Millions of Americans suffered a loss of wealth during the recession and the sluggish recovery that followed. But the last half-decade has proved far worse for Black and Hispanic families than for White families, starkly widening the already large gulf in wealth between White Americans and most minorities, according to a new study from the Urban Institute.
“It was already dismal,” Darrick Hamilton, a professor at the New School in New York, said of the wealth gap between Black and White households. “It got even worse.”
Given the dynamics of the housing recovery and the rebound in the stock market, the wealth gap might still be growing, experts said,
further dimming the prospects for economic advancement for current and future generations of Americans from minority groups.
The Urban Institute study found that the racial wealth gap expanded during the recession, even as the income gap between White Americans and non-White Americans remained stable. As of 2010, White families, on average, earned about $2 for every $1 that Black and Hispanic families earned, a ratio that has remained roughly constant for the last 30 years. But when it comes to wealth — as measured by assets, like cash savings, homes and retirement accounts, minus debts, like mortgages and credit card balances — White families have far outpaced Black and Hispanic ones.
Before the recession, White families, on average, were about four times as wealthy as non-White families, according to the Urban Institute’s analysis of Federal Reserve data. By 2010, Whites were about six times as wealthy.
The dollar value of that gap has grown, as well. By the most recent data, the average White family had about $632,000 in wealth, versus $98,000 for Black families and $110,000 for Hispanic families.
“The racial wealth gap is deeply rooted in our society,” said Caroline Ratcliffe, one of the authors of the Urban Institute study. “It’s here, it’s not going away, and we need to care about it.”
Many experts consider the wealth gap to be more pernicious than the income gap, as it perpetuates from generation to generation and has a powerful effect on economic security and mobility.
Young Black people are much less likely than young White people to receive a large sum from their parents or other relatives to pay for college, start a business or make a down payment on a home, for instance. That, in turn, makes their wealth-building prospects shakier as they move into adulthood.