The American 'Race' of and for Wealth
The recent (and arguably current, recession has left stains on various parts of American society. For example, funds for public programs including education, social security, and both medicaid and medicare will all see, if they haven’t already, sharp declines in funding, all of which will have both short and long term impacts on the people they serve - namely, a lot of the United States. Thus, a new report coming out of the Pew Research Center isn’t so much surprising as it is expected. As somber as that may sound, the economic picture for many individuals living in America resembles the state of the country itself, with a significant amount of Americans losing significant net-worth through the decrease of property values with rising debt.
But the Pew Center’s report sheds light on race and the race for income in the US. First, the wealth gap between whites and minorities grew (which it has been doing for almost 30 years) during the recession. These numbers are quite shocking and really exploit the consequences of broken policies in the US that continue to manufacture poor minority groups as byproducts of slums and cyclical poverty.
Using 2009 Census data, Pew Research found that:
Whites median wealth was $113,149
Hispanics median wealth was $6,325
Blacks median wealth was $5,677
Based on the findings from the data, this means that whites had surmounted an approximate 18:1 wealth (net worth) ratio to Hispanics and 20:1 to blacks.
This compared to a margin that saw a 7:1 spread for whites against both blacks and Hispanics in 1995.
The wealth disparity is growing rapidly and is seeing levels that rival the disproportionate allocation of wealth in the US before and during the industrial revolution.
That’s the race finding of the data. The actual race for wealth in the US is the second aspect of the report.
Asians lost their top rank in household wealth, seeing their ascent to the top peak at $168,103 in 2005. This decreased by more than half to $78,066 in 2009, casting whites as once again top dog in the US.
This significant drop is being attributed to the housing market where, according to data held by Pew Research, Asians had clustered concentrations of homeownership in states such as California, which was perhaps the hardest hit state of the real estate meltdown. Further, whites rebounded faster than Asians because of the diversity of economic investment in stocks and other funds, whereas Asians and minorities either neglected to or, at least in the case of Asians, didn’t do so enough.
Hispanics are also guilty of this geographical concentration, however, and is responsible for dropping their wealth some 67% alone.
Other factors such as debt, variable interest rates, and unemployment all contributed to the fall of wealth for minorities and Asians.
What needs to be done to stop the bleeding?
This is the leading question as many economists have conflicting opinions on what exactly needs to happen in order to prevent the further decay of household value. But, a lot of attention to the instruments available to help the economy are being ignored due to the man-made crisis that is the debt ceiling.
Listening to NPR all week long, every segment seems to be dominated by the debt ceiling controversy. Not to dismiss this as unimportant, but I have read time and time again that the single most important piece of the recovery puzzle is and always has been jobs and the creation there of.
Politics interfering with the recovery? Seems almost too Hollywood to be real, but the harsh and idiotic reality is that yes, that appears to be happening. With all of the ideological discussion weighing cuts vs. tax increases (which, by the way, I am in favor of both), the biggest anecdote to the recession is currently being overlooked…
and unfortunately, it won’t get any love until Congress is done raising the roof.