While the world was focused on the federal debt ceiling circus last week, the Pew Research Center issued this stunning finding: the gap between the net worth of white and Hispanic households rose in 2009 to 20 to 1 and 18 to 1 for blacks.
"These lopsided wealth ratios are the largest since the government began publishing such data a quarter century ago and roughly twice the size of the ratios that had prevailed between these groups for the two decades prior to the Great Recession that ended in 2009," the report said.
In raw numbers, the typical white household had a median net worth (assets minus liabilities) of $113,149, while Hispanic households had $6,325 and blacks, $5,677, according to the report. From 2005 to 2009, inflation-adjusted median wealth fell 16 percent for whites, 66 percent for Hispanics and 53 percent for black households, Pew said.
The report lays bare the largely untold story of this recession: Many minority Americans most vulnerable to the housing crash and the sharp downturn in the labor markets have suffered disproportionately.
"Plummeting house values were the principal cause of the recent erosion in household wealth among all groups, with Hispanics hit hardest by the meltdown in the housing market," the report said.
What's most sad, however, is that the policy discussions in Washington, D.C. and elsewhere have been and continue to be devoid of ideas about how to reverse the devastating trends on housing and jobs.
Instead of policies that would stimulate construction and jobs, Washington is crushing job creation. The National Labor Relations Board's lawsuit threatening to block Boeing from building a plant in South Carolina -- which just happens to be non-union -- is one of many policies that discourage hiring. The Dodd-Frank financial regulation bill is no help either, imposing massive new compliance rules that will hit small banks hardest. The IRS has even taken a heavy hand on non-profits, revoking the tax-exempt status for 275,000 organizations earlier this year. Meanwhile, policies that might help job creation in the U.S., such as regulatory and corporate and small business tax reform aren't even up for substantial debate.
And perhaps the most important debate that isn't being held: How to increase educational achievement. There is no better predictor of financial success than education. Yet while about 30 percent of whites over the age of 25 had a college degree in 2007, only 12.5 percent of Hispanics and 17.3 percent of blacks complete college, according to the U.S. Census Bureau. And what about employment: The jobless rate for Americans with a college degree or higher is 4.4 percent. It is more than double, 10 percent, for high school graduates.
Until these issues are addressed and the regulatory and financial uncertainty is removed for small businesses, which make up the country's jobs engine for high school and college grades alike, the future for households devastated by the Great Recession will remain unnecessarily difficult.
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Brad Bollinger is editor in chief and associate publisher of the Business Journal. He can be reached at 707-521-4251 or bbollinger@busjrnl.com.
