A. Median Wealth
Minority median wealth tumbled following the mortgage crisis. In a 2011 Pew Center Research report, the relative net worth of families signals the devastating impact of the financial market crisis on minority families. Since the mortgage crisis, the gulf in net worth between white and black families has increased dramatically. The Pew report provides a stark reminder that the disparity in wealth between whites, Latinos and African Americans in this country is a nightmarish problem. In the single largest drop since Pew began collecting data in 1984, Latinos saw their median wealth drop sixty-six percent during the financial crisis period of 2005 to 2009, and African Americans fared just about as poorly with a fifty-three percent drop in median wealth during the same period.
This precipitous drop in median wealth for Latinos and African Americans during the period of the financial market crisis of 2008 can be attributed in part to the fact that minority wealth is often tied to home ownership and equity. As a result, minority communities are extremely vulnerable during housing and economic crises. Contrarily, whites are generally in a better position to diversify their assets between home equity, stocks, bonds and other investment alternatives. The housing crisis not only widened the existing wealth gap, as white wealth better weathered the mortgage meltdown based on diversified portfolios, but also saw white families' median wealth drop only sixteen percent because of this diversification. While white family wealth dropped just sixteen percent during the mortgage crisis, both Latino and African American family wealth plunged more than fifty percent. Furthermore, according to the Pew report, almost one-third of Latino and African American households reported zero wealth--having more debt than assets--during the crisis period.
Perhaps the most startling statistic from the recent Pew report is that while whites had an average median wealth of $113,149 during the mortgage crisis period, African Americans had an average median wealth of only $5,677 and Latinos had an average median wealth of $6,325. This disparity is simply alarming. The financial market crisis exacerbated the median wealth gap, as the years of the financial market crisis show a dramatic drop in minority wealth as well as an awful widening of the wealth gap between whites and minorities. Further, statistics show that besides plummeting median wealth, families of color were foreclosed upon disproportionately more often than white families. Minority families were steered into subprime loans predatorily, at a rate far more frequently than white families.
Race, Racism and the Law
Vernellia R. Randall
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