Over the last week, the racial wealth gap in America has received significant attention following the release of a new study from Pew Research Center, which found that the disparity between white and minority households in wealth and financial security has continued to expand since the Great Recession of 2008. The report’s findings are stunning, and a clear signal that the building and preservation of financial assets among communities of color is not only a moral imperative – it is an economic priority for maintaining the nation’s economic competitiveness.
Undeniably, the economic recession wreaked indiscriminate havoc on the wealth and balance sheets of all American households; however, for Hispanic, African-American and Asian households, the recession was especially devastating. Between 2005-2009, these communities of color lost more than half their net worth (66%, 54%, and 53%, respectively) while White households lost 16%. The impact of this massive loss of net worth has led to an increase in financial insecurity — further compounding the dire and disproportional consequences communities of color have historically faced. Unfortunately these minority communities face additional obstacles to financial security, as research now shows that they are also experiencing a negative impact from the so-called recovery.
Though the racial wealth gap began to narrow prior to the recession, evidence from the Pew study indicates that the recovery has done nothing to remedy the disproportionate loss of financial assets: white households now hold 13 times the wealth held by African-American households – the highest the wealth gap has been between these two households in 25 years – and 10 times the wealth held by Hispanic households. Making matters worse, not only has the recovery failed to decrease the overall wealth gap, it has seen a continued decrease in the net worth of African American and Hispanic households. Between 2010 and 2013, the median net worth of African-American and Hispanic households dropped nearly 34% (from $16,000 to $ 11,000) and 14.3% (from $16,000 to $13,700), respectively. For White households the recovery has been much kinder – their median net worth increased by 2.4% (from $138,600 to $141,900).
If these trends continue, the entire U.S. economy will suffer –especially since it is now projected that the US population will largely reflect communities of color by 2043.
The Asset Building Policy Network and its members’ affiliates are committed to closing the racial wealth gap by enabling the economic progress of low‐ and moderate-income communities of color through policy advocacy, research, and implementation of programs aimed at generating savings and strengthening household financial resiliency.
Some of these ABPN member research projects include:
- Banking in Color: New Findings on Financial Access for Low-and-Moderate Income Communities examines how low- and moderate-income African Americans, Asian Americans, and Pacific Islanders interact with the financial system and access credit and other financial products and services. The report was produced by the National Council of La Raza (NCLR), the National Coalition for Asian and Pacific Islander Community Development (National CAPACD), and National Urban League (NUL).
- Reaching Low Income Communities of Color on Real Finances provides insights into the attitudes and behaviors related to personal finances in low-income minority communities, and offers recommendations on how advocates can improve the way they engage communities of color around issues of financial health. This public opinion research study which was conducted by The Leadership Conference on Civil and Human Rights in partnership with ABPN members and Brilliant Corners Research, took place over the last year and included focus groups with low-income Hispanic, African American, and Asian individuals in Prince George’s County, MD, and San Francisco, CA, and interviews with over 1,200 low-income minorities from across the country.
- Family Assets Count aims to expand financial security by combining cutting-edge data with tools for building coalitions that enables more effective partnerships and informs programs and policies that help move families into economic security. This project, led by CFED in partnership Citi Community Development, builds upon the success of the Assets and Opportunity Scorecard by providing data and information on household financial security, household wealth and financial access at the county and city level — including in-depth analysis for ten cities, beginning with Boston, Chicago, Houston, Miami and Sacramento.
These research programs, combined with studies like the Pew report, should inform and frame how policymakers and other influential decision-makers implement programs and policies that impact wealth building among communities of color. ABPN will continue to advance meaningful policy changes that help close the racial wealth gap and achieve greater economic prosperity.
 This Pew report did not present calculations regarding how Asian households fared during the economic recovery.