There are two stunners in the staggering wealth disparities between whites and minorities documented by this week’s Pew Research Center report. One is that it took just a few years of recession to double the yawning gulf in economic security between white households and Hispanic or African-American ones. The other is that there hasn’t been a revolt.
Analyzing 2009 census data, Pew found that the median wealth of white families is 20 times that of black families and 18 times that of Hispanic families. That’s twice the disparity found in 1984, when the Census Bureau started collecting the data. From 2005 to 2009, Hispanic families lost 66 percent of their wealth and black families lost 53 percent. White families fared distinctly better, losing only 16 percent.
The numbers give ammunition to poverty advocates frustrated about the vastly different economic situations of minorities and whites. African-Americans and Hispanics, far more than whites, are teetering on the precipice of economic insecurity; one stroke of bad luck — a health emergency or a sudden drop in housing prices — could plunge them into a “vicious cycle of low wealth,” according to Christian Weller, an economist at the Center for American Progress.
About one-fourth of Hispanics and blacks are in the worst type of economic situation: They have no savings, are in debt, and live paycheck to paycheck. “Our communities are on the wrong side of this huge wealth gap. They can’t afford to be hit,” said Nancy Zirkin, executive vice president of the Leadership Conference on Civil and Human Rights.
Minorities have more to lose from the budget standoff in Congress because of their tenuous economic circumstances. Zirkin says she is alternately depressed and outraged about proposals to steeply cut Medicare, Medicaid, Social Security, and other support programs. “I’m worried about education getting slammed. I’m worried about food stamps. There are a lot of low-income programs that really mean the difference between poverty and not. It is the safety net,” she said.
Elected officials who represent minorities say their constituents exist in an alternate, shadow universe that is not well-known to their more economically secure counterparts — the ones who appear to drive the policy talks in Washington. “For the first time since the Great Society ushered in by Lyndon Johnson, there is virtually no attempt by either the House or the Senate to address the growing level of poverty or the even more frightening reduction of [the] black middle class,” said Rep. Emanuel Cleaver, D-Mo., who chairs the Congressional Black Caucus. “If the word “˜poverty’ or “˜the poor’ or “˜disadvantaged’ ends up in legislation, it is a certainty that it will be massively opposed.”
Two things — health coverage and a two- or three-month savings cushion — can help reverse the downward spiral into economic insecurity, according to Weller. “People will start to relax. They will plan more for the future. They start planning for their kids. The whole thing becomes saner.” But health insurance isn’t a given for minorities. Almost one-third of Hispanics and more than one-fifth of African-Americans were uninsured, according to the Census Bureau’s figures from 2009, before President Obama’s health care overhaul. (By contrast, 12 percent of whites didn’t have health coverage.) Saving is another problem for minorities, whose employment and income plummeted at about twice the rate of whites during the recent recession.
It is ironic that homeownership, traditionally one of the hallmarks of economic security, was the single factor that doomed more blacks and Hispanics than whites. Declines in home equity marked the bulk of the losses for everyone, Pew’s report said. But the impact was far more acute for minorities because their home equity was all they had. Their loans were risky and many had little or no other savings. White families, meanwhile, were more likely to be buoyed by 401(k) or thrift accounts.
When the bottom dropped out of the housing market, Hispanics took a double hit because the housing boom had given them both employment (they work disproportionately in housing) and opportunities to own homes (their homeownership peaked in 2006). Hispanic households’ median accumulated wealth — home equity, savings, retirement accounts — fell from about $18,000 (in 2005) to $6,000 (in 2009). Unemployment was higher among African-Americans than among Hispanics, but it was less tied to the housing bust. Black families generally bought into the housing market a few years earlier did than Hispanics, which made their losses slightly less dramatic. Their wealth dropped from about $12,000 to $5,700 during the same four-year stretch.
The numbers aren’t even in the same ballpark for white households. Their median wealth was close to $135,000 before the recession; it fell to $113,000 afterward. Perhaps that is why minorities are having a hard time conveying the urgency of their economic situation to the broader populace. It just doesn’t compute.