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Minorities Lose Their Shirts under Obama


An Urban Institute study spotlights how the wealth gap between blacks and Hispanics, on one side, and non-Hispanic whites, on the other, has grown during the recession. As of 2010, white families were six times wealthier than black and Hispanic ones, up from four times as wealthy prior to the recession. The mere fact of this gap isn’t as surprising as the numbers involved: Hispanic families saw their wealth decline by 44 percent over a three year period, compared with only 11 percent for white families.

As the New York Times notes, this is a serious problem whose effects will be felt long after the recession is over. If minority families have less wealth, that means they have less freedom to start businesses, pay for college for their children, or take out loans for big-ticket items like houses or cars. This in turn will make it harder for members of future generations to take the risks needed to improve their positions in life and close the wealth gap.

To no one’s surprise, the problems started in the housing market:

Two major factors helped to widen this wealth gap in recent years. The first is that the housing downturn hit black and Hispanic households harder than it hit white households, in aggregate. Many young Hispanic families, for instance, bought homes as the housing bubble was inflating and reaching its peak, leaving them saddled with heavy debt burdens as house prices plunged in places like suburban Phoenix and inland California.

Black families also were hit disproportionately by the housing collapse, because heading into the recession housing constituted a higher proportion of their wealth than for white families, leaving them more exposed when the market crashed. Higher unemployment rates and lower incomes among blacks left them less able to keep paying their mortgages and more likely to lose their homes, experts said.

This is an important story, and we are glad to see the NYT cover it. But the Times carefully tip-toes around several land mines in this story. For one, it avoids any suggestion that certain political actors may have had anything to do with the problems facing minority families in the sluggish economy: So blacks got hosed in the “last five years” or “since the recession” rather than “under the Obama administration.” The piece also does its best to downplay the role that liberal Democrats played in luring underprivileged minorities into the housing market just as the bubble really began to inflate.

Another way to put it: Despite the best intentions in the world, Democrats simply haven’t come up with any policies that actually help their most loyal constituency group.

[Empty wallet photo courtesy Shutterstock.]

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  • Anthony

    WRM, not to restrain the observation to black and Latino post 2008 wealth effect but U.S. middle class generally has fallen to an all time low via metric of wealth effect (Census Bureau Annual Report on poverty, income, and health insurance). “The fortunes of the middle quintile of Americans have been eroding since 2009.” However, your Quick Take rightly identifies the overall gap in net worth between white and Latino and black households; a gap that has increased over last several years (white households lost 16% in recent years but black households dropped 53% and Latino household 66% of their precrash wealth).

    Joel Kotkin in newgeography has an interesting take on policy implications of said economic facts for both republican and democratic enthusiasts.

  • John Barker

    Pardon my lack of spatial intelligence,but what is the object in the picture?

    • Kavanna

      An empty wallet, I believe.

    • Corlyss Drinkard

      Agree. They’d have done better with some clipart moths flying out to give us a hint.

      • Andrew Allison

        I beg to differ, they’d do better to stop padding the blog with silly pictures!

  • John Barker

    ok I see the line at the bottom of the page, but this picture is not worth a thousand words.

  • Luke Lea

    All part of the general trend towards a racially stratified class-society, which can only accelerate if the proposed comprehensive immigration reform passes Congress.

    Can the American idea survive under these circumstances? I don’t think so.

  • Kavanna

    The postwar middle class has been in periodic trouble since the late 1970s. The booms of the 80s and 90s alleviated that. But the post-2000 period has seen the situation worsen without much reversal, and that situation has gotten much worse since 2009.

    The trends among black and Hispanic households are similar, just worse. They started building wealth later, built less of it, and took on relatively more debt.

    The black population of the US is fairly stable and might, under better conditions, have been helped in the last 40 years, but for mass immigration of the unskilled and, later, globalization. I can’t see any fix to it now: too many self-reinforcing trends have been at work for too long.

    Another immigration “reform” (meaning, another amnesty) will only make things worse, on multiple levels. Real reform means adopting a system like Canada’s and ending the supremacy of family reunification in immigration, moving toward a skills- and education-based system.

    If the US were still a serious and rational country, we’d be struggling to get out of this self-inflicted mess. But it isn’t, and there’s no cultural or political institution that’s going to get us out of it. Too many powerful and connected people have too much at stake in the current system, destructive as it is.

    Enjoy the decline, as they say.

    • Andrew Allison

      “The black population of the US is fairly stable and might, under better
      conditions, have been helped in the last 40 years, but for mass
      immigration of the unskilled and, later, globalization.” The sad fact, IMO, is, that we have pandered to the Black population by not expecting from them that which we expect from other ethnic groups. Had Blacks been forced to face economic reality, they would have been in a better position to compete.

      • Kavanna

        I don’t disagree with your point. But I think without the trends of the last 20 years, what you’re saying would have been politically easier.

  • Corlyss Drinkard

    “An Urban Institute study spotlights how the wealth gap between blacks and Hispanics, on one side, and non-Hispanic whites, on the other, has grown during the recession.”
    This is a surprise?
    With illegitimacy in the black community running at 75% of births and 50% in the latino community, absent fathers, generations on welfare, a stunning inability of both minority communities’ leaders to “get it,” and no prospects for intelligent policies to address these “lifestyle choices,” no one reasonably well-informed has any business being surprised. Again, it goes back to the middle class virtues of 100 years ago that suddenly became old-fashioned and passé in the 60s. The whites are headed in the same direction too, with out-of-wedlock birthrates at 25%, the level that the black community was in 1965 when Pat Moynihan wrote his “racist” report warning that the black family was on the verge of calamitous disintegration.

    • Kavanna

      That’s US politics today: suffocated from PC and pressure groups. It’s impossible today to talk about anything important — not that the media would notice — and if they did, they would shout it down.

    • Andrew Allison

      What you say is true but (pardon the dead horse flogging) it’s because they are not being educated.

      • f1b0nacc1

        I must disagree. The society we live in teaches ‘If it feels good, do it, it is nobody’s business what you choose’, the government underwrites it, and the schools do absolutely nothing to counter any of this. What they teach is that the great god of diversity trumps everything else, so why should any one culture’s values be priviliged over anothers?
        No, the sad thing is that we educate them altogether too well…just the wrong way about the wrong things

        • Andrew Allison

          Well yes, I was talking about education, not the parody which exists today.

        • Corlyss Drinkard

          “Diversity” seems to be a code word for policies punishing old fashioned Western virtues that made better people and more effective nations in the name of letting “1000 flowers bloom,” to quote the Chinese Communist tyrant. I never thought for a nanosecond that when we defeated Communist HQ we would start trying to imitate it. Instead of taking the lesson that socialism/communism doesn’t work, we seem determined to prove that with the right “humane” intentions, it can indeed work. What fools!

  • TheCynical1

    Interestingly, unless I missed it, no attention is paid to Asians in the underlying articles by the Urban Institute and the NY Times.

    • Andrew Allison

      Well of course not. That would spoil the narrative that minorities are put upon.

  • Lorenz Gude

    Well, as a retired professional photographer I can attest that I couldn’t work out what the clip art image was either. Time for one those impoverished resourceful interns to chuck his or her broken down wallet on the desk and shoot it with is his or her iPhone. As to the wealth gap I don’t see any end to predicament of Black and Hispanics in the Blue Model short of it pretty well collapsing. I follow Detroit’s trajectory for that reason. And I enjoy helping those who help themselves by patronizing Asian restaurants.

  • dougtheavenger

    Here is a fool proof solution to the black-white wealth gap. Rich white people should have lots of children so that their wealth will forever be being subdivided between their numerous descendants. In fact we should encourage them to practice polygamy. Socially conscious women should all go out and get knocked up by a rich white guy or any white guy since were dealing with averages here. Meanwhile poor black people should have very few children. Eventually the wealth gap will disappear. Of course, by then the USA will look like Utah but we will all be equal. ..What? You don’t like that solution.

    • Kavanna

      The rate of childbearing among American blacks has dropped dramatically in the last 40 years. That’s not the problem.

      The derailing of family life, the false promises and expectations set by politicians, those are real problems.

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