Pew Study Shows Racial Wealth Gap Widens

There's long been a big gap between the wealth of white families and the wealth of African-Americans and Hispanics. But the Great Recession has made it much worse — the divide is almost twice what it used to be.

That's according to a new study by the Pew Research Center, which says that the decline in the housing market is the main cause.

The numbers are astounding. The average wealth of a white family in 2009 was 20 times greater than that of the average black family, and 18 times greater than the average Hispanic family. In other words, the average white family had $113,149 in net worth, compared to $6,325 for Hispanics and $5,677 for blacks.

That's the largest gap since the government began collecting the data a quarter of a century ago, and twice what it was before the start of the Great Recession.

Real Estate Downturn

Rakesh Kochhar, one of the authors of the report, says white households went into the recession in a much stronger position and, as a result, were better able to weather the storm.

One reason was investment in real estate. Minority families had most of their wealth in their homes, so when the housing bubble burst, Kochhar says, those households took a bigger hit.

"Especially Hispanics, for example. Sixty-six percent of their net worth derives from home equity," Kochhar says. "And they are concentrated geographically in parts of the country such as California, Arizona, Florida and Nevada, where the housing downturn was most severe."

The result is that the average Hispanic family lost two-thirds of its wealth between 2005 and 2009, according to the Pew report. Black families lost more than half of theirs.

www.npr.org/2011/07/26/138688135/study-shows-racial-wealth-gap-grows-wider