Recession Impact: Minorities' Net Worth Falls By a Third
Racial and ethnic minorities were hit hard by the Great Recession, losing about a third of their net worth between 2007 and 2010, according to Federal Reserve Board numbers analyzing the years 2007 to 2010.
The nation's median household income fell to 1992 levels, losing 39 percent, largely because of the decrease in home values, especially among the middle class, USA Today reports. While fewer minorities owned homes, their median value dropped significantly during a time when people of all income levels encountered hardship on the job and property front.
When considering share of net worth lost, households headed by nonwhites or Hispanics fared about as bad as their white counterparts: white households' median net worth dropped 27.2 percent; nonwhite or Hispanic households lost 31.31 percent.
But nonwhite and Hispanic households had much less to lose.
In 2007, the median household net worth for a nonwhite or Hispanic households was $29,700. It dropped to $20,400 in 2010. By comparison, white households were worth $179,400 in 2007. In 2010, their value was $130,600.
As the nation becomes more diverse, the economic well-being of all Americans has and will become increasingly tied to the financial well-being of racial and ethnic minorities.
In 2010, whites made up 63.7 percent of the nation's population, down from 69.1 percent in 2000, according to census numbers. The Census Bureau suggests that the white population will fall just under 51 percent by 2040 and that whites will be a plurality by 2050.
Historically, racial and ethnic minorities have earned less than their white peers. In 2010, the median income for non-Hispanic white households was $54,620; it was $32,068 for black households, and $37,759 for Hispanics. The median income for Asians was $64,308.
In 2010, Afraican-American households, on average, earned 59 percent of what their white counterparts did, according to the census. That rate has not changed significantly since 1972, when the census first tracked median income by race and ethnicity.
The gap has closed slightly between whites and Hispanics. In 1972, the median income for Hispanics was 59 percent that of whites. In 2010, they earned 69 percent. The median household income for Asians was nearly 20 percent more than for whites.
The income disparities along racial and ethnic lines are indicative of broader socioeconomic divisions within American society.
"Low socioeconomic status and its correlates, such as lower education, poverty, and poor health, ultimately affect our society as a whole," according to the American Psychological Society.
In 2010, 38.2 percent of African-American children lived in poverty. Among Hispanic children, 32.3 percent did. And 22.7 percent of children who identified as being two or more races were considered poor by federal standards.
White and Asian children had poverty rates below the U.S. average of 21.6 percent.
Children who live in poverty, especially young children, are more likely than their peers to have cognitive and behavioral difficulties, to complete fewer years of education, and--as they grow up--to experience more years of unemployment, according to the census.
Between 2007 and 2010, the median income for all families decreased by 7.7 percent, according to the Federal Reserve Board's Survey of Consumer Finances.
Other figures to note:
- The median net worth of households headed by people ages 35 to 44 dropped from $92,400 in 2007 to $42,100 three years later, a loss of 54.44 percent, according to numbers released by the Federal Reserve in June.
- Households headed by people with college degrees and those who finished their studies when they graduated from high school lost slightly more than a third of their median net worth, 34.63 percent and 32.75 percent respectively. But, again, those with only a high school diploma did not have the financial depth enjoyed by their better-educated peers.
- The median net worth of households headed by a person with a high school diploma dropped from $84,300 to $56,700. College-educated households dropped from $298,600 to $195,200.
- The median American family's total worth in 2010 fell to $77,300, declining from $126,400 in a four-year period.