White Americans now have more than 20 times the wealth of the average black household and 18 times more wealth than that of Latino household, according to a study released Monday by the Pew Research Center.
The wealth gap between blacks and whites continues to grow, the study found, and is now the widest in 25 years.
The study confirmed what many already knew — the “Great Recession” has wreaked havoc on the nation’s must vulnerable communities.
Between 2005 and 2009, the “official” end of the recession, wealth in Hispanic households dropped 66 percent — the largest of any group — and 53 percent among black households. White households saw a 16-percent decline.
This means that the average black family had about $5,677 in wealth compared to the average white family’s wealth of about $113,149 in 2009, the most recent statistics available.
Roderick Harrison, a fellow at the Joint Center for Political and Economic Studies, compared the new statistics to the Kerner Commission study of race in the United States in the 1960s.
“I am afraid that this pushes us back to what the Kerner Commission characterized as ‘two societies, separate and unequal,’” Harrison told the Associated Press. “The great difference is that the second society has now become both black and Hispanic.”
Measuring household wealth, which is different than income, may give a more realistic picture of families’ economic realities. The study defines wealth as the sum of assets (such as houses, cars, stocks) minus the sum of debt (such as mortgages, credit cards, car loans). Income, on the other hand, is solely the yearly inflow of wages and other sources of earnings.
The report revealed a significant racial gap on how people spend their money and how they employ different investment strategies. “It’s not so much that the wealthy were busy getting richer – it’s that they slipped back less than those at the other end of the ladder,” Rakesh Kochhar a co-author of the study, told the Christian Science Monitor.
Kochhar, along with the other researchers, concluded that blacks and Latinos were hardest hit because they, like other less wealthy groups, generally have their money tied to a single asset — usually their homes. They found that whites and other wealthier populations had their assets evenly divided among housing, 401(k) funds and stocks.
The study noted that whites were three to four times more likely to own stocks and mutual funds, which accounted for 28 percent of their income. Wall Street, with the help of a federal bailout, started to recover in late 2009. The housing market, however, has yet to improve.
With Latinos often living in states hit the hardest by the real-estate bubble — California, Nevada, and Florida — it’s no surprise that they saw half their housing equity decline during the recession.
Additionally, with high unemployment rates in both the African American and Hispanic communities, recovering from the recession has proved an even a bigger struggle. Compound that with a decline in the black middle class and it spells trouble for the nation’s largest two minority populations.
Marc Morial, president and chief executive officer of the National Urban League, said the Pew findings were a wake-up call for investment in urban communities.
“A paramount issue for this nation for the 21st century is to ensure the narrowing and closing of the racial wealth gap,” Morial told the Associated Press. “It has deep social implications. It has deep political implications.”