It’s no secret that the Great Recession has shattered the financial dreams of millions of Americans. It’s not just the 9.2% of Americans who are unemployed, or the 18.2% who are underemployed (that number includes part-time workers, freelancers and others off the official U.S. jobless grid).
The wheezing economy has also impacted high school and college graduates who can’t find a job — those “dead end” kids who comprise 26.4% of the U.S. unemployed. Hard times have also stressed homeowners who can’t sell their homes, small-business owners who can’t make ends meet and retirees who can’t afford the high price of gasoline to go visit their grandkids.
But 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.
Fresh data from the Pew Research Center seem to confirm that downward trend. According to Pew, which drew much of its data from the U.S. Census Bureau, the median wealth of white American households is now 20 times that of black households and 18 times greater than Hispanic households.
Pew studied household-wealth data from 2005 to 2009 in drawing its conclusions, and in a colossal understatement called the financial gap “lopsided” in the report. In fact, wealth ratios between U.S. whites and minorities are the widest in a quarter-century (when the government began tracking such data).
Specifically, the housing bubble and resulting recession took a far greater financial toll on backs and Hispanics than it did on white Americans.
From the Pew study:
From 2005 to 2009, inflation-adjusted median wealth fell by 66% among Hispanic households and 53% among black households, compared with just 16% among white households.
As a result of these declines, the typical black household had just $5,677 in wealth (assets minus debts) in 2009; the typical Hispanic household had $6,325 in wealth; and the typical white household had $113,149.
Worse, 35% of African Americans and 31% of Hispanics reported zero or negative net worth in 2009. By contrast, only 15% of white households were in the same boat.
Pew implies that black and Latino households have less investment savings in vehicles like 401(k) plans and individual retirement accounts than white households, and thus didn’t benefit from a bounce back in the U.S. stock market starting in 2009. In addition, black and Latino households relied more on unsecured debt (like credit cards) than did white households, further widening the wealth gap.
Also, blacks and Hispanics are more likely to live in concentrated areas where housing values declined more sharply, contributing to further wealth reductions, Pew says.
It’s not a pretty picture, and it’s not a trend that should turn around soon. Until the jobs picture improves and the housing market rebounds, the U.S. has not only a government debt-gap problem but also a demographic wealth-gap problem.
And a big one, at that.