[Congressional Record Volume 157, Number 125 (Friday, August 19, 2011)]
[Extensions of Remarks]
[Pages E1525-E1526]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




   RECOGNIZING THE WEALTH GAP AMONG RACIAL AND ETHNIC MINORITY GROUPS

                                  _____
                                 

                          HON. DANNY K. DAVIS

                              of illinois

                    in the house of representatives

                        Friday, August 19, 2011

  Mr. DAVIS of Illinois. Mr. Speaker, although our economy is gradually 
improving, we cannot ignore the fact that the economic crisis remains a 
daily reality for millions of Americans, nor can we ignore the fact 
that the crisis unevenly affects certain groups of citizens, such as 
racial and ethnic minority groups.
  A study by the Pew Research Center released last month demonstrates 
starkly the wealth gap among racial and ethnic minorities in this 
Nation. Although all racial and ethnic groups experienced loss of 
wealth during this economic crisis, the wealth of African American and 
Latino households dropped dramatically. For example, the median net 
worth of a white family now stands at 20 times that of a black family 
and 18 times that of a Hispanic family, roughly twice the gap that 
existed before the economic crisis. Even more startling, this is the 
largest wealth gap since data started being collected in 1984. Other 
findings of note that reflect the uneven economic difficulties among 
groups of citizens include the fact that approximately 35 percent of 
Black households and 31 percent of Latino households had zero or 
negative net worth in 2009, compared to only 15 percent of white 
households. The Pew findings echo those of a recent study by the 
Economic Policy Institute (EPI) that found that the Great Recession has 
decimated the black middle class. This study found that the median 
wealth of black households dropped 84 percent from 2004 to 2009, 
essentially wiping out the economic gains that black Americans made 
since the early 90s.
  There are multiple factors that contribute to the wealth gap--
disproportionate investment patterns, experience of unemployment, and 
education debt are a few. The Pew study highlighted the fact that white 
families are typically able to diversify their investments in housing 
as well as stocks and bonds, whereas minorities usually invest heavily 
in housing. The housing crisis then contributed to wealth disparities 
because minority families lost everything and had few (if any) other 
investments on which to fall back.
  African Americans and Latino Americans disproportionately experience 
both unemployment and long-term unemployment, which further contributes 
to the wealth gap. African Americans stand at the highest unemployment 
levels since 1984. Most recently, the black unemployment rate averaged 
16.1 percent in April, May, and June 2011, compared to an average of 
7.9 percent for whites during the same periods. The unemployment rates 
for recent high school graduates who were white were 9.5 percent and 
21.4 percent in 2007 and 2010, respectively. In contrast, the 
unemployment rates for recent high school graduates who were black were 
20.3 percent and 31.3 percent, respectively. Thus, the unemployment 
rate of 21.4 percent in the middle of the recession for white high 
school graduates was about the same level of unemployment for black 
high school graduates at the beginning of the recession. Similarly, 
recent black college graduates have the highest unemploynient rate 
among college graduates. With regard to long-term unemployment, 
researchers at the Institute for Research on Labor and Employment at 
the University of California at Berkeley recently found that African 
Americans represent only 11 percent of the labor force, but 22 percent 
of the long-term unemployed. Thus, African Americans are twice as 
likely to experience long-term unemployment compared to their 
representation in the labor force. Similarly, Latino Americans

[[Page E1526]]

represent 15 percent of the labor force but 17 percent of the long-term 
unemployed. In contrast, white Americans experience unemployment and 
long-term unemployment at lower rates than their representation in the 
labor force. These discrepancies are problems that we cannot sweep 
under the rug.
  The costs of higher education exacerbate the problems of differential 
investment and unemployment that contribute to the wealth gap. Recent 
analyses by Mark Kantrowitz, the publisher of FinAid.org found that 
student loan debt in 2010 surpassed credit card debt for the first 
time. The report--Trends in Higher Education Series 2010--found that 
black graduates with bachelor's degrees exceeded other racial and 
ethnic groups for highest debt. For 2007 to 2008, 27 percent of black 
graduates with bachelor's degrees had over $30,500 in debt, compared to 
only 16 percent of white graduates, 14 percent of Latino graduates and 
9 percent of Asian American graduates. The high-cost of college creates 
a two-fold obstacle for black households to become middle class. Some 
youth may choose not to attend higher education given the costs, 
dramatically reducing their income and ability to enter the middle 
class. Other youth face overwhelming debt that combines with poor job 
opportunities that make a middle-class lifestyle difficult to obtain.
  These studies demonstrate that black families will face serious 
obstacles to becoming middle class, furthering the wealth gap. High 
rates of unemployment and college debt will make it difficult for 
recent graduates to enter the middle class. These difficulties with 
obtaining well-paying jobs are expected to grow given the discussion of 
continued cuts in public sector jobs and capital investment in the name 
of deficit reduction.
  So my fellow colleagues, I urge us to address the wealth gap head on. 
It affects our economy and the well-being of our citizens. Right now, 
we need to do everything we can to rebuild our economy. We need to fix 
our economy, and we need to help our citizens who have borne the brunt 
of the economic crisis recover. Government intervention and investment 
are needed to make our Nation's economy and households strong again.

                          ____________________