A Recession for White Americans, A Depression for Black and Latino Americans

A new study from the Pew Research Center reports staggering gaps in median wealth–a person’s accumulated assets minus her debt–between whites ($113,149), blacks ($5,677) and Latinos ($6,325). That’s a 20-to-1 white-to-black ratio of wealth and a 18-to-1 white-to-Latino ratio.

Essentially, all of the economic gains made by people of color since the Civil Rights Movement have been erased in a few years by the Long Recession. Whites experienced a net wealth loss of 16 percent from 2005 to 2009, while blacks lost about half of their wealth (53 percent) and Latinos lost two-thirds of their wealth.

Media outlets reporting on the Pew study point to housing loss as the primary culprit, since the net worth of blacks and Latinos is heavily reliant on home ownership, while whites are more likely to have retirement accounts and stock.

While this is certainly accurate, it obscures the core racism at play. Public policy decisions have been responsible for the speedy recovery of the financial market and the slow recovery of the housing market. From the start, the Troubled Asset Relief Program (TARP) favored Wall Street recovery over homeowner recovery, with only $12 billion of the $700 billion bailout spent on foreclosure programs. (To be fair, most of the Wall Street money was eventually paid back.)

So prioritization of corporate interests disproportionately assisted whites in the recovery–but (perhaps) not intentionally. The same cannot be said for actual lending practices.

Rampant–and racist–fraud in the home loan industry was a primary contributor to the collapse, with 61 percent of sub-prime loan holders actually qualifying for prime loans that would have been easier to maintain. Blacks and Latinos were especially targeted for sub-prime loans, a practice called “reverse redlining.” Wells Fargo loan officer-turned-whistle blower Elizabeth Jacobson admitted that her company specifically went after African Americans for sub-prime loans through “wealth building” conferences hosted in black churches.

The employment gap between whites and blacks is also a contributor to the wealth gap. While white American are suffering through the Long Recession with 7.9 percent unemployment, blacks are experiencing Great Depression-like figures of 16.1 percent unemployment. This figure jumps to 31.4 percent for blacks ages 16 to 24, and black Americans have consistently had the higher rate of unemployment compared to white Americans since 2007.

Not surprisingly, the employment gap, too, has racist origins. The Center for American Progress analyzed unemployment data from the last three recessions and found that black unemployment starts earlier, rises faster and lingers longer. Explanations include the concentration of black workers in the stumbling manufacturing sector, the cutting of public sector jobs–and racial discrimination. This last finding is no shock given that employers are more likely to call back a white job applicant with a criminal record than a similarly qualified black man without a record.

The role of racism in poverty is important to keep in mind at a time Washington politicians are manufacturing crises that will slash the entitlement programs that 1 in 6 Americans rely on. It’s ironic that we’re cutting safety nets for the poor just as we’re experiencing the highest poverty rate since 1960, with blacks and Latinos three times as likely to live in poverty. Public policy is supposed to knock down racial and other non-meritorious barriers to pursuing life, liberty, and happiness, not jack them higher.

Photo of unemployment line from Flickr user Bernard Pollack under Creative Commons 2.0

Comments

  1. The problem with unemployment is so varied from community to community it is difficult to assess the best possible solution. I live in a rural area which is the bastion of economic lack. For a variety of reasons I can not leave. I did move to Houston and lived and worked there for nearly three decades but that is not an option. I really dont know whether or not all the companies who do not contact me after I submit an online application are doing so due to my race? They really dont know my age so the problem must be something else? When I have been able to make voice contact with a company their promises are often shallow. It is not a happy situation for many.

  2. I too moved from Houston and cannot go back (lack of effective public transit). I am also having employment difficulties–but perhaps because of my disability. Despite a college degree and prior office experience, I still do not get an actual job.

    With the unemployment rate for employable people with disabilities actually being around 16.9%, getting past the interview stage is really tough.

    And my family knows I have disabilities, but they do not understand people are not rushing to hire me because of the disability. They have stars in their eyes/head in the clouds about my actual options. It is so tough.

  3. Robin, I certainly relate. I dont have a handicap except for being a female. That is a huge hurdle in the eyes and minds of many. Yes the bus system in Houston stinks. Atleast now they have those trains which go from the Dome to DT and loads of stops between. If I can help you I will. You can contact me at the website. I know there are many who have quality skills and are being stuck on the back burner. In my case – I am too young for social security – else I would get that. I find this to be a very unpleasant situation. Caroline ought to interview us and put a new face to the unemployed and those on welfare. We are not some homeless looking thugs.

  4. I’ve applied for Social Security because of today’s economic conditions and difficulty finding jobs which I am capable of performing/accessing.

    But again, the parents (who I actually DO love very much) do not understand these cases do take a long time to process or the different definition of ‘disability’ according to the Social Security Administration versus something like special education. It’s not something which is automatically decided even if a person had medical conditions since birth.

    Since I was able to earn a masters degree and work at an office before the current economic climate, arguing that I was incapable of successfully performing any wage work, even with my medical history would be difficult. I am theoretically ‘not disabled’ under Social Security rules because reasonable accomodations are possible with finally obtaining the ‘right job’.

    And they don’t understand that the program payments are not at all lavish. I need to continue looking for a job which I am both qualified for and can actually access. I’ve had to turn down job offers only because the jobs are located outside of the public transit service area or require driving as a mandatory job duty.

    I wish Ms. would do a story on women with disabilities and unemployment. Show the barriers which we’re continuing to deal with from employers and family.

  5. The economic climate is about as troubling as those overloaded dams following Hurricane Irene. Everybody knows something has got to give and give it will. In its deadly path will be many who either stood by, not believing what they are seeing or those who chose to ignore the obvious signs of stress and too much water in too short a time. Others will be caught off guard and simply became a fatality. It is not a good place to be and one I wish I could view from youtube instead of daily and one on one.

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