Whiter is Wealthier
White Americans enjoy an 11-to-1 wealth advantage over Hispanics, and an even higher 14-to-1 advantage over blacks, according to a new study by the Pew Hispanic Center. In both cases, disparities of wealth far exceed disparities of income, and they are worse today than they were before the 2001-02 recession.
The accumulation of wealth is what enables low-income families to rise into the middle class and "have some kind of assets beyond next week's paychecks,” said Robert Suro, director of the Pew Hispanic Center. "Having more assets enabled whites to ride out the jobless recovery better.”
"Wealth is a measure of cumulative advantage or disadvantage,” Suro added. “The fact that black and Hispanic wealth is a fraction of white wealth also reflects a history of discrimination."
Among the report’s major findings:
• The median net worth of Hispanic households in 2002 was $7,932. This was nine percent of the $88,651 median wealth of White households at that time. The net worth of Black households was only $5,988.
• Between 1999 and 2001, the net worth of Hispanic and Black households fell by 27 percent each. The net worth of White households increased by 2 percent.
• Twenty-six percent of Hispanic, 32 percent of Black and 13 percent of White households had zero or negative net worth in 2002. These proportions are essentially unchanged since 1996.
• Fifty-five to 60 percent of Hispanic and Black households had wealth less than one-fourth the national median level of wealth between 1996 and 2002. Fewer than 40 percent have middle-class levels of wealth and this proportion has not changed since 1996. Nearly 75 percent of White households have middle-class or higher levels of wealth.
• The wealthiest 25 percent of Hispanic and Black households own 93 percent of the total wealth of each group. Among White households, the top 25 percent own 79 percent of total wealth.
• The percentage of White households who owned homes in 2002 was 74.3 percent. The homeownership rates for Hispanic and Black households were 47.3 percent and 47.7 percent respectively.
• Financial market participation for Hispanic and Black households is well below the norm for White households. More than 25 percent of Latino and Black households, and only 6 percent of White households, own no assets other than a vehicle or unsecured liabilities.
• Home equity is a key component of household wealth and accounts for two-thirds of the mean net worth of Hispanic and Black households. The strength of the housing market in the recent economic slowdown eased the erosion in wealth of households which can be traced to the loss in value of financial assets.
• The median net worth of renters is only one percent of the level of net worth of homeowners.
• The net worth of immigrant households is only 37 percent of the net worth of native born households. Immigrants tend to be younger and less educated and their incomes are below average. Many are also in the early stages of assimilation.
• Hispanic immigrants from Central American and Caribbean countries had a net worth of only $2,508 in 2002. Cuban immigrants led the way for first-generation Hispanics with a net worth of $39,787. Mexican immigrants are in the middle with a net worth of $7,602 in 2002.
• Immigrants, Hispanic and non-Hispanic, show initial signs of rapid assimilation into homeownership, but it takes about 20 years for the homeownership rate among immigrants to equal the rate among native-born households of the same ethnicity.
n Jim Lardner