Wealth gap widens between whites, minorities in the US

Based on analysis of newly available government data from 2009, the study by Pew Research Center highlights how blacks and Hispanics have been disproportionately affected by the collapse of the US housing market, the financial crisis and the recession that marked the period from 2005 to 2009.

The median wealth of white households was 20 times that of black households and 18 times that of Hispanic households, the study says.

These lopsided wealth ratios are the largest since the government began publishing such data a quarter century ago and roughly twice the size of the ratios that had prevailed between these three groups for the two decades prior to the Great Recession that ended in 2009, it said.

The study found that, in percentage terms, the bursting of the housing market bubble in 2006 and the recession that followed from late 2007 to mid-2009 took a far greater toll on the wealth of minorities than whites.

Plummeting house values were the principal cause of the recent erosion in household wealth among all groups, with Hispanics hit hardest by the meltdown in the housing market, the study said.

Rakesh Kochhar, one of the report's co-authors, was quoted by CNN as saying that it is possible that the gaps may have narrowed somewhat since 2009.

Kochhar said home prices have stabilised in the last year, which should lift the net worth of black and Hispanic homeowners, since both groups draw a large share of their net worth from home equity.

From 2005 to 2009, inflation-adjusted median wealth fell by 66 per cent among Hispanic households and 53 per cent among black households, compared with just 16 per cent among white households.

As a result of these declines, the typical black household had just USD 5,677 in wealth (assets minus debts) in 2009, the typical Hispanic household had USD 6,325 in wealth and the typical white household had USD 113,149.

Moreover, about a third of black (35 per cent) and Hispanic (31 per cent) households had zero or negative net worth in 2009, compared with 15 per cent of white households. In 2005, the comparable shares had been 29 per cent for blacks, 23 per cent for Hispanics and 11 per cent for whites, the study said.