The wealth disparity between white households and black and Hispanic households reached staggering and unprecedented proportions after the housing market meltdown and subsequent recession, according to a new Pew Research Center report which analyzed Census data from 1984 to 2009.
The report finds that the median white household has a net worth of $113,149, 20 times more than the median black household, at $5,667, and 18 times more than the median Hispanic household, at $6,325.
Poor households, possessing zero or negative net worth, were also found to be disproportionately black or Hispanic: About a third of black and Hispanic households had nothing or less than nothing, compared to 15 percent of white households.
One of the main causes of the high disparity was that minority households suffered much more from the housing crisis and recession than white households did: “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,” states the report. In this four-year period, the disparity between white households and black and Hispanic households doubled, primarily because these minority groups lost much more in net worth than whites did.
One reason for the sharp post-2005 decline is that black and Hispanic households were much more likely to have invested in the housing market. Another is the sustained high levels of unemployment: African-Americans and Hispanics have much higher levels of unemployment than whites do. Declining income during the recession also disproportionately affected minority households.
Hispanics, an ethnic group which grew faster than any other in the United States from 2000 to 2009, also suffered the most from the housing crash, with the median level of home equity declining by half from $99,983 to $49,145 in the 2005-2009 period. Immigration to a particular area can lead to increases in local housing prices. Many of the states which suffered the most from the housing crisis — Arizona, California, Florida and Nevada — also had the highest levels of immigration in the 1990s and early 2000s.
The report also argues that whites may also have recovered more in the 2005-2009 period because they are much more likely to invest more of their wealth in the stock market, which has recovered faster than the housing market has. And while white households lost more in an absolute sense after 2005 than black or Hispanic households, they did so because the typical white household had much more to begin with. The median white household had $134,992 in 2005, and the median black and Hispanic households had $12,124 and $18,359, respectively
Extremely high racial disparities in household wealth could be one explanation for recent political trends. Last week, Pew released an analysis of survey data which revealed that the Republican Party has been increasing in popularity among white voters while black and Hispanic voters have remained strongly Democratic. Groups where the GOP has traditionally been weaker, including young and lower-income people, have since 2008 grown more likely to identify as Republican if they are white.