All Articles Tagged "wealth gap"
If you’re thinking the rich seem to keep getting richer and the poor get poorer– you’re right. According to a new study by Brandeis University, the wealth gap between blacks and whites has ballooned since the middle of the Reagan administration, nearly tripling between 1984 and 2009.
The just-released study found that the median white household enjoyed a net worth of $265,000 by 2009, eight times more than the median black household’s net worth, which was just $28,500. And things won’t get any better, predicts Tatjana Meschede, a co-author of the study.
“The gap presents an opportunity denied for many African American households and assures racial economic inequality for the next generation,” Meschede said in a statement.
The study followed 1,700 households between 1984 and 2009. There still are a variety of discrepancies, reports The Huffington Post. They include:
– Home ownership: Twenty-eight percent of whites were more likely to own their home than black households, found the study.
– Income: According to the U.S. Census Bureau, average white person’s income was $29,401 per year in 2011,compared to the average black person’s income, at just $18,357.
– Unemployment: The black unemployment rate was 13.8 percent in January; the white unemployment rate was only 7 percent, according to the Labor Department.
– College education: Roughly 29 percent of whites age 25 and older held a bachelor’s degree or graduate degree between 2006 and 2010. Only 18 percent of blacks in the same age group, according to the Census Bureau.
– Inheritance: The Brandeis study discovered that whites were five times more likely to receive an inheritance than blacks between 1984 and 2009.
Where do you think we should start to close this gap?
The Senate Small Business & Entrepreneurship Committee held its third annual roundtable to discuss the wealth gap. According to the Pew Research Center, there’s a yawning wealth gap between blacks (average household net worth of $5,677) and whites ($113,150 average household net worth).
To close that gap, the roundtable focused on entrepreneurship and small businesses. Among the suggestions — strengthening contract programs for minority businesses and access to resources, for example — there’s one that stood out.
“Convince Americans that closing the wealth gap is good for everyone,” writes The Business Journals.
“Helping more African Americans succeed in business shouldn’t be viewed as ‘a form of charity,’ said Atlanta Mayor Kasim Reed, whose city has become a Mecca for minority-owned businesses,” the article continues. “Instead, the growth of black entrepreneurship benefits the economy as a whole because of the jobs that are created.”
This idea is so critical. When a segment of the population trips, we all go down. The country benefits from having strong businesses across the board. And it’s obvious from the research what we’ve been reporting that, among African Americans, there’s a strong entrepreneurial streak that should be nurtured. (Rather than just broadly declaring that whole swaths of the general population are “victims” who “don’t pay income tax.”)
The article does note that it’s not just promoting small business ownership, but helping these businesses grow so that they can hire employees. Given the interest in business ownership, this is an economic avenue that the black community is interested in pursuing. Read more about the roundtable here.
by Charlotte Young
Around the country the job search is finally yielding results for many of exhausted job searchers. The unemployment rate is falling for the third consecutive month and in December 200,000 jobs in the private sector were created. Unfortunately, as The Seattle Medium points out, African Americans aren’t exactly benefiting from the job increase. In fact, the African American unemployment rate has increased from 15.5 to 15.8 percent, with black women experiencing the biggest loss.
Although the unemployment rate for African American women is 13.9 percent, lower than the male rate of 15.7 percent, this year African American men have actually gained jobs while African American women have lost them. This is partially due to what jobs are being created in the economy. Many companies are creating positions for construction and redevelopment jobs, roles predominately filled by men. Jobs that women tend to take such as teachers, social workers and nurses, are still being cut. In addition, about 23 percent of African Americans work at some level of the government. And at the federal, state and local level, government workers are being let go, not hired.
As so many are trying to get back on their feet, the gap in employment has also created a growing wealth gap. The Seattle Medium reports that the median wealth of American families has dropped to $20,500—compared to the Congressional gain of $725,000.
While the unemployment rate may continue to drop, it still encompasses about 13.1 million people still looking for work. In the competitive pool so large odds are tough for African American women.
by Randy Williams
As recent data has shown, the net worth of Whites is now about 20 times that of African-Americans. Between 2005 and 2009 the household wealth of African-Americans fell a staggering 53%. Maybe more detailed numbers will put the canyon that is the Black wealth gap in greater perspective: The average White household in the United States has $113,149 in wealth while the average Black household has only $5,677. In spite of what the statistics say, closing the wealth gap is still possible, but several changes must be made in order for this to happen. Here are seven words that can completely transform the economic outlook for African-Americans.
Collaboration – How can one of the most imitated and influential cultures ever suffer from such drastic economic frailty? Historically, our culture is one that stresses individuality and harbors a “I-have-mine-now-you-get-yours” mentality that has weakened black families for decades. As studies have shown, Black families have very few resources individually; however, by pooling our resources together we dramatically increase the power of our communities. Essentially, this power can then be used to build businesses, promote social interests and lessen the individual burdens that many of us face. Collaboration also becomes a breeding ground for new ideas and concepts that were previously unavailable. Studies predict that by the year 2013, the spending power of African-Americans is expected to reach $1.2 trillion, proving that together we are a force to be reckoned with.
(Reuters) — New research finds an appalling 20 to one chasm in net worth between white and black Americans, and an 18 to one gap between whites and Hispanics. The Pew Research Center found that the net worth gap has widened during the Great Recession, mainly because the housing bust disproportionately cut into the wealth of African-Americans and Hispanics. The housing crash hurt these households disproportionately because they tended not to have much in the way of other assets, especially when it came to retirement savings. So, the Pew report — an analysis of the comprehensive U.S. Census Bureau Survey of Income and Program Participation for 2009 – points to a terribly important social problem we face today – and the growing retirement security gap confronting minority households.
By Alexis Garrett Stodghill
Whites now outpace all minority groups in America in terms of wealth accumulation according to a new study to be released on July 26 by the Pew Research Center. The wealth disparity between white Americans versus blacks, Asians and Latinos is larger than it has ever been since this data was first collected in 1984. White households now have 20 times the wealth of black families, and 18 times the wealth of Latinos. These rates are twice what they were before the recession hit and wiped out the housing equity of many of minorities in the foreclosure crisis. In 2005 Asian families had more assets than whites with an average of $168,103, but by 2009 that sum fell 54% to $78,066.
While African-Americans saw their wealth decline by 53%, and Latinos saw a 66% dip during the same period, whites faced losses of only 16%. Experts agree that the median net worth of white families was preserved despite the crash of the housing market because they are more likely to own stocks, bonds and a diverse array of holdings. By contrast, before the recession 59% of black wealth was contained in housing equity, along with two-thirds of the assets of Latinos. When the foreclosure crisis caused millions to lose homes, blacks and Latinos fell far behind whites in terms of average wealth — and now face the largest gap between the groups in recorded history. The Washington Post reports:
“White households have been more diversified — they are more likely to own stocks and bonds,” Kochhar said.
As a result, when the housing market collapsed, the effect fell heavier on black and Hispanic households, according to the report. Between 2005 and 2009, the median net worth of black families fell to $5,677 from $12,124, and that of Hispanic families fell to $6,325 from $18,359. In the same period, the median net worth of white households dropped to $113,149 from $134,992.
Household wealth is the sum of assets, including houses, cars and banking accounts, minus debts, including mortgages, auto loans and credit cards.
Researchers who study the economics of households by ethnic groups said that although the gap in incomes between whites and blacks has narrowed over decades, the wealth gap has been more persistent.
This is an important point, because it is wealth that can be passed down between generations, not income. Part of the reason that African-Americans had home equity as the greatest percentage of our median net worth is that often our homes were the sole assets possessed by black families. Much like stocks and bonds, they can be preserved and passed down through the years. But unlike stocks, homes can be paid off a little at a time by an entire household of workers for years.
The effects of slavery and Jim Crow segregation made the accumulation of non-housing assets, and their passing down, more difficult for African-Americans — but at least it was possible. This method of wealth accumulation and passing down became our mainstay. Even though times have changed, this way of thinking is not something we have grown out of as a group.
We are paying for this failure to evolve economically now. When the recession hit and incomes were lost — incomes that helped blacks pay for refinanced mortgages on inherited homes — our community did not have the diversified portfolio of assets that could have helped us weather the storm. We are at a point now in our collective development when stock investment is affordable, but it is clear that not enough blacks have taken this leap, and this is our responsibility.
Yet another critical factor is at play in the sudden sharp drop in black and Latino wealth being studied. This report seems to ignore the well-documented fact that blacks and Latinos were disproportionately targeted for highly destructive sub-prime mortgages. These groups were steered into these loans even if the credit rating of an applicant qualified him or her for a much better deal. While it is not the ultimate responsibility of the lender to ensure that a mortgage applicant is being treated fairly, the race-based exploitation that fueled the stripping of black and Latino wealth through the foreclosure crisis deserves mention.
Despite this clear cause, researchers seem puzzled about the wealth gap, in noting that while incomes have become more equal, overall disparities in asset accumulation persist. When speaking to The Washington Post about this issue, an expert from the Institute on Assets and Social Policy at Brandeis University said: “We know that the income gap is not as large; it has gotten smaller. But the wealth gap is stubbornly high.”
Stubborn? Well, here’s an idea.
It would help if corporations did not target people of color for mortgages that are likely to destroy what little wealth blacks and Latinos have, because it’s clear based on basic numbers crunching that they won’t be able to afford them. That’s a start.
At the same time, people of color need to learn how to use more financial tools intelligently as a means of protection from the devious mechanizations of companies motivated by nothing but greed. The fact that blacks and Latinos were seen as easy prey for the sub-prime mortgages that destroyed their wealth is in part the repsonsibility of these groups. Financial education and empowering action are the only solutions to rebuild wealth and prevent similar losses in the future.
But the huge wealth gap generated between whites and minorities due to massive losses of housing equity is hardly a mystery. It was almost predictable given the sub-prime mortgages blacks and Latinos were led to, like poisoned water. This staggering wealth chasm could have been predicted, as easily as it could have been prevented by ethical loan officers.
(Washington Examiner) — The District’s wealthiest community earns more than three times the household income of the city’s poorest area — a massive income gap that has grown wider over the past five years. D.C.’s wealthiest residents live in the neighborhoods between Georgetown and Friendship Heights, an area rich with million-dollar homes, lived in by some of the city’s top wage-earners. The median income of households there is more than $103,000 annually, according to the Census Bureau’s latest American Community Survey data.
(Slate) — In 1915, a statistician at the University of Wisconsin named Willford I. King published The Wealth and Income of the People of the United States, the most comprehensive study of its kind to date. The United States was displacing Great Britain as the world’s wealthiest nation, but detailed information about its economy was not yet readily available; the federal government wouldn’t start collecting such data in any systematic way until the 1930s. One of King’s purposes was to reassure the public that all Americans were sharing in the country’s newfound wealth.