group of Hispanics originally accounted for 56% of the wealth, but this rose to 72%.
For blacks, the top 10% expanded their wealth share from 59% to 67%.
And this rise was smallest with white households, a move of 46% to 51%. This was also due to the fact that a drop occurred in the threshold for the top 10%, the report claims.
The report lays out the facts in more detail explaining factors such as “asset ownership” and “net worth by type of asset”.
These startling gaps between ethnic groups are more than twice what they were 15 years previously.+6
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