The uneven recovery
Julianne Malveaux | 6/5/2013, 5 p.m.
Although the overall unemployment rate still exceeds 7 percent, and the official Black unemployment rate is greater than 13 percent, there are some who insist that there is a robust economic recovery in progress. Indeed, we were declared "post recession" in 2011 based on the definition of recovery as GDP growth for three quarters in a row.
The perception of whether the recovery is stumbling or soaring depends on your own financial status.
White and Asian households headed by those ages 40-61 who have a two- or four-year degree recovered all but 2 percent of their wealth by 2012.
Similarly situated African American and Hispanic households had just 58.7 percent of the wealth they had at the beginning of the recession. Wealth recovery depends on race, pre-recession portfolio (which speaks to the racial wealth gap), home value, stocks (the wealthier are more likely to hold stocks than others), savings (lower for African Americans), and debt (higher for African Americans).
Wealth accumulation is important. Even moderate amounts of wealth increase the likelihood that young people in these households are more likely to go to college, more likely to experience upward economic mobility, and more likely, in the next generation, to attain homeownership. Our nation lost more than $16 trillion in wealth during the downturn. Much of it has been recovered, but too many families, especially African Americans, have yet to recover. Homeownership among African Americans, especially younger African Americans have declined.
Unemployment also has something to do with the wealth gap, because those who are unemployed frequently draw down on their home value, increase credit card debt, or use other means to simply survive. African Americans are twice as likely to be unemployed as Whites, and there are no existing public policies to both increase employment generally, and to target employment programs to those most in need.
President Barack Obama can't create "Black" employment programs, but targeting employment possibilities to inner city resident is an implicit target to Black America. Targeting to recent college grads that are unemployed and have significant debt would also implicitly favor African Americans (since virtually all African American students graduate with some debt, but nearly 50 percent of Whites graduate without debt).
Median wealth among single African American women with children is just $5 according to a Pew study--"Lifting as We Climb: Women of Color, Wealth and America's Future."
Average wealth is a bit higher, at $1,000. The root of this low level of wealth is a function of unequal income, but more importantly more debt, lower savings, and lower stock ownership.
Consider the life of an African American mom. She works hard, raises her children as best she can, may or may not have health insurance (the lack of which can push her into debt), and is likely to have little savings. She is all too often the sole support of her children. If she is the most stable in her family, she is frequently "hit up" for loans by parents and siblings. This, too, contributes to her difficulty to accumulate wealth.