5 Alarming Facts About the Racial Wealth Gap
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A new report paints a disturbing picture of just how unjust our economy is for America's communities of color. "Beyond Broke: Why Closing the Racial Wealth Gap Is a Priority for National Economic Security," from the Center for Global Policy Solutions, used the most recently available data from the U.S. Census Bureau’s Survey of Income and Program Participation (SIPP) and the National Asset Scorecard in Communities of Color (NASCC) to illustrate the immense racial wealth gap.
Maya Rockeymoore, one of the researchers of the study, said it’s time we start addressing the issues no one wants to face.
“The nation remains passive in the face of facts that show that African Americans continue to experience a stunning level of economic segregation and isolation a full 50 years after the Civil Rights Act of 1964,” she said. “So while the lynch mobs have gone away and the 'whites only' signs are removed from buildings — the pernicious effects of racialized public and private institutional structures continue to operate in ways that prevent asset building or, perversely, promotes asset stripping when African-Americans do manage to accumulate resources.”
Here are some key takeaways from the report.
1. Eighty percent of black and Latino households have a net wealth less than the white median of $111,740.In addition, when net wealth is separated by income levels, blacks and Latinos still have only a fraction of whites’ median wealth. To look at it another way, whites have a median net worth 15 times that of blacks and 13 times that of Latinos.
2. Whites have 100 times more liquid wealth than blacks, and 65 times more than Latinos.Liquid wealth consists of assets that can readily be turned into cash, usually for emergencies. It includes cash on hand, money in a checking account and government bonds and stocks. Blacks have a median liquid wealth of $200 and Latinos $340 compared to $23,000 held by whites. When you exclude retirement savings, blacks have a liquid wealth of $25 and Latinos have $100 whereas whites have $3,000. This makes a majority of blacks and Latinos, unlike whites, “liquid asset poor” — meaning unable to survive three months at the poverty line.
The study says: “This absence of liquidity not only would thrust families into an immediate crisis if they were to experience any disruption in their income stream, it would also reduce their ability to take risks that might be necessary to improve their economic position over the long haul.”
3. Twenty-one percent of blacks, 17 percent of Latinos, and 11 percent of Asians — compared to 6 percent of whites — have no tangible assets whatsoever.Having tangible assets, such as a home or car, is important in terms of diversifying the types of assets you have. In terms of financial assets, 38 percent of blacks and 35 percent of Latinos have no financial assets at all, compared to 14 percent of whites. For a majority of blacks and Latinos who do have a financial asset, a checking account is their only one. Meanwhile, a majority of whites hold both checking and retirement accounts.
4. The net wealth of blacks decreased by 53 percent following the latest economic recession. Latinos' net wealth plummeted 65 percent and Asians lost 54 percent of their net wealth, while whites lost 16 percent of their net wealth.Because home ownership makes up a majority of Americans' net wealth, the housing crisis was responsible for much of this loss, though it affected homeowners of color disproportionately, as they lost more home equity than whites. And when adjusted for mortgage characteristics, such as income, marital status and region, blacks and Latinos were 80 and 35 percent, respectively, more likely to be underwater than their white counterparts.
5. Blacks own six cents, and Latinos 7 cents, for every dollar possessed by whites in 2011.While that’s technically better than the 2009 numbers (5 and 6 cents respectively) it’s quite insignificant. This means that during the economic recovery period, the gap closed slightly, but because it was so wide from the start, it remains deeply unequal.
The report concludes by suggesting numerous policy initiatives that would increase and extend economic opportunity for races. They include implementing living wages, a federal jobs guarantee, ensuring mortgage relief programs are fair, implementing universal pre-K, curbing tuition fees at universities, expanding Social Security, and establishing universal retirement accounts.
It closes by stating:
"Each of these tools, and others, are essential for building a future that improves economic empowerment across racial and ethnic divides, a future that one day relegates America’s racial wealth gap to merely a historical fact, rather than a lingering contemporary reality."