In an ideal world, a rising tide really would lift all boats. But we know it doesn’t work like that. And, as a new report shows, when the tide goes out, not every boat is equally likely to get stranded.
The median wealth of white households is now an unprecedented 20 times that of black households and 18 times that of Hispanic households, according to an analysis released Tuesday by the Pew Research Center. This staggering disparity is the largest since the government began tracking such data over a quarter-century ago.
Between 2005 and 2009, Hispanic households lost 66 percent of their wealth, and black and Asian households lost about 53 percent of their wealth. By comparison, white households saw their wealth drop by an average of 16 percent. These inequality ratios between whites and minorities have nearly doubled since 2005, illustrating the disproportionate effect the economic crisis has had on minorities. In 2009, a typical black family had only about $5,600 in wealth (which is measured by assets minus debts), a Hispanic family had about $6,300, and a white family had over $113,000.
Black and Hispanic households have been hit the hardest by the economic crisis because a much larger proportion of their wealth was tied up in their homes - about 66 percent of a Hispanic household’s wealth and 59 percent of a black household’s wealth was composed of home equity in 2005, compared to only 44 percent of a white household’s wealth. But there’s another disturbing link between increasing wealth disparities and the housing crisis. Numerous studies have shown that black and Hispanic households were much more likely to be targeted during the subprime lending boom for predatory loans. As a result, those families have been far more likely to lose their homes to foreclosure.
Facts like these make it impossible to pretend that we live in a post-racial America. If we want a nation where skin color does not determine wealth, and where the ills of poverty are not reproduced in generation after generation of communities of color, we must implement policies that promote equality and opportunity. Let’s create a country where all of our boats have a chance to catch the next rising tide.