Hispanics Suffer Most in Wealth Decline, Pew Says

Recession, housing bubble collapse drive minority households down

Household wealth fell far more sharply among minorities than in white households, according to data analyzed by the Pew Research Center, with Hispanics taking the brunt of the losses.

In the analysis released Tuesday of newly available government data from 2009, Pew Research found that from 2005 to 2009, inflation-adjusted median wealth among Hispanic households fell by 66%, Asian households by 54%, and black households by 53%. In white households, wealth fell by only 16%.

These are the largest gaps since the government began publishing its data 25 years ago, and also approximately double the size of the ratios that were present among the three groups for the 20 years prior to the end of the Great Recession in 2009.

Thanks to the decline, while white households had a typical wealth level (assets minus debts) of $113,149, black households had $5,677 and Hispanic households $6,325. Also in 2009, approximately a third of Hispanic households (31%) and black households (35%) had zero or negative net worth, compared with white households at 15%. In 2005, before anything collapsed, black households were at 29%; Hispanic households were at 23%; and white households were at 11%.

According to a New York Times report, the data also reveal that approximately a quarter of all black and Hispanic households owned nothing but a car in 2009. Only 6% of whites and 8% of Asians found themselves in similar circumstances.

The data analyzed by Pew Research came from the Survey of Income and Program Participation (SIPP), which is distributed by the Census Bureau to thousands of homes periodically. It presents comprehensive data, by race and ethnicity, about wealth in the U.S. The two most recent surveys were in 2005 and 2009, and the 2009 data has only recently been released to researchers.

Home ownership was the single biggest factor in the decline in Hispanic household wealth, probably because of their disproportionate concentration in states that suffered most from the collapse of the housing bubble: California, Florida, Arizona and Nevada.

Asians, too, suffered disproportionately from real estate losses, since they too tend to be concentrated in the same states. While they were at the top of the median household income levels in 2005, higher than white households, they are no longer; real estate losses combined with an influx of immigrants have lowered their median wealth below that of white households.

According to the National Bureau of Economic Research, while the period of 2005-2009 allows a look at the impact of the so-called Great Recession, it does not match perfectly with the downturn that spanned December 2007 to June 2009. If it did, since the stock and housing markets were still on the increase, the declines now shown in the wake of the recession would be even steeper, says the bureau.

Another factor is the continuation of the housing slump compared with the recovery of the market. Since white households are more likely to own stocks than Hispanics or blacks, that means that white households have also experienced a disproportionate recovery compared to the other groups.

Read what are the Top 10 Wealthiest Cities in the U.S. at AdvisorOne.

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