Wealth Gap Gives Edge to Anglos

WASHINGTON (HispanicBusiness) October 18, 2004 - The enormous wealth gap dividing white families from blacks and Latinos grew larger following the most recent recession, a private analysis of government data finds.

White households had a median net worth of about $88,000 in 2002, 11 times that of Latinos and more than 14 times that of blacks, the Pew Hispanic Center says in a study released today.

Blacks were slowest to emerge from the economic downturn that started in 2000 and ended early in 2001, the report says.

Net worth accounts for the values of items such as a home and car, checking and savings accounts, and stocks, minus debts such as mortgage, car loans and credit card bills.

Greater wealth often means a greater ability to weather a job loss, emergency home repairs, illness and other unexpected costs, as well as being able to save for retirement or a child's college tuition, financial analysts say.

According to the group's analysis of Census Bureau data, nearly a third of black families and 26percent of Latino families were in debt or had no net assets, compared with 11 percent of white families.

After accounting for inflation, net worth for white households increased 17 percent from 1996 to 2002 and rose for Latino homes by 14 percent to about $7,900. It decreased for blacks by 16percent, to roughly $6,000.

Regardless of race and ethnicity, the median net worth for all U.S. households was $59,700 in 2002, a 12 percent gain from 1996.

Only white homes recouped all their losses from 2001 to 2002. Both Latinos and blacks lost nearly 27 percent of net worth from 1999 to 2001; the next year Latinos had gained almost all back (26 percent), though blacks were up only about 5 percent.

Roberto Suro, director of the Pew Hispanic Center, said the accumulation of wealth allows low-income families to rise into the middle class and "have some kind of assets beyond next week's paychecks."

Job losses hit blacks

Blacks were hit hard by job losses in the manufacturing industry and professional fields, where they were victims of "last-hired, first-fired" policies, said Roderick Harrison, a researcher at the Joint Center for Political and Economic Studies, a Washington, D.C.-based think tank.

Only relatively recently were large numbers of blacks and Latinos able to make investments and accumulate wealth. They were slower to enter the stock market during the 1990s rush and then had less of a cushion when the market began its decline in 2000.

Another factor affecting disparities is that whites are far more likely to own their homes; homeownership is among the most common ways to build wealth.

Census figures released in August showed the national median household income remained basically flat from 2002 to 2004 at $43,318. Median incomes for whites ($47,800) and blacks ($29,600) also were stagnant, while the median income for Latinos fell about 2 percent to $33,000.