Wed, Jul 27, 2011 - Page 7 News List

Wealth gap widening in the US

DIVIDE:The 2009 US census results show that the median wealth of white households was US$113,149, compared with US$6,235 for Hispanics and US$5,677 for blacks

AP, Washington

The wealth gaps between whites and minorities in the US have grown to their widest levels since the US government began tabulating them about 25 years ago. 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 recent economic meltdown, which ravaged housing values and sent unemployment soaring. It also offers the most direct government evidence yet of the stark wealth divide, a 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.

“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 US race relations. “The great difference is that the second society has now become both black and Hispanic.”

The median wealth of white US households in 2009 was US$113,149, compared with US$6,325 for Hispanics and US$5,677 for blacks, according to the analysis released yesterday by the Pew Research Center. Those ratios, roughly 20 to 1 for blacks and 18 to 1 for Hispanics, far exceed the low mark of 7 to 1 for both groups reached in 1995, when the nation’s economic expansion lifted many low-income groups to the middle class.

The white-black wealth gap also is the widest since the census began tracking such data in 1984, when the ratio was about 12 to 1.

“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 professor at the University of Wisconsin-Madison, who specializes in income inequality.

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.

“There’s a good chance the wealth gap will widen further,” Smeeding said, citing the stalled housing market. “What we need to do is help lower-income people move up.”

According to the Pew study, the housing boom of the early to mid-2000s particularly boosted the wealth of Hispanics, 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.

Those gains quickly shriveled in the housing collapse. After reaching a median wealth of US$18,359 in 2005, the wealth of Hispanics — who had 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, their household wealth fell 53 percent from US$12,124 to US$5,677.

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

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