The Pew Research Center just published a report that provides a stark reminder that the disparity in wealth between whites, Latinos and African Americans in this country is a nightmarish problem. In the single largest drop since Pew began collecting data in 1984, Latinos saw their median wealth drop 66% during the period of 2005 to 2009, and African Americans did not fare much better, with a 53% drop in median wealth during the same period.
This precipitous drop in median wealth for Latinos and African Americans during the period of the financial market crisis of 2008 can be attributed to the fact that minority wealth is often tied into home ownership and equity, thereby making minority communities extremely vulnerable during housing crises. Contrarily, whites are generally in a better position to diversify their assets between home equity, stocks, bonds and other investment alternatives. The housing crisis not only widened the existing wealth gap, as white wealth better weathered the mortgage meltdown based on diversified portfolios, white families saw their median wealth drop only 16% because of this diversification. Furthermore, according to the Pew Report, almost one third of Latino and African American households reported zero wealth—that is, having more debt than assets.
The most startling statistic is that while whites had an average median wealth of $113,149 according to Pew; African Americans had a median wealth of only $5,677, and Latinos had a median wealth of $6,325 – simply alarming. The financial market crisis exacerbated this wealth gap, indicating that the mortgage crisis has landed heaviest on communities of color.