Blacks feeling the brunt of recession, report says
CYRIL JOSH BARKER Amsterdam News Staff | 8/4/2011, 12:45 p.m.
A study by the Pew Research Center reports that the wealth gap is widening between white households and households of color. This data further confirms that the recession is hitting Blacks the hardest.
The median wealth of white households is 20 times that of Black households, according to government data from 2009. Hispanics make 18 times less than whites.
Wealth is measured as the sum of all assets (house, car, stocks, 401(k) account, etc.) minus all debts (mortgage, car loan, credit card debt, etc.).
From 2005 to 2009, inflation-adjusted median wealth fell by 66 percent among Hispanic households and 53 percent among Black households, compared with just 16 percent among white households. This resulted in Black households having only $5,677 in wealth while white households had $113,149.
There was also a striking difference in the home equity of Black and white homeowners. Among white homeowners, equity declined from $115,364 in 2005 to $95,000 in 2009. For Black homeowners during the same period, it fell from $76,910 in 2005 to $59,000 in 2009.
In an op-ed in the Washington Post, one of the authors of the report, Pew Foundation Executive Vice President Paul Taylor said that the toll the recession is taking on Blacks has come into full focus in the findings. He blames several factors for the income discrepancy, including predatory lending practices from prior years.
"Roughly two decades ago, the nation embraced policies to expand homeownership, believing it would be good for the economy and the social fabric," Taylor said. "A disproportionate share of the new homeowners of the 1990s and 2000s were minorities. Many bought houses at prices inflated by the residential real estate market bubble of the time. And as we all now know, many were either undercapitalized or victims of predatory lending practices-or both. When the market collapsed, it fell hardest on them."
In a survey also conducted by the Pew Research Center, Blacks remain optimistic that the economy will improve. Forty percent of Blacks say they expect the economy to improve in the next year, compared with 34 percent of Hispanics and 29 percent of whites.
Speaking at the National Urban League's annual convention, President Marc Morial said the report is a "wake-up call" for job creation and investments in the Black community.
"A paramount issue for this nation for the 21st century is to ensure the narrowing and closing of the racial wealth gap," he said.
During the Urban League's four-day conference in Boston, the organization's Policy Institute released a study titled "At Risk: The State of the Black Middle Class." According to the study, this recession has taken away the gains made by the Black middle class over the last 30 years. Blacks with four-year college degrees are also seeing high unemployment rates.
"We found that the great recession has begun to dismantle the crown jewel achievement of racial advancement in America: a strong Black middle class," Morial said. "Our analysis clearly shows that, whether one looks at education, income or any other meaningful measure, almost all the economic gains that Blacks have made in the last 30 years have been lost in the Great Recession that started in December 2007 and in the anemic recovery that has followed since June 2009."
The unemployment rate for Blacks with four-year college degrees has tripled since1992, according to the report. College-educate Blacks saw a 6.5 percent increase in unemployment compared to college-educated whites, who only saw a 2.9 percent increase.