Thomas Sowell on Kamala Harris’ Communist Video

They say the Great Recession of 2007-2009 triggered a sharp, prolonged decline in the wealth of American families, and an already large wealth gap between white households and black and Hispanic households widened further in its immediate aftermath. But the racial and ethnic wealth gap has evolved differently for families at different income levels, according to a new Pew Research Center analysis of data from the Federal Reserve Board’s Survey of Consumer Finances.

Among lower-income families, the gap between white households and their black and Hispanic counterparts shrank by about half from 2007 to 2016. But among middle-class families, it increased and shows no sign of retreating. (There are an insufficient number of observations in the SCF data to report on upper-income black and Hispanic families separately.)

And even though overall racial and ethnic inequality in wealth narrowed from 2013 to 2016, the gap remains large. In 2016, the median wealth of white households was $171,000. That’s 10 times the wealth of black households ($17,100) – a larger gap than in 2007

Here are some key trends in household wealth across income tiers and racial and ethnic groups. In this analysis, we categorized families by their household income, after adjusting their incomes for family size. Middle-income families have size-adjusted incomes between two-thirds and twice the national median size-adjusted income. Lower-income families have a size-adjusted household income less than two-thirds the median and upper-income families more than twice the median.

Overall, American household wealth has not fully recovered from the Great Recession. In 2016, the median wealth of all U.S. households was $97,300, up 16% from 2013 but well below median wealth before the recession began in late 2007 ($139,700 in 2016 dollars). And even though overall racial and ethnic inequality in wealth narrowed from 2013 to 2016, the gap remains large. In 2016, the median wealth of white households was $171,000. That’s 10 times the wealth of black households ($17,100) – a larger gap than in 2007 – and eight times that of Hispanic households ($20,600), about the same gap as in 2007. (Asians and other racial groups are not separately identified in the SCF data.)

Here are some key trends in household wealth across income tiers and racial and ethnic groups. In this analysis, we categorized families by their household income, after adjusting their incomes for family size. Middle-income families have size-adjusted incomes between two-thirds and twice the national median size-adjusted income. Lower-income families have a size-adjusted household income less than two-thirds the median and upper-income families more than twice the median.       

Lower-income white families experienced greater losses in wealth during the recession than lower-income black and Hispanic families did. Prior to the recession in 2007, lower-income white families had 10 times as much median wealth as lower-income black families – $42,700 versus $4,300 (figures in 2016 dollars). Lower-income Hispanic families had a median net worth of $8,400, lagging white families by a ratio of five-to-one.

These large wealth gaps were trimmed roughly in half by the Great Recession, which cut the median wealth of lower-income white households to $21,900 in 2010, a loss of 49%. Losses for lower-income black and Hispanic households were much smaller, 3% and 5%, respectively. The larger losses for lower-income white families may have arisen from their greater exposure to the housing market crash. In 2007, 56% of lower-income whites were homeowners, compared with 32% each of lower-income blacks and Hispanics. The homeownership rate among lower-income whites has trended downward since then, falling to 49% by 2016, but the rate for blacks and Hispanics is largely unchanged.                                                                                                                                                                                                                                    Racial and ethnic wealth inequality among middle-income families increased with the recession and has not retreated in the recovery. Middle-income black and Hispanic families took a substantial hit in the recession. The median wealth of middle-income blacks fell to $33,600 in 2013, down 47% from 2007. Likewise, the median wealth of middle-income Hispanics dropped to $38,900 in 2013, a loss of 55% since 2007. Meanwhile, middle-income white families experienced a less substantial loss of 31% in this period, as their median wealth fell to $131,900. As a result, racial and ethnic wealth inequality among middle-incomes families increased during or after the recession. From 2007 to 2013, among those in the middle-income tier, the white-to-black wealth ratio increased from three-to-one to four-to-one, and the white-to-Hispanic wealth ratio increased from two-to-one to three-to-one. These margins did not diminish from 2013 to 2016.

 

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