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The Racial Wealth Divide In America Is Staggering

Reprinted with permission from AlterNet.

After predicating his presidential campaign on racist incitement against Muslims, immigrants and Black Lives Matter, President-elect Donald Trump set to work appointing a cabinet that, so far, is setting new records as the wealthiest, and least diverse, in American history. In less than a month, that administration will take the White House of a country that faces the highest levels of wealth disparities along racial lines in nearly three decades.

The Pew Research Center determined in June that white homes possess roughly 13 times the wealth of their black counterparts. Analysis of federal government data also determined that black people in the United States are at least two times as likely as white people to be poor or unemployed. Meanwhile, homes headed by a black person “earn on average little more than half of what the average white households earns,” Pew concluded.

A separate Pew report concluded in 2014 that the wealth gap between white and black people in the United States is at its highest point since 1989.

Those findings were followed by a separate report released in August by the the Institute for Policy Studies and the Corporation for Enterprise Development found that, if economic trends over the past three decades continue on pace, it “will take black families 228 years to amass the same amount of wealth white families have today.” It would take Latino families 84 years to accrue the same wealth as their white counterparts.

The study projects that, by 2043, when people of color are projected to comprise a majority of the U.S. population, the wealth divide with white families on one side and Latino and black families on the other while be double current levels.

“This growing wealth divide is no accident,” states the report. “Rather, it is the natural result of public policies past and present that have either been purposefully or thoughtlessly designed to widen the economic chasm between White households and households of color and between the wealthy and everyone else. In the absence of significant reforms, the racial wealth divide—and overall wealth inequality—are on track to become even wider in the future.”

This economic divide dovetails with racial segregation on the neighborhood level. A report authored by Century Foundation fellow Paul Jargowsky in 2015 found that “more than one in four of the black poor and nearly one in six of the Hispanic poor lives in a neighborhood of extreme poverty, compared to one in thirteen of the white poor.”

“Through exclusionary zoning and outright housing market discrimination, the upper-middle class and affluent could move to the suburbs, and the poor were left behind,” he writes. “Public and assisted housing units were often constructed in ways that reinforced existing spatial disparities. Now, with gentrification driving up property values, rents, and taxes in many urban cores, some of the poor are moving out of central cities into decaying inner-ring suburbs.”

Impacted communities have long been sounding the alarm about this trend. In their policy platform released earlier this year, the Movement for Black Lives proclaimed, “We demand economic justice for all and a reconstruction of the economy to ensure Black communities have collective ownership, not merely access.”

The platform states, “Together, we demand an end to the wars against Black people. We demand that the government repair the harms that have been done to Black communities in the form of reparations and targeted long-term investments. We also demand a defunding of the systems and institutions that criminalize and cage us.”

Sarah Lazare is a staff writer for AlterNet Follow her on Twitter at @sarahlazare.

IMAGE: AFP Photo/Mladen Antonov

Wealth Gap Between Races Widens

WASHINGTON (AP) — The wealth gaps between whites and minorities have grown to their widest levels in a quarter-century. The recession and uneven recovery have erased decades of minority gains, leaving whites on average with 20 times the net worth of blacks and 18 times that of Hispanics, according to an analysis of new Census data.

The analysis shows the racial and ethnic impact of the economic meltdown, which ravaged housing values and sent unemployment soaring. It offers the most direct government evidence yet of the disparity between predominantly younger minorities whose main asset is their home and older whites who are more likely to have 401(k) retirement accounts or other stock holdings.

“What’s pushing the wealth of whites is the rebound in the stock market and corporate savings, while younger Hispanics and African-Americans who bought homes in the last decade — because that was the American dream — are seeing big declines,” said Timothy Smeeding, a University of Wisconsin-Madison professor who specializes in income inequality.

The median wealth of white U.S. households in 2009 was $113,149, compared with $6,325 for Hispanics and $5,677 for blacks, according to the analysis released Tuesday by the Pew Research Center. Those ratios, roughly 20 to 1 for blacks and 18 to 1 for Hispanics, far exceed the low mark of 7 to 1 for both groups reached in 1995, when the nation’s economic expansion lifted many low-income groups to the middle class.

The white-black wealth gap is also the widest since the census began tracking such data in 1984, when the ratio was roughly 12 to 1.

“I am afraid that this pushes us back to what the Kerner Commission characterized as ‘two societies, separate and unequal,'” said Roderick Harrison, a former chief of racial statistics at the Census Bureau, referring to the 1960s presidential commission that examined U.S. race relations. “The great difference is that the second society has now become both black and Hispanic.”

Stock holdings play an important role in the economic well-being of white households. Stock funds, IRA and Keogh accounts as well as 401(k) and savings accounts were responsible for 28 percent of whites’ net worth, compared with 19 percent for blacks and 15 percent for Hispanics.

According to the Pew study, the housing boom of the early to mid-2000s boosted the wealth of Hispanics in particular, who were disproportionately employed in the thriving construction industry. Hispanics also were more likely to live and buy homes in states such as California, Florida, Nevada and Arizona, which were in the forefront of the real estate bubble, enjoying early gains in home values.

But those gains quickly shriveled in the housing bust. After reaching a median wealth of $18,359 in 2005, the wealth of Hispanics — who derived nearly two-thirds of their net worth from home equity — declined by 66 percent by 2009. Among blacks, who now have the highest unemployment rate at 16.2 percent, their household wealth fell 53 percent from $12,124 to $5,677.

In contrast, the median household wealth of whites dipped a modest 16 percent from $134,992 to $113,149, cushioned in part by a stock market recovery that began in mid-2009.

“The findings are a reminder — if one was needed — of what a large share of blacks and Hispanics live on the economic margins,” said Paul Taylor, director of Pew Social & Demographic Trends. “When the economy tanked, they’re the groups that took the heaviest blows.”

The latest data come as President Barack Obama and congressional leaders try to reach a deal to avoid a U.S. default on its financial obligations after Aug. 2. Democrats and Republicans have been wrangling over proposals that could cut trillions of dollars from programs such as Medicare and Social Security; they are divided over whether to bring in new tax revenue, such as by closing corporate tax loopholes or increasing taxes for the wealthy.

The NAACP and other black groups urged Obama to resist deep cuts to housing assistance or safety net programs, saying it would disproportionately hurt urban areas with high poverty and unemployment. The U.S. poverty rate currently stands at 14.3 percent, with the ranks of the working-age poor at the highest level since the 1960s. Some analysts believe the poverty rate will climb higher when new figures are released in September.

“Typically in recessions, minorities suffer from being last hired and first fired. They are likely to lose jobs more rapidly at the beginning of the recession, and are far slower to gain jobs as the economy recovers,” said Harrison, who is now a sociologist at Howard University. “One suspects that blacks who lost jobs in the recession, or who have tried to help family members or relatives who did, have now spent whatever savings or other cashable assets they had.”

Other findings:

—About 35 percent of black households and 31 percent of Hispanic households had zero or negative net worth in 2009, compared with 15 percent of white households. In 2005, the comparable shares were 29 percent for blacks, 23 percent for Hispanics and 11 percent for whites.

—Asians lost their top ranking to whites in median household wealth, dropping from $168,103 in 2005 to $78,066 in 2009. Like Hispanics, many Asians were concentrated in states like California hit hard by the housing downturn. More recent arrivals of new Asian immigrants, who tend to be poor, also pushed down their median wealth.

—Across all race and ethnic groups, the wealth gap between rich and poor widened. The share of wealth held by the top 10 percent of U.S. households increased from 49 percent in 2005 to 56 percent in 2009. The threshold for entry into the wealthiest top 10 percent, however, dipped lower: from $646,327 in 2005 to $598,435.

The numbers are based on the Census Bureau’s Survey of Income and Program Participation, which sampled more than 36,000 households on wealth from September-December 2009. Census first began publishing wealth data from this survey, broken down by race and ethnicity, in 1984.

Online:

Pew Social & Demographic Trends: http://pewsocialtrends.org/

Census Bureau: www.census.gov