The typical black household now has just 6% of the wealth of the typical white household; the typical Latino household has just 8%, according to a recent study called The Racial Wealth Gap: Why Policy Matters, by Demos, a public policy organization promoting democracy and equality, and the Institute on Assets and Social Policy.
In absolute terms, the median white household had $111,146 in wealth holdings in 2011, compared to $7,113 for the median black household and $8,348 for the median Latino household. (All figures come from the U.S. Census Bureau Survey of Income and Program Participation.)
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“Homeownesrhip is the central vehicle Americans use to store wealth, so homeownership and access to homeownership are at the heart of that widening wealth gap,” says Ruetschlin.
But disparities in homeownership fall along racial and ethnic lines. Seventy-three percent of whites own a home, compared to 47% of Latinos and 45% of blacks.
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A college education is all but required to flourish in the labor market, establish financial stability and build wealth. But the gap in college attainment by whites versus blacks and Latinos has widened over the last decade. In 2011, 34% of whites completed a four-year college degree, whereas just 20% of blacks and 13% of Hispanics did.
One obstacle is the surge in college costs over recent years, forcing households to take on significant debt to send student to college.
But obtaining a bachelor’s isn’t enough for a black or Hispanic person to escape the racial wealth gap. The return on investment in college is much higher for whites than for blacks and Hispanics: A white family at the median sees a return of $55,869 from completing a four-year degree. A black family sees $4,846 and an Hispanic family $4,191.
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Labor markets can provide economic security through earned income, employer-provided health coverage, paid leave and workplace retirement plans. But inequality in the labor market is responsible for 20% of the growth in the racial wealth gap in the last 25 years, and unemployment another 9%.
Disparate outcomes in the labor market can come from employment discrimination, geographic barriers to jobs and differing levels of social capital.
The typical white family earns $50,400, while the typical black family earns $32,038, and the typical Latino family, $36,840.
“In the labor market, the wealth return to a dollar of income is first determined by how much of that income you have the opportunity to save,” says Ruetschlin. “If you are facing a wealth gap of 80 cents for every dollar a white family makes, that makes you 20% less able to put that dollar into savings, because you may need all of those dollars to fill your consumption needs.”
Additionally, black and Latino families earn a lower return on their incomes, meaning they are less able to turn each additional dollar of income into wealth. A white family will typically see a return of $19.51 for each dollar earned, while a black family will see only $4,80 in return and Latino families $3.63.
http://www.forbes.com/sites/laurash...ehold-has-16-times-the-wealth-of-a-black-one/