Why the Wealth Gap for Blacks and Hispanics Continues to Grow
It's getting worse. The recession has famously taken a toll on blue collar sectors including construction and manufacturing. And the fact that America's minorities have traditionally comprised a large portion of the workers in those realms has made them and their wealth particularly vulnerable. The extent to which groups like African-American and Hispanic Americans are suffering in comparison to Whites is the subject of a new study by the Pew Research Center.
The report, entitled, "Wealth Gaps Rise to Record Highs Between Whites, Blacks and Hispanics," and written by Rakesh Kochbar, Richard Fry and Paul Taylor, puts it plainly: for data from 2009, the median wealth of white households is 19 times that of black households and 15 times that of Hispanic households. And those numbers show that the disparity has only been getting worse. Using the same categorical distinctions from 2004 data, the ratios then stood at 11 to 1 for blacks, and 7 to 1 for Hispanics.
"What's pushing the wealth of whites is the rebound in the stock market and corporate savings, while younger Hispanics and African-Americans who bought homes in the last decade -- because that was the American dream -- are seeing big declines," said Timothy Smeeding, a University of Wisconsin-Madison professor who specializes in income inequality, in an interview with The Associated Press.
Indeed, the amplification of wealth disparity among the races is in keeping with the uneven recovery noted by many analysts. One recent report by the Brookings Institution chalked up the inconsistency to geography: "Metro areas that were hit hard because of their exposure to the housing bust, such as Las Vegas and Tampa, have been slow to recover, with their housing markets still facing significant structural problems," notes Brookings' quarterly "How We're Doing" index, published in May.
But the explanation for the wealth gap lies beyond geography, many analysts note. Rather, they say, the answers lie in structural patterns that have developed amid the crisis. In the run-up to the enactment of the health care law, the U.S. Chamber of Commerce released a study in September 2010 that investigated the reaction to it among small businesses.
"Very small business leaders who are being counted on to grow jobs are deeply unsettled about the present and concerned about the future, and a tremendous amount of that uncertainty is due to the new health care law," said the report, entitled "U.S. Chamber Releases Bipartisan Poll Highlighting Small Business Leaders' Concerns With Health Care Law."
This so-called uncertainly principle is believed to have been strengthened by recent developments, such as the current debate over the nation's debt ceiling. But while few would question the authenticity of America's economic uncertainty, some analysts, such as author Zachary Karabell, see the "uncertainly principle" as a smokescreen for keeping work rolls as slim as possible. "Large businesses aren't hiring for basic reasons," he noted in a column for Time from October 2010. "They are highly profitable even with fewer workers. They have spent billions on technologies that have made them more efficient and productive. And they are adding jobs abroad -- where the growth is."
As further proof of companies' willfully opting out of hiring (as opposed to having their hand forced by pervasive "uncertainty"), there's the oft-cited amount of money held offshore by U.S. corporations -- $1.9 trillion. In short, there is cash on hand to launch projects that would require staffing. But there remains little incentive to expand beyond the skeleton crews already in place, which keep overhead costs -- such as employment budgets -- low.
Naturally, those hurt most don't find themselves in the corporate boardrooms or their equivalents. "The findings are a reminder -- if one was needed -- of what a large share of blacks and Hispanics live on the economic margins," Paul Taylor, director of Pew Social & Demographic Trends, told the AP. "When the economy tanked, they're the groups that took the heaviest blows."
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