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Report: Racial Wealth Inequality Gap Widened After Great Recession

While overall American families have rebuilt their household wealth during the economic recovery in the wake of the Great Recession, not all households have benefited equally from the economic recovery.

While overall American families have rebuilt their household wealth during the economic recovery in the wake of the Great Recession, not all households have benefited equally from the economic recovery. Shutterstock

While overall American families have rebuilt their household wealth during the economic recovery in the wake of the Great Recession, not all households have benefited equally from the economic recovery. Wealth inequality along racial lines has widened in the years since the 2008 financial crisis, according to a new report by the Pew Research Center.

The median wealth of white households was 13 times the median wealth of Black households in 2013; that’s compared to only eight times the median wealth of Black households in 2010.

What’s more, in 2013 the median wealth of white households was ten times the wealth of Hispanic households, compared to nine times in 2010.

The gap between white and Black households is the largest it’s been since 1989, when whites households had 17 times the wealth of Black households.

A report from the Institute on Assets and Social Policy at Brandeis University found that among the main causes of the racial wealth gap are the number of years of home ownership, average family income, unemployment, and inherited wealth.

The report concluded that because of these factors, when people of color are able to increase their household wealth, that wealth grows at a much small rate than it does for white individuals.

The bottoming out of the housing market that was one of the major causes of the economic collapse disproportionately affected people of color. A 2010 study by the Center for Responsible Lending found that from 2007 through 2009, Black and Latino individuals were 70 percent more likely to lose their homes to foreclosure than white Americans.

There is considerable evidence that shows financial institutions such as Wells Fargo and Countrywide Financial practice racist lending practices, targeting people of color with predatory lending practices.

The fall in the rate of home ownership also disproportionately affected people of color. The Pew study found that from 2010 to 2013, home ownership among white households fell from 75.3 percent to 73.9 percent, while the home ownership rate for people of color fell during that same time period from from 50.6 percent to 47.4 percent.

The Pew report noted that white households were in a better position to benefit from the economic recovery, which first took place in the financial markets. White households are more likely than households of people of color to own stocks directly or indirectly through retirement accounts.

The wealth gap is also perpetuated by the systemic inequalities in the education system. The U.S. Department of Education’s Office for Civil Rights released a report this year that shows the extent of racial inequality in the nation’s schools.

The implementation of the Affordable Care Act is expected to address some of the racial disparities in the health-care system: According to a report released by the Urban Institute, the federal health-care law will reduce the coverage gap between people of color and white individuals.

The report also found the coverage gap reduction would not be as dramatic if states do not fully implement Medicaid expansion. Twenty-eight states have expanded Medicaid, seven states are considering the expansion, and 16 have completely rejected expanding Medicaid, according to the Kaiser Family Foundation. 

That said, the Affordable Care Act has failed to address other areas of racial inequality within the health-care system.