People patiently wait for things to get better in America.
But the bony hand of the Great Recession appears to keep fingering its way into people’s lives. The Pew Research Center last year reported that “the gap between America’s upper-income and middle-income families has reached its highest level on record.”
The median wealth in 2013 of $639,400 for upper-income families was nearly seven times the $96,500 in median wealth of middle-income families. It’s the widest gap seen in the 30 years when the Federal Reserve began collecting such data.
“In addition, America’s upper-income families have a median net worth that is nearly 70 times that of the country’s lower-income families, also the widest wealth gap between these families in 30 years,” the Pew center notes.
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Wealth is measured in the value of a person’s assets such as a home, vehicles and savings minus that individual’s debt. Wealth determines whether a family can remain afloat financially in the event of a layoff, hospitalization or some other calamity. Wealth also determines whether a family can afford to send children to college, enjoy travel and other opportunities without taking on enormous debt.
The National Urban League’s State of Black America report last week like the Pew study also shows worsening gaps along racial and ethnic lines. The median black household has just 6 cents in wealth and the Latino household 7 cents for every dollar of median white household wealth.
Pew also notes, “The current gap between blacks and whites has reached its highest point since 1989, when whites had 17 times the wealth of black households. The current white-to-Hispanic wealth ratio has reached a level not seen since 2001.”
This kind of wealth disparity is damaging to the U.S., not just people of color. That’s because of rapid increase in America’s minority population.
The Census Bureau reported this month that about the time the 2020 census occurs more than half of the nation’s children are expected to be part of a racial or ethnic minority group. They need to be in families, where the breadwinners earn a liveable wage and have enough wealth socked away to weather any unexpected financial or medical storm.
The U.S. population of 319 million people is expected to become majority-minority in 2044. If the racial and ethnic wealth disparity continues it will sink America.
Too many families now strapped for cash land at the doorstep of payday loan, title loan and other outfits that charge outrageous interest rates. That makes wealth creation nearly impossible for such things as sending children to college, saving for retirement and passing on an inheritance for future generations — all staples of a rock-solid middle class.
Pew notes that 46 percent of U.S. families in 2013 were classified as middle income, a third were lower income and 21 percent were upper income. “For a family of three in 2013, a household income of $38,100 qualifies as middle income and $114,300 or greater qualifies as upper income,” the Pew study said.
Upper income families’ fortunes have rebounded since the Great Recession. “In 2010, the median wealth of upper-income families was 6.2 times the median wealth of middle-income families. By 2013, that wealth ratio grew to 6.6,” the report said.
“The Great Recession destroyed a significant amount of middle-income and lower-income families’ wealth, and the economic ‘recovery’ has yet to be felt for them,” the report said.
We are starting to see a rebound with the unemployment rate falling, but many new jobs don’t pay as much as those that disappeared. The Great Recession robbed many people of wealth they had in equity in their homes; it took from their retirement savings, eliminated jobs, reduced wages, killed pay increases and interest earnings.
Many still wait, still hope for a recovery that helps everyone, not just the wealthy.