Minorities & People With No Diplomas Making Biggest Economic Gains Post-Recession
By Ryan Velez
Last Wednesday, the Federal Reserve released some new data about household incomes in this country, and the results are a combination of interesting and frustrating. The Chicago Tribune reports that nearly all Americans have come out of the Great Recession with more money than before, but it is African American and Hispanic families and Americans without college degrees showing the greatest gains.
Household wealth for African-American and Hispanic families and Americans without high school diplomas rose the fastest from 2013 to 2016, according to the Fed's Survey of Consumer Finances, which surveys over 6,000 households about their pay, debt and other finances. Note that all people are seeing similar results, though, with incomes growing and the values of stocks, homes, and other assets climbing as well.
However, while these groups may be making more, it isn’t changing the fact that income gaps are growing at the same time, potentially meaning their work may be counting for less. Regardless, it is a change from 2010 to 2013, where all non-white groups saw drops in income. "We're glad the recovery is spreading to a lot of households," Fed economists said Wednesday. The economists didn’t provide any formal reasons for this, but noted that the unemployment rate had fallen from 7.5 percent to 5 percent last year.
Comparing median net worth shows that minorities and the uneducated still have quite a way to go to increase their earnings. The median net worth of a white household was $171,000, nearly 10 times larger than blacks. The median net worth of African-American and Latino families was below $21,000. The same applies for people without high school diplomas. Their median net worth is just $23,000. However, it is the educated and wealthy who are all on top. "Shares of income and wealth held by affluent families have reached historically high levels," wrote the Fed in its report.
Economists believe that the climbs that Latinos and African-Americans are making are largely byproducts of starting so low to begin with. Any economic recovery they had would look far larger as a result.
"You're looking at people with lower net worth, so when the economy recovers you are going to see them benefit disproportionately as a percentage," said Jeffrey Eisenach, an economist and managing director at NERA Economic Consulting, which released a study in December on Latino prosperity.
"If you're poor and you go through a tough period, you use all your savings to get through it," Eisenach said. "If you go from having very little to doubling that, you still may not have very much but you see a big percentage gain."