The Pew Research Center’s report, Wealth Gaps Rise to Record Highs Between Whites, Blacks and Hispanics, describes the historic wealth gaps that currently exist and addresses some of the reasons for the dramatic growth of these gaps. The report states that the median wealth of white households is 20 times that of black households and 18 times that of Hispanic households; amounting to the largest gaps in wealth ratios since the government began publishing this data a quarter century ago. These gaps are particularly concerning in that, as noted by the report, they are approximately twice the size of the ratios that existed between these three groups for the two decades prior to the recession that ended in 2009. The report states that between 2005 and 2009, median wealth fell by 66% among Hispanic households, 53% among black households and 16% among white households; amounting to the typical black household having just $5,677 in wealth (assets minus debts) in 2009; the typical Hispanic household having $6,325 in wealth; and the typical white household having $113,149.
The report states that plummeting house values were the principal cause of the recent reduction in household wealth among all groups. However, the report goes on to state that the housing market bubble burst in 2006, and the recession that followed from late 2007 to mid-2009, took a far greater toll on the wealth of minorities than on whites. Furthermore, previous studies, including a study conducted by the Center for Responsible Lending, have found that blacks and Hispanics were 30 percent more likely than whites to be charged higher interest rates, even among borrowers with similar credit ratings. Policies that protect families from subprime lending and other predatory practices are critical to ensuring children grow up in safe, stable and economically successful families. The Center for Responsible Lending has several resources for policymakers to consider when working to address responsible lending practices, including efforts to prevent steering (or direct borrowers into more expensive loans), rules for regulating brokers, eliminating prepayment penalties and several other protections to assist families in developing and maintain assets, like owning a home.
To learn more about policy strategies to promote affordable housing, please visit PolicyforResults.org.
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