Wealth gap grows wider among races

WASHINGTON – The wealth gaps between whites and minorities have grown to their widest levels in a quarter-century. The recession and uneven recovery have erased decades of minority gains, leaving whites on average with 20 times the net worth of blacks and 18 times that of Hispanics, according to an analysis of new census data.

The analysis shows the racial and ethnic impact of the economic meltdown, which ravaged housing values and sent unemployment soaring. It offers the most direct government evidence yet of the disparity between predominantly younger minorities whose main asset is their home and older whites who are more likely to have 401(k) retirement accounts or other stock holdings.

“What’s pushing the wealth of whites is the rebound in the stock market and corporate savings, while younger Hispanics and African-Americans who bought homes in the last decade – because that was the American dream – are seeing big declines,” said Timothy Smeeding, a University of Wisconsin-Madison professor who specializes in income inequality.

“I am afraid that this pushes us back to what the Kerner Commission characterized as ‘two societies, separate and unequal,’ ” said Roderick Harrison, a former chief of racial statistics at the Census Bureau, referring to the 1960s presidential commission that examined U.S. race relations.

Stock holdings play an important role in the economic well-being of white households. Stock funds, IRA and Keogh accounts, as well as 401(k) and savings accounts were responsible for 28 percent of whites’ net worth, compared with 19 percent for blacks and 15 percent for Hispanics.

According to the Pew study, the housing boom of the early to mid-2000s boosted the wealth of Hispanics in particular, who were disproportionately employed in the thriving construction industry. Hispanics also were more likely to live and buy homes in states such as California, Florida, Nevada and Arizona, which were in the forefront of the real estate bubble, enjoying early gains in home values.

But those gains quickly shriveled in the housing bust. After reaching a median wealth of $18,359 in 2005, the wealth of Hispanics – who derived nearly two-thirds of their net worth from home equity – declined by 66 percent by 2009. Among blacks, who now have the highest unemployment rate at 16.2 percent, household wealth fell 53 percent from $12,124 to $5,677.

In contrast, the median household wealth of whites dipped 16 percent from $134,992 to $113,149, cushioned in part by a stock market recovery that began in mid-2009.

Other findings:

• About 35 percent of black households and 31 percent of Hispanic households had zero or negative net worth in 2009, compared with 15 percent of white households. In 2005, the comparable shares were 29 percent for blacks, 23 percent for Hispanics and 11 percent for whites.

• Asians lost their top ranking to whites in median household wealth, dropping from $168,103 in 2005 to $78,066 in 2009. Like Hispanics, many Asians were concentrated in states hit hard by the housing downturn.

• Across all race and ethnic groups, the wealth gap between rich and poor widened. The share of wealth held by the top 10 percent of U.S. households increased from 49 percent in 2005 to 56 percent in 2009.