"We have made some progress toward closing the income gap," said Lawrence Mishel, president of the Economic Policy Institute, a labor-oriented research organization. "It will take many decades, at the rate we're going, to make any substantial progress toward closing the wealth gap."
One major reason that gap has proven so intractable, economists and historians say, is that wealth begets wealth. It is easier to build wealth if a family already has assets that can make money on their own, such as a stock that pays dividends, a savings account that earns interest or a home that gains value. Owning a home was particularly important to maintaining wealth levels during the recession, when millions of people lost their jobs and the stock market sank, but real estate prices sprinted ahead.
Dionne Walsh and her husband have a combined annual income of $80,000, but need more savings. The family's goal of owning a home has been elusive.
(Susan Biddle -- The Washington Post)
Video: The Washington Post's Nell Henderson discusses the widening wealth gap between minorities and white families.
Homes that appreciate in value give families growing equity that can be used to secure loans to send their children to college, cover emergency costs and provide a source of wealth that can be tapped in retirement or passed on to the next generation.
Although minority homeownership rates have been on the rise in recent years, fewer than half of blacks and Hispanics own their own homes, compared with nearly three-quarters of whites.
Among blacks, homeownership rates have been suppressed by a legacy of discrimination in the housing market that led many to buy in less-desirable neighborhoods and to accept deals at exorbitantly high interest rates that often led to foreclosure, according to numerous studies. The percentage of Hispanic homeowners is kept low by the steady stream of immigrants, who can take decades to build enough savings to buy a home after they arrive in the United States, Suro said.
Both groups are also hurt by a credit industry that targets them for high-interest credit cards and mortgages that prevent them from developing equity, said Elizabeth Warren, a Harvard Law professor and an expert on lending practices. "The credit industry has painted a bull's eye on the backs of blacks and Hispanics," Warren said.
Jay Brinkmann, vice president for research and economics at the Mortgage Bankers Association, disagreed. Blacks and Hispanics tend to pay higher interest rates, he said, because they also tend to have lower credit scores. "Mortgage rates are based on a person's credit risk, not on race," he said.
Suro said many blacks and Hispanics are "new to the game" of wealth creation, putting them at a distinct disadvantage because they have not had enough time to pass assets down from one generation to the next. At least among Hispanics, he said, wealth should begin to increase as the population ages, education levels rise and people migrate away from traditional immigration hubs such as New York, Los Angeles and Washington, where the housing prices are higher than in the rest of the country.
Homeownership "allows for a kind of intergenerational movement that's worked well for whites in this country," he said. "It's possible to see that kind of success in the long term for Hispanics as well. But right now, the trend lines are not in a positive direction."
In Walsh's case, she likes the way her own family's trend lines are starting to look. She is back at work. They have paid off their debt. And they are working with the Association of Community Organizations for Reform Now, a group that promotes homeownership among low- and moderate-income people, to get an affordable loan. Walsh, who is chairwoman of ACORN's Landover Hills chapter, has visions of buying a three- or four-bedroom house in Prince George's County next spring, giving her family a chance to spread out and allowing their wealth to begin to build.
"That becomes an asset. You have equity," Walsh said. "You become fairly stable. Or, at least, people think of you as fairly stable because you're a homeowner."