Racial & Ethnic Wealth Inequality Has Widened Since End of Great Recession: Wall Street Is Involved

[amborin]

Wealth inequality has widened along racial, ethnic lines since end of Great Recession

....even as the economic recovery has begun to mend asset prices, not all households have benefited alike, and wealth inequality has widened along racial and ethnic lines.....

.....The wealth of white households was 13 times the median wealth of black households in 2013, compared with eight times the wealth in 2010, according to a new Pew Research Center analysis of data from the Federal Reserve’s Survey of Consumer Finances. Likewise, the wealth of white households is now more than 10 times the wealth of Hispanic households, compared with nine times the wealth in 2010.

.....The current gap between blacks and whites has reached its highest point since 1989, when whites had 17 times the wealth of black households. The current white-to-Hispanic wealth ratio has reached a level not seen since 2001......

....The stability in household wealth follows a dramatic drop during the Great Recession. From 2007 to 2010, the median net worth of American families decreased by 39.4%, from $135,700 to $82,300. Rapidly plunging house prices and a stock market crash were the immediate contributors to this shellacking........

.....All American households since the recovery have started to reduce their ownership of key assets, such as homes, stocks and business equity. But the decrease in asset ownership tended to be proportionally greater among minority households. For example, the homeownership rate for non-Hispanic white households fell from 75.3% in 2010 to 73.9% in 2013, a percentage drop of 2%. Meanwhile, the homeownership rate among minority households decreased from 50.6% in 2010 to 47.4% in 2013, a slippage of 6.5%......

more at the link:

http://www.pewresearch.org/fact-tank/2014/12/12/racial-wealth-gaps-great-recession/

Wall Street is partly to blame here. So is the high price of college tuition.


Racial Wealth Gap Persists Despite Degree, Study Says

Even with tuition shooting up, the payoff from a college degree remains strong, lifting lifelong earnings and protecting many graduates like a Teflon coating against the worst effects of economic downturns.

But a new study has found that for black and Hispanic college graduates, that shield is severely cracked, failing to protect them from both short-term crises and longstanding challenges.

....The collapse of the housing bubble played havoc with college-educated black and Hispanic families, who on average accumulated a huge amount of debt relative to the size of their paychecks. They borrowed a lot to buy homes, only to see them plunge in value during the mortgage crisis. While the average value of a home owned by a white college graduate declined 25 percent, homes owned by black and Hispanic grads fell by about twice that.

This loss was made more devastating by the fact that blacks and Hispanics tended to have more of their wealth concentrated in their homes than whites and Asians, who, on average, accumulated more assets in the stock and bond markets, primarily through retirement accounts.

The housing boom and bust particularly whipsawed college-educated Hispanics: From 2007 to 2013, their net worth fell a whopping 72 percent.

That notion applies equally to excessive college and housing loans......Blacks and Hispanics are also less likely than whites to inherit money or receive help from their parents to cover a tuition bill or a down payment on a house.

William A. Darity Jr., a professor of public policy at the Samuel DuBois Cook Center on Social Equity at Duke University, points out that a family headed by a black college graduate has less wealth on average than a family headed by a white high school dropout.......

http://www.nytimes.com/2015/08/17/business/racial-wealth-gap-persists-despite-degree-study-says.html

The loan crisis hits hardest at colleges enrolling large numbers of students from low-income backgrounds. These undergraduates have to borrow for college, then often have difficulty finding well-paying jobs after graduation — if they graduate at all.

As a result, they struggle to repay their loans. The colleges with the lowest student-loan repayment rates include many for-profit colleges, but also some public and private nonprofit colleges, including a substantial number of historically black institutions. Even some wealthier, more selective colleges turn out to have a bigger student loan problem than previously realized.

Along with recent research finding that student loan defaults are heavily concentrated among the most economically marginalized students, the new data suggests that debt is a major financial obstacle for people who already face barriers to opportunity.........

Historically black colleges are neither unusually expensive nor profligate institutions. Most have served their communities for decades or longer, enduring racism and inadequate funding while enrolling young people who are often low-income, first-generation college students. As a result, despite the fact that tuition at historically black colleges is often much lower than at well-heeled private colleges, a vast majority of their students borrow.

That so many graduates of black colleges struggle to repay their loans may exacerbate racial wealth disparities. These nonrepayment rates, moreover, do not include the private loans that many students take out once their federal aid is exhausted, or the debt that parents are increasingly carrying to pay for their children’s college educations....

http://www.nytimes.com/2015/10/08/upshot/student-debt-is-worse-than-you-think.html

Bernie's detailed college tuition plan would help.



Student Loan Debt Means Failure To Attain Home Ownership:

Over the past ten years, the real amount of student debt owed by American households more
than doubled, from about $450 billion to more than $1.1 trillion, with average real debt per
borrower increasing from about $19,000 to $27,000.

During the same period, the U.S. homeownership rate declined markedly amidst the housing market bust and the financial crisis: from 69 percent in 2005 to 64 percent in 2014.

The declines in home ownership have been the largest (both in relative and absolute terms) among young households|a population segment that owes the preponderance of the outstanding student loan debt.

http://www.federalreserve.gov/econresdata/feds/2016/files/2016010pap.pdf

[beam me up scottie]

1. A lot of good info there, thanks.

The issue is not as simplistic as some want us to believe. No one thinks economic justice will conquer racism but it is one part - a very important part of a solution.

[yourout]

2. Not suprised.....there should have been zero dollars to the bailouts unless....

#1. Glass-Steagall reinstated immediately.
#2. Big banks broken up.

Congress did neither and now we are staring at another collapse in my opinion.

While the last 8 years things have stabilized the underlying cause for the collapse has not been fixed.

[speaktruthtopower]

3. It's smart business for Wall Street to co-opt..

DLC types. They think of it as a put option on regulation risk.