Wealth Gap Widens in U.S. Between Minorities, Whites 

MIRIAM JORDAN / Wall Street Journal 18oct04

[AP articles below]

LOS ANGELES — Economic recession and a weak recovery have hit Hispanics and African-Americans harder than whites, increasing the wealth gap between the two minority groups and whites, a new study found.

The median net worth of Hispanic households fell in 2002 to $7,932, down 24% from 1999, according to the Pew Hispanic Center, a Washington-based think tank. Over the same period, the net worth of African-Americans fell 32% to $5,988 from $8,774. For white households, the measure rose 2.6% to $88,651 from $86,370.

"The recession was much harder on minority households, which were already living on the edge," says Rakesh Kochhar, the economist who conducted the study. "While some of the decline in wealth among Hispanics is due to the influx of new immigrants, much of it reflects the effects of the 2001 recession," he added.

The Pew analysis found that even though the median income of Latino and African-American households is two-thirds that of white households, their wealth is only about one-tenth as large. That is mainly because the two minorities have significantly less access to financial services, such as bank accounts, and face greater barriers to homeownership.

"Wealth provides you with short-term protection against economic downturns," says Mr. Kochhar. "A key component of wealth is owning a home."

In 2002, slightly less than half of all Hispanics and African-Americans were homeowners compared with 74% of whites. One out of four Hispanic and black households owned only a car or unsecured debt, such as credit-card debt. Even the wealthiest 5% of Hispanic households had a net worth that is less than half of the net worth of comparable white households.

Across the economy in recent years, real wages have fallen, health-care costs have escalated and home prices have surged. These trends have hampered the ability of low-wage workers, who are predominantly minorities, "to accumulate assets that would give them a small measure of wealth in society," says David Koff, senior research analyst with Unite Here, the textile and hotel workers' union.

Janitors and other low-wage workers "can't dream of buying a house," says Ben Monterroso, a legal immigrant from Guatemala who is a western regional leader of the Service Employees International Union, one of the nation's largest labor groups, based in Washington. "With benefits shrinking, you go to the hospital once and it wipes out your savings."

Mr. Monterroso and his wife, Maria Elena, saved enough to buy a two-bedroom home in Los Angeles after four years earning $10 an hour as janitors in the 1980s. Their home, purchased for $80,000 in 1985, is now valued at $300,000. But nowadays, he says, most janitors earn about $15 an hour and typically work two or three jobs because companies prefer hiring part-time laborers to avoid paying benefits.

Although Hispanics lost wealth in the recession, there are signs that they are making gains in employment and income that could bode well for the future. Latinos have been taking a high proportion of new jobs, particularly in two of the more vibrant sectors of the economy, construction and services. "Whether this will translate into greater wealth, we will know only with time," says Mr. Kochhar, the economist.

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A Look at the Wealth Gap in U.S.

AP 18oct04

The median net worth in dollars of white, black and Hispanic households in 1996 and 2002, adjusted for inflation, and the percent change between those years, according to an analysis of Census Bureau data by the Pew Hispanic Center. Figures for whites and blacks refer to those not of Hispanic ethnicity:

Category  	 1996 	  2002  (%)
Hispanic	 6,961   7,932  14.0
Black		 7,135   5,988 -16.1
White 	 	75,482  86,651  17.4
All households  53,160  59,706 	12.2

Source: Pew Hispanic Center.

Study Says White Families' Wealth Advantage Has Grown

AP 18oct04

WASHINGTON, Oct. 17 (AP) - The enormous wealth gap between white families and black and Hispanic families grew larger after the most recent recession, a private analysis of government data has found.

White households had a median net worth of greater than $88,000 in 2002, 11 times that of Hispanic households and more than 14 times that of black households, the Pew Hispanic Center said in the study, being released Monday.

Blacks were slowest to emerge from the economic downturn that started in 2000 and ended early in 2001, the report found.

Net worth accounts for the value of items like a home and a car, checking and savings accounts, and stocks, minus debts like mortgage, car loans and credit card bills.

Roberto Suro, director of the Pew Hispanic Center, said the accumulation of wealth allows low-income families to rise into the middle class and "have some kind of assets beyond next week's paychecks."

"Having more assets enabled whites to ride out the jobless recovery better," Mr. Suro said.

According to the group's analysis of Census Bureau data, nearly one-third of black families and 26 percent of Hispanic families were in debt or had no net assets, compared with 11 percent of white families.

"Wealth is a measure of cumulative advantage or disadvantage," said Roderick Harrison, a researcher at the Joint Center for Political and Economic Studies, a Washington research organization that focuses on black issues. "The fact that black and Hispanic wealth is a fraction of white wealth also reflects a history of discrimination."

After accounting for inflation, net worth increased 17 percent for white households from 1996 to 2002 and 14 percent for Hispanic homes, to about $7,900. It fell for black households by 16 percent, to roughly $6,000.

The median net worth for all American households, representing all races and ethnicities, was $59,700 in 2002, a 12 percent gain from 1996.

Only white homes recouped all their losses from 2001 to 2002. Both Hispanics and blacks lost nearly 27 percent of net worth from 1999 to 2001; the next year Hispanics gained it almost all back (26 percent), while blacks were up only about 5 percent.

Mr. Harrison said Hispanics were more insulated from the downturn than blacks, so they suffered less. For example, Hispanics made employment gains in lower-paid, lower-skilled areas like service and construction.

Blacks were hit hard by job losses in the manufacturing industry and in professional fields, where they were victims of "last hired, first fired" policies, he said.