ORLANDO, Fla. —The Great Recession affected Americans
from all walks of life, but it took a lopsided toll on the personal
wealth of blacks and Hispanics, erasing many of the gains made over the
past two decades, a new report shows.
The report, released early Tuesday by the nonpartisan
Pew Research Center, found that the median wealth of white households
at the end of the recession in 2009 was 20 times that of black
households and 18 times that of Hispanic households — the biggest gap
since the U.S. Census Bureau began collecting such data a
quarter-century ago.
From 2005 to 2009, the analysts found,
inflation-adjusted median wealth fell by 66 percent among Hispanic
households and 53 percent among black households, compared with 16
percent among white households, which had far more personal wealth to
start with.
By 2009, about a third of black and Hispanic
households had a net worth of zero or less, compared with 15 percent of
white households.
In every ethnic group, the Pew researchers found, the
poorest fared worst. And among blacks who were already struggling, the
recession’s effect sometimes meant it was a challenge just to afford
food.
“If you are a low-income person, then you don’t have
much in the way of resources during hard times,” said Rakesh Kochhar,
associate director for research at the Pew Hispanic Center and the
report’s main author. “If you haven’t accumulated wealth over time,
you’re going to fall 1/8harder].”
But he also noted that because the report relies on
2009 data — the most recent available — the analysts don’t know yet
whether the shift in wealth will be brief or lasting.
In a few states, including Florida, the disparities
were particularly sharp for Hispanics, largely because of the uneven
effect of the housing market’s collapse. While virtually all homeowners
lost personal wealth as the value of their property declined, the drop
for Hispanic homeowners was greatest in terms of both equity and
homeownership.
For Luis Raul Arroyo, 50, a Kissimmee businessman and
father of three who moved from Puerto Rico for a better life, the
homeownership dream turned into a nightmare. On the cusp of the
recession, he lost his job at Walmart, then his wife had her hours cut
at Walt Disney World. Soon, the family had burned through their savings,
lost their $225,000 home in Poinciana and spent nearly four months
sleeping in their car.
“Since I am a professional, it has been very
difficult to find a job because all the places where I applied told me I
was overqualified,” said Arroyo, who has a bachelor’s degree in
business administration. “You do not see the same treatment for
Hispanics as for the 1/8non-Hispanic3/8 Americans. We knock at many
doors, and they do not open for us.”
In South Florida, Rigoberto Quant, 35, a Miramar iron
worker, went from making six figures to no income when he was laid off
in 2009.
Quant, a married father of two, said the family tried
to scrape by on unemployment and his wife’s income while he searched
for work. Unable to land a job in his field, he recently started his own
business, Quant Construction Inc. He is hoping to win a contract that
could bring in some income.
“There’s a lot competition, which is killing the
workers and the subcontractors,” said Quant, who put his family’s
two-bedroom house up for sale because they can’t afford to keep it.
“It’s about who you know.”
Some have accused banks and mortgage companies of
targeting minorities with predatory lending practices. A 2009 Orlando
Sentinel investigation found that Hispanic homebuyers in Central Florida
wound up with a disproportionate number of the high-risk, high-interest
loans known as subprime mortgages. A Pew Hispanic Center report the
same year came to a similar conclusion: Latinos nationwide were more
than twice as likely as non-Hispanic whites to receive “higher-priced”
loans when buying or refinancing a home during the housing boom.
James Wright, a sociology professor at the University
of Central Florida, in part faults what he calls “misguided” emphasis
on homeownership for low-income buyers. “You have to ask yourself: Why
were these populations lured into scraping together every nickel they
could find and dumping it into a down-payment, only to have that equity
disappear?” Wright said. “In retrospect, it was a very bad idea for
mortgage lenders and HUD (the federal Department of Housing and Urban
Development) to promote that kind of behavior.”
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(c) 2011, The Orlando Sentinel (Fla.).
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