Tanvi Misra is a staff writer for CityLab covering immigrant communities, housing, economic inequality, and culture. She also authors Navigator, a weekly newsletter for urban explorers (subscribe here). Her work also appears in The Atlantic, NPR, and BBC.
The wealth gap between whites and blacks in the U.S. is the widest it's been in 30 years.
The recession affected everyone, but minorities were hit harder. As the U.S. economy rebounded, the wealth gap between races widened because a much larger share of minorities were—and still are—locked out of the recovery process. A new Pew Research Center analysis shows that in 2013, the wealth gap between African-Americans and whites rose to its highest level in 30 years.
Pew analyzed Survey of Consumer Finances data from the Federal Reserve and found that white households were worth 13 times more than black households, and 10 times more than Hispanic households in 2013. The white-to-black wealth ratio hasn't been so high since 1989, when it was 17:1. For Hispanic households, the 2013 wealth ratio was the highest since 2001, when white wealth was approximately 11 times Hispanic wealth.
What's driving the two ends of the wealth spectrum apart is that while white wealth is growing (albeit modestly), minority wealth is declining steeply. Black household net worth declined by 33.7 percent and Hispanic net worth fell by 14.3 percent between 2010 and 2013.
During the recession, black and Hispanic households took more out of savings to keep their families afloat, but they have not been to replenish that savings post-recession. And although the economy has been adding jobs, "we have had very little income growth in the middle and tail-end of the income distribution, where the blacks and Hispanics are," explains Rakesh Kochhar, one of the study's authors.
"The recession has had a lingering after-effect on income, particularly for minorities," says Kochhar. As a result, the median income for all minorities (black, Hispanic, and others) has declined by 9 percent since 2010.
The other problem is that minorities can't really take advantage of the rising value of stocks or the rebound in housing prices because they are less likely to own these assets, Kochhar points out. Even when post-recession circumstances encourage home-buying, that credit is disproportionately unavailable to minorities.
To fish minorities out from the bottom of the wealth barrel, the Urban Institute's Signe-Mary McKernan has offered several policy recommendations, but at the end of the day, there's no replacement for a healthier economy.
"A stronger [overall] recovery would benefit all households," Kochhar says.