The Income Gap Between Races Is Wider Than It’s Been for Decades

Wealth inequality between whites and their black and Hispanic counterparts has reached its highest point since the late ’80s and early 2000s in the U.S., according to a recent study by the Pew Research Center. It seems even when it comes to economic recessions and recoveries, race plays a large part in furthering inequality in America.

The current gap between blacks and whites has reached its highest point since 1989, when whites had 17 times the wealth of black households. The current white-to-Hispanic wealth ratio has reached a level not seen since 2001. (Asians and other racial groups are not separately identified in the public-use versions of the Fed’s survey.)…A number of factors seem responsible for the widening of the wealth gaps during the economic recovery. As the Federal Reserve notes, the median income of minority households (blacks, Hispanics and other non-whites combined) fell 9% from its 2010 to 2013 surveys, compared with a decrease of 1% for non-Hispanic white households. Thus, minority households may not have replenished their savings as much as white households or they may have had to draw down their savings even more during the recovery.

Also, financial assets, such as stocks, have recovered in value more quickly than housing since the recession ended. White households are much more likely than minority households to own stocks directly or indirectly through retirement accounts. Thus, they were in better position to benefit from the recovery in financial markets.

All American households since the recovery have started to reduce their ownership of key assets, such as homes, stocks and business equity. But the decrease in asset ownership tended to be proportionally greater among minority households. For example, the homeownership rate for non-Hispanic white households fell from 75.3% in 2010 to 73.9% in 2013, a percentage drop of 2%. Meanwhile, the homeownership rate among minority households decreased from 50.6% in 2010 to 47.4% in 2013, a slippage of 6.5%.

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—Posted by Natasha Hakimi Zapata