Hispanic families accounted for the largest single decline in wealth of any ethnic and racial group in the country during the recession, according to a study published Tuesday by the Pew Foundation.
The study, which used data collected by the Census Bureau, found that the median wealth of Hispanic households fell by 66 percent from 2005 to 2009. By contrast, the median wealth of whites fell by just 16 percent over the same period. African Americans saw their wealth drop by 53 percent. Asians also saw a big decline, with household wealth dropping 54 percent.
The declines have led to the largest wealth disparities in the 25 years that the bureau has been collecting the data, according to the report.
On the one hand, there's a bit of a "duh" reaction when first reading this. Any economic downturn wipes out those populations already suffering disproportionately from poverty, discrimination, etc. Not surprising, in that sense.
But the extent of the carnage is what's surprising.
Household wealth, also referred to in the report as net worth, is made up of assets, like a house, a car, savings and stocks, minus debts, like mortgages, car loans and credit cards. It is tracked by the Census Bureau in the Survey of Income and Program Participation, a broad sampling of household wealth by race and ethnicity. Nearly two-thirds of Hispanics’ median net worth in 2005 came from home equity, according to the report, and when the housing market collapsed, so did their wealth. Median home equity for Hispanics fell by 51 percent in the period of the survey.In other words, when you subtract "minus outstanding debt" most people aren't really worth anything, beyond what they bring home in their paychecks. And when unemployment strikes, poverty quickly ensues.
Remember that surf-guitar smash hit from the 1960's called Wipeout? You're seeing it live in-person in the U.S. right now.
The share of Americans with no wealth at all rose sharply during the recession. A third of Hispanics had zero or negative net worth in 2009, up from 23 percent in 2005. For blacks, the portion rose to 35 percent from 29 percent, and for whites, it rose to 15 percent from 11 percent.
About a quarter of all black and Hispanic households owned nothing but a car in 2009. Just 6 percent of whites and 8 percent of Asians were in that situation.
Whites were less affected by the crisis, largely because their wealth flowed from assets other than housing, like stocks. A third of whites owned stocks and mutual funds in 2005, compared with 8 percent of Hispanics and 9 percent of blacks.
I keep thinking the maniacally laughing voice at the beginning that yells "wipeout!" is the voice of Wall Street and the criminals who escaped punishment.