Summary: This CBS news report shows dramatic wealth inequalities across race, and how the inequalities have increased dramatically during the Great Recession. Like Oliver and Shapiro's classic book, Black Wealth/White Wealth, the report documents that in 1995, the median white household had a net worth 7 times larger than black and Hispanic households. Citing Census data analyzed by the Pew Center, the video shows that in 2010 white households ($113,000) now have 18 times the net worth of Hispanics ($6,325) and 20 times the net worth of African-Americans ($5,677). It notes that part of this growing difference is that the net worth of most racial minorities is found in their homes, while whites are more likely to also own financial assets. The news team argues that this asset allocation explains why white wealth has rebounded significantly from its recent losses and increased the wealth divide. While this is true, they largely miss other important factors. For example, Melvin Oliver's 2008 report found that African-Americans were the subject of systematic predatory lending during the housing bubble that led to the Great Recession. He noted that "minorities were steered away from safe, conventional loans by brokers who received incentives for jacking up the interest rate" and that their mortgages had "high hidden costs, exploding adjustable rates, and prepayment penalties to preclude refinancing." This not only lead to a drop in the value of minority wealth, but actually stripped much of their assets as borrowers who defaulted on their loans. The video closes by saying "experts say it could be a decade before the wealth gap closes," although they do not cite any experts that say this. Viewers may question the optimism of this prediction and reflect on why it is likely to take much more than a decade for something like wealth (which is passed down from one generation to another) to be more equitably distributed across race. The video is a great accompaniment to the readings linked to above, and perhaps even this comedic video from Chris Rock on race and the differences between being rich and wealthy.
Submitted By: Paul Dean