Whites earn more than three-fourths of the nation’s income
By Carol Morello,
Whites took home a disproportionately large share of income through the recession and the start of the slow recovery, but minorities are gradually catching up, a new analysis of census data shows.
According to a study by Sentier Research, a firm specializing in income statistics, non-Hispanic whites reaped 76 percent of the nation’s total wages and other income from 2008 to 2010, even though they accounted for 64 percent of the population. The income share was down slightly from 78 percent in mid-decade, reflecting the diminishing percentage of the non-Hispanic white population.
Asian Americans, who make up about 5 percent of the population, earned a slightly higher share of total income — less than a percentage point more. But blacks and Hispanics, the two largest minority groups, earned considerably less than a proportionate share.
Hispanics, who account for 16 percent of the U.S. population, earned 9 percent of total income, up from about 8 percent in mid-
decade. And African Americans, who make up 13 percent of the population, earned 8 percent of total income, a slight increase.
The Sentier study of income data from the Census Bureau’s American Community Survey adds another dimension to the studies of wealth and income made during a period of shifting demographics and economic uncertainty.
The country is on its way to becoming a majority-minority nation within three decades. Non-Hispanic whites make up a smaller percentage with every passing year, and Hispanic and Asian populations are growing at great speed.
In a report last fall, the Census Bureau said income inequality had increased during the recession, with higher-percentage declines among middle- and low-income households than among the richest households.
The Pew Research Center found a widening gap between the wealth accumulated by non-Hispanic white households and the assets of black and Hispanic households, which took the biggest hits from the bursting housing bubble and rising unemployment during the recession.
The 2008-10 income data may actually temper concerns about the recession’s long-term impact, particularly on minorities. Some academics have warned that the steep loss in home equity could prevent some families from borrowing money to send their children to college, hurting the lifetime earnings of future generations.
“This suggests that the income gap is not exploding the way the wealth gap was,” said Roderick Harrison, a fellow at the Joint Center for Political and Economic Studies and a former head of the Census Bureau’s racial statistics branch. “It’s in fact declining with population size, though clearly not as rapidly.”
For the time being, the country is broadly divided between the relative prosperity enjoyed by many non-Hispanic whites and Asians and the economic difficulties experienced by many African Americans and Hispanics.
Many factors are responsible for the gap.
Non-Hispanic whites and Asians have generally higher education levels and are more likely to be part of households in which two adults hold well-paying jobs. A sizable number also hold advanced degrees in scientific and technical fields that pay high salaries; African Americans and Hispanics are more likely to have degrees in the social sciences and humanities.
More than half of non-Hispanic white and Asian households consist of married couples. One in five black households is headed by a single parent, and just 28 percent are headed by married couples.
With a median age of 42, non-Hispanic whites are more likely to be in their peak earning years than Hispanics, whose median age is 27, or African Americans, at 31.
But those factors do not fully explain the stubborn chasm.
“The big factor is historical,” said Austin Nichols, an economist with the Urban Institute. “If you amass wealth in one group, it tends to stay there.”
For African Americans, slavery is the big historical influence, Nichols said. And many Hispanics are recent immigrants, whose families have not had multiple generations to amass wealth.
“If this report had been written 100 years ago, that would have been true about new arrivals from Europe,” he said. “The story with Hispanics may be different 50 years from now. Black Americans, through their different history, face a different disadvantage.”
The recession underscored the significance of education. College graduates had significantly lower unemployment rates than adults with no more than a high school degree.
“Your social class — where you came from, your education, family wealth, who you’re married to and what they do for a living — is much more important than race and ethnicity” as a factor in income, said Timothy Smeeding, who is a professor at the University of Wisconsin at Madison and heads the Institute for Research on Poverty there.
“There are differences of race and ethnicity, and those were exacerbated by the recession. But what really determines your income has more to do with your education and how long you’ve been somewhere.”
The Sentier study found that the Washington metropolitan area, whose population has the nation’s highest percentage of college graduates, had the nation’s fourth-largest share of more than $8 trillion in annual income — behind New York, Chicago and Los Angeles, but ahead of Philadelphia, Houston, Atlanta and Boston.
The study counted income from a variety of sources, including wage and salary income, Social Security benefits, dividends, pensions, unemployment compensation and alimony. It did not count food stamps or one-time windfalls such as capital gains, inheritances and lottery winnings.