The Great Recession was hard on almost everyone, eroding the net worth of the typical American by nearly 40 percent between 2007 and 2010. But the recovery has been more selective, according to a new analysis of Federal Reserve data by the Pew Research Center. While the wealth of whites leveled off as the economy began to heal between 2010 and 2013, blacks and Hispanics experienced continued decline.
The result is an expanding racial wealth gap. Now whites have 13 dollars for every dollar held by African Americans, a level of inequality not seen since 1989, when the white-black gap was 17 to 1, according to Pew researchers Rakesh Kochhar and Richard Fry. The gap separating whites and Hispanics is not as huge but still massive: just over 10 to 1, a level not seen since 2001. The charts below show how wealth has fluctuated by race and ethnicity since since the government began collecting the data in 1983:
For blacks, the decline between 2010 and 2013 was precipitous–more than 33 percent. Pew noted that decline is related to the 9 percent drop in median income for minorities during the three-year period covered in the report. Also, the black unemployment rate has been in double digits for years, and stood at 11.1 percent in November, even as the overall jobless rate was 5.8 percent. By comparison, Hispanics had a 6.6 percent unemployment rate in November, and the white jobless rate was 4.9 percent.
“Minority households may not have replenished their savings as much as white households or they may have had to draw down their savings even more during the recovery,” the report said.
Another factor is that stocks and other financial assets have made rapid gains in recent years.Whites are much more likely than minorities to have such holdings, putting them in a better position to benefit from the robust recovery in financial markets. In addition, the home ownership rate for minorities fell from 50.6 percent in 2010, to 47.4 percent in 2012, the report said. For whites it slipped from 75.3 percent to 73.9 percent.
Even when minorities held on to their homes, it barely helped their wealth portfolio, economists have found. An October report by Economic Policy Institute researcher Valerie Wilson found that inflation-adjusted median home values fell by 4.6 percent for white households and 18.4 percent for African American households between 2010 and 2013. For Hispanics, who had the steepest wealth losses during the housing bust, home values increased by 3.7 percent, the report found.
All of that has made for greater wealth inequality. Were it not for what Pew researchers called some “anomalies,” the racial wealth gaps “are at or about their highest levels observed in the 30 years for which we have data,” the report said.