April 28, 2013

Hispanics not catching up to whites economically

This would seem relevant to thinking about immigration policy, but almost nobody draws the connection. Annie Lowrey writes in the NYT:
The Urban Institute study found that the racial wealth gap yawned during the recession, even as the income gap between white Americans and nonwhite Americans remained stable. As of 2010, white families, on average, earned about $2 for every $1 that black and Hispanic families earned, a ratio that has remained roughly constant for the last 30 years. But when it comes to wealth — as measured by assets, like cash savings, homes and retirement accounts, minus debts, like mortgages and credit card balances — white families have far outpaced black and Hispanic ones. Before the recession, white families, on average, were about four times as wealthy as nonwhite families, according to the Urban Institute’s analysis of Federal Reserve data. By 2010, whites were about six times as wealthy. 
The dollar value of that gap has grown, as well. By the most recent data, the average white family had about $632,000 in wealth, versus $98,000 for black families and $110,000 for Hispanic families.

A commenter writes in:
Please note that the MEDIAN wealth for white families was 110,729 in 2010. For black households the "wealth" drops to 4,995 and Hispanics "wealth" is 7,424. These are figures released by the United States Census Bureau. 

Lowrey (is she Ezra Klein's girlfriend?) continues:
Two major factors helped to widen this wealth gap in recent years. The first is that the housing downturn hit black and Hispanic households harder than it hit white households, in aggregate. Many young Hispanic families, for instance, bought homes as the housing bubble was inflating and reaching its peak, leaving them saddled with heavy debt burdens as house prices plunged in places like suburban Phoenix and inland California.

So, lenders overestimated Hispanic ability to pay off big loans.
Discriminatory lending practices were also a factor. “We know that communities of color, their rate of subprime or predatory loans was twice what it is in the overall population,” said Tom Shapiro, the director of the Institute on Assets and Social Policy at Brandeis University. 

So, lenders underestimated Hispanic ability to pay off big loans.

Which one is it?
Something similar may be happening as the housing recovery takes hold. “Some people talk about it in terms of a land grab,” said Professor Hamilton of the New School, as mainly white investors are buying foreclosed homes from disproportionately minority owners. “As the housing market starts to appreciate, some of those minority buyers might not be back.”

Clearly, the failure of minorities to pay their old mortgages means we'll need more programs to fight discrimination and racial inequality by encouraging fast-buck lenders to give them new mortgages. What could possibly go wrong?


Baloo said...

Remember the scene in _Centennial_, where the rancher or farmer is frustrated that his Mexican stoop-labor employees didn't seem to want to rise economically the way his Japanese employees did? Michener could see it, but politicians just don't understand politics as well as a novelist did.

Anonymous said...

Lowrey (is she Ezra Klein's girlfriend?)

Wife, they married about a year and a half ago if memory serves.

Anonymous said...

I love Steve's close readings. Fisking, I think it's called.

Anonymous said...

It's a real problem in America that so many of the wealthy elite made their money in real estate. It's as if they can't conceive of growing an economy by means other than pipelining people. Leeching off family-formation, you might say. Maybe they're just confused and wrong.

Anonymous said...

The implication seems to be that most of these blacks and Hispanics who default could've kept their homes had they gotten the best rate they would have qualified qualified for. Has anyone looked into this thoroughly?

Anonymous said...

More immigrants needed to help hispanics close The Gap

kaganovitch said...

Ah Steve, you fail to grasp the profundity of predatory lending theory. You see if only lenders would treat semi-employed strawberry pickers the way they do software executives they would give them the same easy lending terms which strawberry pickers could meet!Instead they impose more onerous terms on the poor than the rich; I ask you is that just??

Anonymous said...

It's a real problem in America that so many of the wealthy elite made their money in real estate. It's as if they can't conceive of growing an economy by means other than pipelining people. Leeching off family-formation, you might say. Maybe they're just confused and wrong.Nothing wrong with making money off of real estate but when there are no rules it gets out of hand. Real estate has a history of boom and bust in California and Florida but last time it really got out of hand.
4/28/13, 6:08 PM

countenance said...

Surprise. The American diaspora of simple Indo-Mezo-Chicano jungle peasants who couldn't organize a two-car parade to save their lives have median household net wealths less than the blue book of a used Buick. And Bellcurvius has even less.

Frontal lobe development -- It's a very good thing.

Anonymous said...

Is the "American Dream" qualifying for a 30-year mortgage? Or maybe having a financial system based around the 30-year mortgage, or rough equivalent?

Does Mexico have 30-year mortgages or something similar? How about the rest of the world?

Anonymous said...

If Hispanics aren't catching up with whites economically, it must be down to white racism. That's why it's important that, along with amnesty, we redouble our efforts to detect and eliminate white racism.

Only then will "we" have a vibrant and growing economy. And that's what "we" are all aiming for.

Anonymous said...

Just going to drop this in here, whites had about 30k of assets excluding home equity in 2009, Azns about 20k:

Jonathan Silber said...

Blacks spend more and save less than
whites; and they are more likely than whites to fail to pay back the money they borrow.

Ergo, whites are racists.

When someone can analyze with this high level of Ivy-League rigor, no wonder they hold the opposition in contempt.

NOTA said...

I'd say mortgage brokers correctly estimated the gullability of investors w.r.t. hispanics' ability to pay off mortgages. Along with many, many other peoples' ability to pay them off.

How does the old quote go? "Let's put it this way. He is the broke-er, and you is the broke-ee."

SkepticalCounterpoint said...

As Steve pointed out recently, journalists wielding Occam's Butterknife are increasingly countered by hordes of anonymous commenters wielding Occam's razor.

Here on this article for example, the most up-voted reader submissions seem to be critical of the totally PC tone of author Lowrey. And this is the readership of the New York Times, not VDare.

If so many Times readers are anti-PC, is "elite opinion" really as monolithic as we think?


Although fundamentally in agreement with Steve-ism, I am attempting to explore areas where the inevitable phenomenon of "groupthink" might lead Steve and his readers to ignore contrary evidence.

Jefferson said...

With the exception of a few wealthy Cuban American business owners in Miami, Hispanics in the U.S as a whole have never been a very financially affluent ethnic/racial group.

When it comes to average household income, Hispanic Americans lag behind Asian Americans, WASP Americans, Jewish Americans, Italian Americans, etc.

Even though Hispanics are 17 percent of the U.S population, there is not a single Hispanic in the Forbes 400 richest Americans list. There is not a single Lopez, Hernandez, Cervantes, Del Rio, or Reyes on that list.

Hispanics make up 50 percent of the population in Los Angeles, yet not a single wealthy affluent neighborhood in Los Angeles is predominantly Hispanic.

Whites make up only 29 percent of the population in L.A, yet all wealthy upscale neighborhoods in Los Angeles are predominantly White.

Los Angeles is just like Latin America, meaning a predominantly Brown area where most of the wealth is in the hands of the White Minority.