Global IssuesU.S.: Recession Turned Back Clock for Blacks, Hispanics
While recession in the U.S. delivered a series of record lows, from crashing property prices to residual birth and marriage rates, an analysis of new census data suggests it accomplished at least one record high - the wealth gap between whites and minorities.
In a report released Tuesday by the Pew Research Center, new government data from 2009 shows that following some 18 months of the Great Recession, the median wealth of white households is 20 times that of black households and 18 times that of Hispanic households.
The study found that Hispanic households have, relative to other racial and ethnic groups, carried the brunt of recession losses. The median wealth of Hispanic households fell by 66 percent from 2005 to 2009, the report said.
African Americans didn't fare much better, with household wealth dropping by 53 percent, while Asians saw equally dramatic wealth drops at 54 percent.
By contrast, the median wealth of white households fell by 16 percent.
'Blacks and other [minorities] are suffering - we have lost our houses, our jobs and our savings, if we had any,' Eleanor Hinton Hoytt, president and CEO of Black Women's Health Imperative, told IPS.
'We will never know the full extent of the devastation this recession has had on the Black family. We have lost all that we gained during the past three decades,' she said.
According to the Pew study, the crash of the housing market was the principal cause for the uneven recovery patterns that triggered these disparate losses, particularly for Hispanics, who were disproportionately invested in jobs in the construction industry and more likely to live in areas where the housing meltdown was concentrated.
The widening wedge between the 'haves' and 'have-nots' along racial and ethnic lines that festered throughout the ensuing recession marked an end to decades of minority gains, while Hispanics - with nearly two-thirds their median net worth based on home equity in the years preceding the recession - saw their short-lived wealth boosts collapse with the housing market.
'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 three groups for the two decades prior to the Great Recession that ended in 2009,' the report said.
But the numbers didn't reveal losses for all U.S. households. The study found that the share of wealth held by the top 10 percent of U.S. households rose from 49 percent in 2005 to 56 percent in 2009. That would suggest the wealth gap from rich to poor isn't only widening between racial and ethnic lines; it's expanding across all of them.
Proposed cuts may exacerbate disparities
The report came as President Barack Obama and Congress struggled in Washington to reach a budget compromise to avoid a default of the U.S.'s financial obligations Aug. 2, which Obama said in a public announcement Monday night would be a 'reckless and irresponsible outcome' to the current debate.
The debate has centred around two different approaches announced Monday by Democrat Senate Majority Leader Harry Reid and Republican Speaker of the House John Boehner.
While both sides recognise the danger of default, Democrats and Republicans remain gridlocked in a game of political tug-of-war over the proposals, divided over the question of 'how much is enough?' and 'how much is too much?' when it comes to mandatory spending programmes like Medicare and Social Security and revenues from taxes on the country's wealthiest households.
Experts worry that cuts to mandatory spending programmes without tax increases for the nation's wealthiest will force those with the least to bear most of the economic brunt while driving a greater wedge between the wealth of whites and other races.
'Poverty rates for minorities are higher than for whites and that means that those populations are more likely to be dependent on government goods and services. Cuts on those programmes will have a disproportionate effect on [minority] communities,' Algernon Austin, director of the Race, Ethnicity and the Economy programme at the Economic Policy Institute, told IPS.
Meanwhile, Robert Greenstein, president of Center on Budget and Policy Priorities, has called Boehner's new budget proposal 'tantamount to a form of class warfare'.
'If enacted, it could well produce the greatest increase in poverty and hardship produced by any law in modern U.S. history,' Greenstein said in a statement Monday.
Greenstein's criticisms stemmed from Boehner's plan to increase revenue by 1.8 trillion dollars in budget cuts - which would target entitlement programmes - without instilling any tax increases for the wealthy.
Boehner's proposal, however, was not unique in slashing funds for entitlement programmes, as both plans proposed heavy cuts in government spending on social programmes as a means of mitigating the nation's debt crisis. A main source of contention remained centred on the debt ceiling.
'If your concerns are about ameliorating the hardships your citizens are facing, you wouldn't be taking these drastic reductions our leaders are talking about,' Austin told IPS.
'I think our leaders are completely misguided in what's going on right now,' he added. 'Increasing the debt ceiling is not supposed to be a huge political battle, it's just supposed to happen as has been the case over and over again many times prior to this.
'The number one concern should be creating jobs. With a job deficit of 11 to 14 million jobs, this is not the time for the government to create more unemployed people and to create more hardships for low income people,' he said.
© Inter Press Service (2011) — All Rights ReservedOriginal source: Inter Press Service