July 26th, 2011
01:20 PM ET

Wealth gaps rise to record highs between whites, blacks and Hispanics

Editor's Note: The following is reprinted from Pew Research Center's Social and Demographic Trends. Read the full report including the report methodology at pewsocialtrends.org.

By Rakesh Kochhar, Richard Fry and Paul Taylor

The median wealth of white households is 20 times that of black households and 18 times that of Hispanic households, according to a Pew Research Center analysis of newly available government data from 2009.

These lopsided wealth ratios are the largest since the government began publishing such data a quarter century ago and roughly twice the size of the ratios that had prevailed between these three groups for the two decades prior to the Great Recession that ended in 2009.

The Pew Research Center analysis finds that, in percentage terms, the bursting of the housing market bubble in 2006 and the recession that followed from late 2007 to mid-2009 took a far greater toll on the wealth of minorities than whites. From 2005 to 2009, inflation-adjusted median wealth fell by 66% among Hispanic households and 53% among black households, compared with just 16% among white households.

As a result of these declines, the typical black household had just $5,677 in wealth (assets minus debts) in 2009, the typical Hispanic household had $6,325 in wealth and the typical white household had $113,149.

Moreover, about a third of black (35%) and Hispanic (31%) households had zero or negative net worth in 2009, compared with 15% of white households. In 2005, the comparable shares had been 29% for blacks, 23% for Hispanics and 11% for whites.

These findings are based on the Pew Research Center's analysis of data from the Survey of Income and Program Participation (SIPP), an economic questionnaire distributed periodically to tens of thousands of households by the U.S. Census Bureau. It is considered the most comprehensive source of data about household wealth in the United States by race and ethnicity. The two most recent administrations of SIPP that focused on household wealth were in 2005 and 2009. Data from the 2009 survey were only recently made available to researchers.1

Plummeting house values were the principal cause of the recent erosion in household wealth among all groups, with Hispanics hit hardest by the meltdown in the housing market.

From 2005 to 2009, the median level of home equity held by Hispanic homeowners declined by half - from $99,983 to $49,145 - while the homeownership rate among Hispanics was also falling, from 51% to 47%. A geographic analysis suggests the reason: A disproportionate share of Hispanics live in California, Florida, Nevada and Arizona, which were in the vanguard of the housing real estate market bubble of the 1990s and early 2000s but that have since been among the states experiencing the steepest declines in housing values.

White and black homeowners also saw the median value of their home equity decline during this period, but not by as much as Hispanics. Among white homeowners, the decline was from $115,364 in 2005 to $95,000 in 2009. Among black homeowners, it was from $76,910 in 2005 to $59,000 in 2009. There was little or no change during this period in the homeownership rate for whites and blacks; it fell from 47% to 46% among blacks and was unchanged at 74% among whites.2

Household wealth is the accumulated sum of assets (houses, cars, savings and checking accounts, stocks and mutual funds, retirement accounts, etc.) minus the sum of debt (mortgages, auto loans, credit card debt, etc.). It is different from household income, which measures the annual inflow of wages, interest, profits and other sources of earning. Wealth gaps between whites, blacks and Hispanics have always been much greater than income gaps.

The 2005 to 2009 time frame allows for a before-and-after look at the impact of the Great Recession. However, those dates do not align perfectly with the downturn, which ran from December 2007 to June 2009, according to the National Bureau of Economic Research.

In 2005, both the stock and housing markets were still rising. Thus, had the base year for these measurements of wealth been closer to the top of these markets in 2006 or 2007, the recorded declines are likely to have been even steeper.

Moreover, since the official end of the recession in mid-2009, the housing market in the U.S. has remained in a slump while the stock market has recaptured much of the value it lost from 2007 to 2009. Given that a much higher share of whites than blacks or Hispanics own stocks - as well as mutual funds and 401(k) or individual retirement accounts (IRAs) - the stock market rebound since 2009 is likely to have benefited white households more than minority households.

Read the full report including the report methodology at pewsocialtrends.org.

soundoff (21 Responses)
  1. j. von hettlingen

    The Hispanics and the Blacks wanted to live their American dream and became homeowners. Cheap loans made mortgage borrowing possible. When the worst recession of all times hit America 2009, there came along the housing bubble. The homeowners lost their jobs and couldn't pay the mortgage. Not only the Hispanics and the Blacks were badly hit, many white Americans faced the same devastation. I think this median wealth is not representative.

    July 26, 2011 at 6:55 pm |
  2. HeyJustSaying

    But what about asian americans and indian americans?

    July 26, 2011 at 7:15 pm |
    • sp

      This is a common trick the libs play. Asians are typically omitted because they tend to outperform whites in education level and percentage in high earning jobs (doctor, dentist, etc). To include them would mean that certain races would have to take a hard look at there values system. Not PC, you know.

      August 6, 2011 at 10:20 am |
  3. Tristan Richardson

    The Median is the middle number between a set of numbers- Like this 1,2,5,50,500000000. The middle number in this group is 5. So if there are 5 black people that make the above listed amounts...The they typical household of black people make 5 dollars a year...Give me a break, this graph is seriously distorted. Please give the American public an average.- The amount of black people in this country , the average amount could not make do on 5 g's a year.

    July 26, 2011 at 8:40 pm |
  4. SarahPalin

    My rich republican friends like to hire Hispanics to cook and clean. Of course they are "off the books" cause they are illegals.

    July 26, 2011 at 9:45 pm |
  5. yvonnelopez123

    When interest rates drop, homeowners take notice. If rates dip lower than your current rate, refinancing may allow you to lower your monthly payment, potentially reducing the interest expenses you’ll pay over the life of the loan. Shop around use sources like "123 Refinance" to compare rates

    July 27, 2011 at 5:57 am |
  6. firstlast

    Shame on the CNN World for proliferating the bigoted conclusion that it is possible to distinguish whites or blacks from anyone politically labeled Hispanic. The premise in this news piece is clear: In the United States, if one is describe as "Hispanic" then one must have the same race: biological features and physical characteristics as everyone else described as "Hispanic". Latin Americans are as diverse as non Latin Americans, and it is impossible to describe them as all sharing the same race. Any Latin American can be white, black, Asian, Native American, or mixed. Shame on the CNN World for being so bigoted and journalistically reckless. The Pew Research Center is a nonprofit organization that makes its money by making itself relevant–thus, all its polls and studies. As is the nature of all polls and studies of this kind, the results depend heavily on how it defines the group that it polls and studies, the kind of questions asked, and the way in which the pollster or researcher ask a question. Nothing about polls and these kinds of studies is scientific. Who are the individuals "labeled" hispanic? What race are they? Indeed, if race if relevant to the study then the race of the those politically labeled Hispanic by definition is also important and relevant, yet it is deliberately ignored. This study, therefore, as it applies to people politically labeled Hispanic cannot possibly be accurate. Shame on CNN World for proliferating such bigotry and acting so journalistically reckless.

    July 27, 2011 at 3:41 pm |
  7. scorpioman

    Does anyone really believe this is "new" news?

    It's samo samo all over again.

    IMHO, this is something that is going to be around for a long, long, time.

    What is the solution? Ask JJ and Rev. Shrimpton. :> )

    July 28, 2011 at 12:59 am |
  8. undermedikated

    CNN is the reason Fox News became #1.
    Biased reporting screwed CNN. People got tired of their "Left Wing" agenda in the 90's and started tuning out. It was sickening to watch it. Now Fox News may be in the same boat. Small time, "Left Wing" commentators on MSNBC are starting to gain some traction. It's almost like a pendulum swinging back and forth. I'm waiting for an Independent news show but HaHaHa..

    July 28, 2011 at 7:36 am |
  9. undermedikated

    The way to build weath is through working hard and saving money. Draw your own conclusions.

    July 28, 2011 at 7:37 am |
  10. undermedikated

    If all the wealth you have totals 100k and you are 50, then you might as well only have 5k. You are screwed either way.

    July 28, 2011 at 7:39 am |
  11. C-

    It is funny to see how many people are targeting the data without addressing the bigger, obvious issue in this country. It is unbelievable for most to believe the above. Unfortunately you need to check your data and maybe look around a little. If you look at all the economic indicators in this great country this data is representative of a problem (not to say it is correct down to the dollar). Look at the % of population by race against those that are in prisons, in college etc... there is a problem. You can easily come to the conclusion that these races are inferior, but in my opinion that is a very simplistic and inaccurate assessment. The other option is there is something systemic in the history of our nation that has created this divide.... I go with the latter.

    July 31, 2011 at 11:46 pm |
  12. sundownr

    Enough is enough. The wealth gap in America is becoming gruesome. Sure America
    was once the land of plenty where anybody could get rich,
    but when the rich keep getting richer by lobbying our Congress then Americans
    need to rethink our Capitalist System. Is it really lawful for our Congress to
    be paid large sums of money to vote sensitive legislation contrary to the very
    people the Congress represents?

    Did you know we Americans still subsidize large corporations who boast
    of profits in the billions of dollars annually? How can this insanity be? In
    addition American tax dollars have been used to save the very banks who now sit
    on billions when America most needs their participation to help rebuild a
    sagging economy.

    How about the extreme inequities of “Shadow Banking”? I am talking
    about a banking system in America that operates with impunity to the very laws
    which govern most of us… that is more money is exchanged within “Shadow Banking”
    by far than is posted through the regulated banking system and there is no
    requirements for customers (the rich) of shadow banking to report banking
    transactions, no matter how large a transaction may be.

    If by any chance you still think America is a fair and just society
    then think again. The wealth gap in America is becoming so enormous even the
    rich are getting nervous at the extreme inequities which face the unemployed and
    the poor.

    The real problem in America is becoming obvious… that you cannot
    continually have millions of hungry people (many children) in a political system
    in which 5% of the people own 90% of wealth and the rich still want more. It
    does not take a genius to understand this is the point where societies start
    breaking down.

    Above all else in America I am tired of seeing my fellow soldiers die
    on some Godforsaken, foreign battlefield in wars which cause only extreme
    financial hardship and death. Are we Americans just plain stupid or mentally
    lame? How long will we keep offering our youth as a sacrifice to whatever? Can
    we Americans not see that life is precious beyond all measure and to enact the
    possibility of death or serious injury on any individual is the ultimate act of
    human disregard?

    And please don’t give me any of that anti-America crap. I love this
    nation as much as anybody but I am quickly seeing how greed and stupidity are
    corrupting the values of a great nation... that is America is not the America of
    my youth but rather a nation which now caters primarily to wealth and leaves
    many of its citizens stranded when times get tough.

    I sincerely hope somebody hears this cry and passes it on because until
    America truly comes to its senses we Americans are in for a financial struggle
    we never bargained for. At the very least we can bring our troops home after
    which we all need to find a way to make American banks and corporations
    understand they do not have a license to bleed all of us to death.

    August 13, 2011 at 12:28 pm |
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