Pew Study Finds Wealth Gap Between Whites and Blacks is at Record High

Despite greater numbers than ever of African-Americans receiving college diplomas and earning advanced degrees, a recent study by the Pew Research Center has found that the wealth gap between whites and blacks is greater than its ever been since the government began publishing such data.

The Pew study, released on Tuesday, July 26, found that the typical black household had just $5,677 in wealth (assets minus debts); the typical Hispanic household had $6,325 in wealth; and the typical white household had $113,149.

Moreover, about one-third (35 percent) of black households had zero or negative net worth in 2009, compared with 15 percent of white households. That translates to a median wealth of white households at 20 times that of black households and 18 times that of Hispanic households, according to the study of newly available government data from 2009.

What’s the cause of this disparity? Is it because more minority households are single-family earners? Is it pay discrimination? Perhaps it's the outsourcing of unskilled labor abroad? Or is it discriminatory hiring and firing practices in a recessive economy?

Well, the recent study may not outline the cause for the disparity, but it does somewhat explain why the gap has widened in recent years.

First, it should be noted that the measure of household wealth is different than the measure of household income. Household wealth is the accumulated sum of assets (houses, cars, savings and checking accounts, stocks and mutual funds, retirement accounts, etc.) minus the sum of debt (mortgages, auto loans, credit card debt, etc.).

Household income measures the annual inflow of wages, interest, profits and other sources of earning. So, wealth gaps between whites, blacks and Hispanics have always been much greater than income gaps.

Moreover, since the official end of the recession in mid-2009, the housing market has been slow to recover while the stock market has pretty much regained much of its value.

Additionally, 24 percent of both black and Hispanic households in 2009 had no assets other than a vehicle, compared with just 6 percent of white households, according to the study.

So, given that black and Hispanic household have fewer hard assets and that a much higher share of whites than blacks or Hispanics own stocks— as well as mutual funds and 401(k) or individual retirement accounts (IRAs)— the depressed economy has taken a far greater toll on the wealth of minorities than whites.

However, while the reason behind the widening wealth gap is explained to some extent, the most stark and urgent issue -- the exact source(s) of the gap -- remains still unaddressed.