The economic turmoil of 2007-2009 adversely impacted household earnings across America, but a 2011 research study details the extent to which significant declines in household wealth were concentrated in lower-income and minority populations and those whose wealth was primarily derived from their homes.
The 2011 report from the Pew Research Center, “Wealth Gaps Rise to Record Highs Between Whites, Blacks and Hispanics,” compared data from the Survey of Income Program and Participation (SIPP) in 2005 and 2009. The SIPP collected significant data on low-income and minority households.
The key findings include:
- The ratio between the median wealth (assets minus debts) of white households versus that of black and Hispanic households is the largest since the government started collecting such data in 1984, and approximately twice what it had been before the Great Recession of 2007-2009.
- From 2005 to 2009, inflation-adjusted median household wealth dropped by 66% among Hispanic households, 54% among Asian households, 53% among black households, and 16% among white households.
- In 2009, typical wealth (again, a family’s assets minus its debts) had dropped to $5,677 for black households, $6,325 for Hispanic households, and $113,149 for white households.
- Hispanic homeowners suffered the most from plummeting home prices; their median levels of home equity declined nearly 50%. A high percentage of Hispanic homeowners also lived in California, Florida, Nevada and Arizona, where the housing market was decimated by the bursting of the real estate bubble in the mid-2000s.
- Greater income disparities also emerged within racial and ethnic groups. While the wealth of the top 10% of households declined during the study period, the top 10% of wealthiest Hispanics increased their percentage of the aggregate wealth of all U.S. Hispanics from 56% in 2005 to 72% in 2009, and the share of in-group wealth held by the 10% of wealthiest whites rose from 46% in 2005 to 51% in 2009.
The study’s findings also highlight the extent to which home ownership may not provide long-term financial stability.
Tags: financial crisis, poverty, race, Hispanic, Latino, inequality, ethnicity and community