# Why do blacks and hispanics have such low net worths compared with whites?

**URL:** <https://boards.straightdope.com/t/why-do-blacks-and-hispanics-have-such-low-net-worths-compared-with-whites/681108>\
**Category:** Great Debates\
**Created:** [February 12, 2014, 1:05am UTC](https://boards.straightdope.com/t/why-do-blacks-and-hispanics-have-such-low-net-worths-compared-with-whites/681108 "2014-02-12T01:05:38Z")\
**Posts on this page:** 20\
**Page:** 1

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**Author:** ![Shalmanese](https://avatars.discourse-cdn.com/v4/letter/s/45deac/32.png) [@Shalmanese](https://boards.straightdope.com/u/Shalmanese)\
**Post date:** [February 12, 2014, 1:05am UTC](https://boards.straightdope.com/t/why-do-blacks-and-hispanics-have-such-low-net-worths-compared-with-whites/681108/1 "2014-02-12T01:05:38Z")

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According to [this CNN article](http://money.cnn.com/2012/06/21/news/economy/wealth-gap-race/) from 2012:

> [@](#):
>
> The median household net worth for whites was $110,729 in 2010, versus $4,995 for blacks, according to recently released Census Bureau figures.
> 
> The difference is similarly notable when it comes to Hispanics, who had a median household net worth of $7,424. The ratio between white and Hispanic wealth expanded to 15 to 1.

While I’ve been well aware of the income gap between whites and minorities, I wasn’t aware that the net worth disparity is even more striking.

According to [this source](http://www.infoplease.com/ipa/A0104552.html), the median income for whites in 2011 was $55,412 and for blacks was $32,229. The 40% disparity in income does not seem to account for the 95% disparity in net worth.

What are the causes for net worth being so much lower for black and hispanic minorities compared to whites?

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**Author:** ![Ethilrist](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ethilrist/32/4604_2.png) [@Ethilrist](https://boards.straightdope.com/u/Ethilrist)\
**Post date:** [February 12, 2014, 1:27am UTC](https://boards.straightdope.com/t/why-do-blacks-and-hispanics-have-such-low-net-worths-compared-with-whites/681108/2 "2014-02-12T01:27:49Z")

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Maybe it takes $32k to live off of, so the blacks can only save $229, whereas the whites can save $21k and change?

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**Author:** ![Great\_Antibob](https://avatars.discourse-cdn.com/v4/letter/g/e47c2d/32.png) [@Great\_Antibob](https://boards.straightdope.com/u/Great_Antibob)\
**Post date:** [February 12, 2014, 1:34am UTC](https://boards.straightdope.com/t/why-do-blacks-and-hispanics-have-such-low-net-worths-compared-with-whites/681108/3 "2014-02-12T01:34:00Z")

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> [@Ethilrist](#):
>
> Maybe it takes $32k to live off of, so the blacks can only save $229, whereas the whites can save $21k and change?

Maybe if we had a term for this concept…like a line. A line under which you are living in poverty…

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**Author:** ![verificationist](https://avatars.discourse-cdn.com/v4/letter/v/e19b73/32.png) [@verificationist](https://boards.straightdope.com/u/verificationist)\
**Post date:** [February 12, 2014, 1:37am UTC](https://boards.straightdope.com/t/why-do-blacks-and-hispanics-have-such-low-net-worths-compared-with-whites/681108/4 "2014-02-12T01:37:09Z")

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I think this is largely an answer for the experts to answer. And I ignore what the experts think about this. But let me give you an example from my personal experience.

I was born and raised in Mexico by a completely Mexican family in a normal traditional Mexican environment. I then came to England to do my bachelor’s degree. My English is good enough for me to understand anything anyone says or writes in modern standard English. I understand perfectly well how to live in a modern urban environment. Mostly thanks to my parents, I have had a very good education in academic terms.

Now, I got into an internship in a major accounting firm. And despite all those advantages I have had in life I had to make a good amount of effort to adapt to the culture and fit into a place in the office. I managed it, but it was quite difficult. And I think one of the reasons was that Anglo Saxon social norms and the way Anglo Saxon social groups work are extremely different from that of Hispanic societies. You really have to make an effort to understand what’s going on, how to impress people, when it’s the right moment to make certain moves, and how to do it, how to socialize in an informal setting, and so on. I think this makes it difficult for Hispanic people to succeed in the workforce.

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**Author:** ![zytron](https://avatars.discourse-cdn.com/v4/letter/z/90db22/32.png) [@zytron](https://boards.straightdope.com/u/zytron)\
**Post date:** [February 12, 2014, 1:38am UTC](https://boards.straightdope.com/t/why-do-blacks-and-hispanics-have-such-low-net-worths-compared-with-whites/681108/5 "2014-02-12T01:38:10Z")

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**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\
**Post date:** [February 12, 2014, 1:38am UTC](https://boards.straightdope.com/t/why-do-blacks-and-hispanics-have-such-low-net-worths-compared-with-whites/681108/6 "2014-02-12T01:38:57Z")

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> [@Shalmanese](#):
>
> The 40% disparity in income does not seem to account for the 95% disparity in net worth.

How do you figure that? It seems to me that the disparity in income is the likeliest explanation for the disparity in net worth. Net worth is essentially just accumulated surplus income so less income means less surplus and less accumulation.

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**Author:** ![Procrustus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/procrustus/32/2994_2.png) [@Procrustus](https://boards.straightdope.com/u/Procrustus)\
**Post date:** [February 12, 2014, 1:45am UTC](https://boards.straightdope.com/t/why-do-blacks-and-hispanics-have-such-low-net-worths-compared-with-whites/681108/7 "2014-02-12T01:45:13Z")

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Net Worth can be influenced by generational factors. I lot of people I know have a little net worth only because they inherited some amount. Thus, even if I make only a iittle more than you, I might have a lot more net worth if my parents and grandparents had more advantages than your parents and grandparents. In my case, my parents put me through college without debt, I inherited a bit when my grandparents died, and my parents paid for my first car. So, even though I made the same low salary at the public defender’s office as my colleagues of every race, I had more net worth. The same was true, to a greater or lessor extent, for a lot of the white people I knew, and not true for most of the non-white people I knew.

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**Author:** ![Max\_the\_Immortal](https://avatars.discourse-cdn.com/v4/letter/m/6de8d8/32.png) [@Max\_the\_Immortal](https://boards.straightdope.com/u/Max_the_Immortal)\
**Post date:** [February 12, 2014, 1:46am UTC](https://boards.straightdope.com/t/why-do-blacks-and-hispanics-have-such-low-net-worths-compared-with-whites/681108/8 "2014-02-12T01:46:03Z")

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> [@Shalmanese](#):
>
> According to [this source](http://www.infoplease.com/ipa/A0104552.html), the median income for whites in 2011 was $55,412 and for blacks was $32,229. The 40% disparity in income does not seem to account for the 95% disparity in net worth.

Is there a similar net worth disparity between white households earning around $55,412 per year and white households earning around $32,229 per year? Is there a similar net worth disparity between white households earning around $32,299 per year and black households earning around $32,299 per year? And for the other permutations?

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**Author:** ![verificationist](https://avatars.discourse-cdn.com/v4/letter/v/e19b73/32.png) [@verificationist](https://boards.straightdope.com/u/verificationist)\
**Post date:** [February 12, 2014, 1:50am UTC](https://boards.straightdope.com/t/why-do-blacks-and-hispanics-have-such-low-net-worths-compared-with-whites/681108/9 "2014-02-12T01:50:26Z")

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Sorry, I completely misread the question. Bad skim reading skills.

But I would still say that culture probably has something to do with it. I have noticed that only quite well off people in my country tend to think about long term investments, whereas people with an Anglo Saxon background do it even if their incomes are on the lower levels.

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**Author:** ![Wesley\_Clark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wesley_clark/32/20581_2.png) [@Wesley\_Clark](https://boards.straightdope.com/u/Wesley_Clark)\
**Post date:** [February 12, 2014, 1:50am UTC](https://boards.straightdope.com/t/why-do-blacks-and-hispanics-have-such-low-net-worths-compared-with-whites/681108/10 "2014-02-12T01:50:41Z")

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Could part of it be the higher rates of single parenthood? Looking into it, that doesn’t make sense.

> **[Children in single-parent families by race and ethnicity | KIDS COUNT Data...](https://datacenter.aecf.org/data/tables/107-children-in-single-parent-families-by-race-and-ethnicity)**
>
> Table data for Children in single-parent families by race and ethnicity

That doesn’t explain why latino and black rates are about the same while white net worth is so much higher. Rates for whites, latinos and blacks are 25%, 42% and 67% respectively.

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**Author:** ![monstro](https://avatars.discourse-cdn.com/v4/letter/m/ba9def/32.png) [@monstro](https://boards.straightdope.com/u/monstro)\
**Post date:** [February 12, 2014, 1:52am UTC](https://boards.straightdope.com/t/why-do-blacks-and-hispanics-have-such-low-net-worths-compared-with-whites/681108/11 "2014-02-12T01:52:53Z")

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I highly recommend you listen to the This American Life episode entitled [House Rules](http://www.thisamericanlife.org/radio-archives/episode/512/house-rules). It nicely sums up exactly how the biggest promise of the “American Dream”–home ownership–was snatched away from black Americans. Not by an evil bank. Not by an evil individual. But by the federal government.

Here’s a transcript of the show: [http://www.thisamericanlife.org/radio-archives/episode/512/transcript](http://www.thisamericanlife.org/radio-archives/episode/512/transcript).

More about [redlining](http://en.wikipedia.org/wiki/Redlining):

> [@](#):
>
> Although informal discrimination and segregation had always existed in the United States, the specific practice called “redlining” began with the National Housing Act of 1934, which established the Federal Housing Administration (FHA).[10] Racial segregation and discrimination against minorities and minority communities pre-existed this policy. The decay of minority inner city neighborhoods from withheld mortgage capital and difficulty for neighborhoods to attract and retain families able to purchase homes was aggravated by the implementation of this federal policy.[11] In 1935, the Federal Home Loan Bank Board (FHLBB) asked Home Owners’ Loan Corporation (HOLC) to look at 239 cities and create “residential security maps” to indicate the level of security for real-estate investments in each surveyed city. Such maps defined many minority neighborhoods in cities as ineligible to receive financing. The maps were based on assumptions about the community, not accurate assessments of an individual’s or household’s ability to satisfy standard lending criteria. Since African-Americans were unwelcome in white neighborhoods, which frequently instituted racial restrictive covenants to keep them out, the policy effectively meant that blacks could not secure mortgage loans at all. At various times the practice also affected other ethnic groups, including Latinos, Asians, and Jews. The assumptions in redlining resulted in a large increase in residential racial segregation and urban decay in the United States. Urban planning historians theorize that the maps were used by private and public entities for years afterwards to deny loans to people in black communities.[10] However, recent research has indicated that the HOLC did not redline in its own lending activities, and that the racist language reflected the bias of the private sector and experts hired to conduct the appraisals.[12]
> 
> On the maps, the newest areas — those considered desirable for lending purposes — were outlined in blue and known as “Type A”. These were typically affluent suburbs on the outskirts of cities. “Type B” neighborhoods were considered “Still Desirable”, whereas older “Type C” were labeled “Declining” and outlined in yellow. “Type D” neighborhoods were outlined in red and were considered the most risky for mortgage support. These neighborhoods tended to be the older districts in the center of cities; often they were also black neighborhoods.[10]
> 
> Some redlined maps were also created by private organizations, such as J.M. Brewer’s 1934 map of Philadelphia. Private organizations created maps designed to meet the requirements of the Federal Housing Administration’s underwriting manual. The lenders had to consider FHA standards if they wanted to receive FHA insurance for their loans. FHA appraisal manuals instructed banks to steer clear of areas with “inharmonious racial groups”, and recommended that municipalities enact racially restrictive zoning ordinances, as well as covenants prohibiting black owners.[13][14]

I can almost hear members of the peanut gallery emphatically shaking their heads, unable to believe that a policy that officially ended in 1968 could POSSIBLY be responsible for disparities 46 years later. But of course it can! Forty-six years ago is like yesterday when we’re talking about the biggest asset that an average person owns and passes down to his or her children. And 46 years ago is nothing when we realize that where a family resides is linked to a lot of intangibles–such as the quality of education that one receives–that are also tied to socioeconomics.

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**Author:** ![verificationist](https://avatars.discourse-cdn.com/v4/letter/v/e19b73/32.png) [@verificationist](https://boards.straightdope.com/u/verificationist)\
**Post date:** [February 12, 2014, 1:56am UTC](https://boards.straightdope.com/t/why-do-blacks-and-hispanics-have-such-low-net-worths-compared-with-whites/681108/12 "2014-02-12T01:56:00Z")

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> [@Max\_the\_Immortal](#):
>
> Is there a similar net worth disparity between white households earning around $55,412 per year and white households earning around $32,229 per year? Is there a similar net worth disparity between white households earning around $32,299 per year and black households earning around $32,299 per year? And for the other permutations?

Yes, that is a very important factor to take into account. Suppose that when you earn only 32,229 you have to spend 90% of what you earn, but that when you earn 55,412 you only have to spend 70% because you still get a good quality of life with only spending so much. That would make the disparity in net worth go faster than the disparity in income.

Come think of it. If you make 10 million or more you probably are only spending 10% of what you earn.

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**Author:** ![nevadaexile](https://avatars.discourse-cdn.com/v4/letter/n/eb8c5e/32.png) [@nevadaexile](https://boards.straightdope.com/u/nevadaexile)\
**Post date:** [February 12, 2014, 2:16am UTC](https://boards.straightdope.com/t/why-do-blacks-and-hispanics-have-such-low-net-worths-compared-with-whites/681108/13 "2014-02-12T02:16:00Z")

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I’m African American and even though I’m “middle class” (whatever that is anymore) I can say that following doesn’t help:

[ol]  
[li]\*\* A lack of inherited wealth\*\* - Many Black parents have nothing to leave their children and so those children start off behind[/li][li] **More limited work opportunities** - I have several skill sets. Many African Americans don’t. Coupled with the fact that even today many businesses (especially smaller ones) won’t hire African Americans, means that most can’t find work which will help them earn enough to save.[/li][li] **A lack of emphasis on savings** - Many people in the African American community aren’t savers even if they earn enough to BE savers. They spend money as soon as they get or in some cases faster which leads to debt. Also, saving isn’t emphasized as much as it needs to be in the Black community.[/li][li] **Legal issues** - Many African Americans find their limited savings are used to pay for legal issues facing them or a relative. Since this money will almost certainly never be paid back or recovered, they end up further behind in their savings[/li][li] **Inequality in property values** - I know that I make more than my neighbors. However, I also know that my home would worth less because I’m Black and they are not. That means one of major sources of savings is worth less than what I might eventually pay for it.[/li][li] **Health issues** - For a wide variety of reasons, health problems plague the African American community. With limited savings and perhaps no health insurance, people often find themselves mired in debt.[/li][/ol]

There are many more reasons; but the above I have found to be the primary reasons why African American levels of net worth are lower than White and Asian Americans.

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**Author:** ![monstro](https://avatars.discourse-cdn.com/v4/letter/m/ba9def/32.png) [@monstro](https://boards.straightdope.com/u/monstro)\
**Post date:** [February 12, 2014, 2:20am UTC](https://boards.straightdope.com/t/why-do-blacks-and-hispanics-have-such-low-net-worths-compared-with-whites/681108/14 "2014-02-12T02:20:37Z")

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Another thing:

We talk about how important education is to having the American Dream fulfilled. Even if we assume that black and white Americans are given the same educational opportunities today, we can’t ignore a glaring fact. Formal, legal discrimination in education ended when many Baby Boomers were in junior high. That means that if you are a black Boomer, you were likely given an inferior education to your white contemporaries. Not because you were poor, but because you are black.

I didn’t learn about [Massive Resistance](http://en.wikipedia.org/wiki/Massive_resistance) until I moved here to VA (seven years ago). Imagine having to start school at age 10 because the schools have been closed for five years and your folks can’t afford private school tuition. Is it fair for someone to expect you to graduate from high school with the same prospects and optimism as someone who did not have to face such adversity? Is it fair for your children, who have inherited your disadvantages, to be held to the same standards as the children who inherited advantages?

No offense to anyone in this thread, but when white folks continually pose the question in the OP, I just want to throw something. I just don’t know what’s so hard to understand about how present-day circumstances reflect the well-documented legacy of racial discrimination and oppression. And by legacy, I’m not just talking about slavery, though that’s important. I’m talking about stuff that happened within living memory. And also stuff that’s still happening [today](http://www.nytimes.com/2005/06/17/nyregion/17felons.html).

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**Author:** ![Chessic\_Sense](https://avatars.discourse-cdn.com/v4/letter/c/7c8e57/32.png) [@Chessic\_Sense](https://boards.straightdope.com/u/Chessic_Sense)\
**Post date:** [February 12, 2014, 3:13am UTC](https://boards.straightdope.com/t/why-do-blacks-and-hispanics-have-such-low-net-worths-compared-with-whites/681108/15 "2014-02-12T03:13:05Z")

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[quote=“nevadaexile, post:13, topic:681108”]

[li] **Inequality in property values** - I know that I make more than my neighbors. However, I also know that my home would worth less because I’m Black and they are not.[/li][/QUOTE]

Huh? How would a home buyer know your race? Even if we assume the area was very racist, you’d be the one dragging down the white people’s home values, not the other way around.

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**Author:** ![nevadaexile](https://avatars.discourse-cdn.com/v4/letter/n/eb8c5e/32.png) [@nevadaexile](https://boards.straightdope.com/u/nevadaexile)\
**Post date:** [February 12, 2014, 3:49am UTC](https://boards.straightdope.com/t/why-do-blacks-and-hispanics-have-such-low-net-worths-compared-with-whites/681108/16 "2014-02-12T03:49:04Z")

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> [@Chessic\_Sense](#):
>
> Huh? How would a home buyer know your race? Even if we assume the area was very racist, you’d be the one dragging down the white people’s home values, not the other way around.

Umm…not certain what you are implying.

Please re-read my statement. My neighbor’s homes are worth more than mine if I had to sell because they are White and I am not.I have pictures of my family and African art in the house. It wouldn’t take a genius to discern that the occupant of the home was probably…African American.

And I shouldn’t be “dragging” anyone’s housing values down as my home is as well-maintained as theirs are. That’s my complaint.

Finally, this the United States. There is no “assumption of racism.” There’s racism until it’s proven that there isn’t racism. Not my doing, as I would prefer to live in a country where my race wasn’t a major issue.

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**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\
**Post date:** [February 12, 2014, 4:10am UTC](https://boards.straightdope.com/t/why-do-blacks-and-hispanics-have-such-low-net-worths-compared-with-whites/681108/17 "2014-02-12T04:10:06Z")

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> [@nevadaexile](#):
>
> Umm…not certain what you are implying.
> 
> Please re-read my statement. My neighbor’s homes are worth more than mine if I had to sell because they are White and I am not.I have pictures of my family and African art in the house. It wouldn’t take a genius to discern that the occupant of the home was probably…African American.

I think that’s the point Chessic Sense was making. If the presence of a black person in the neighbourhood reduces home values then you would presumably be the only person immune to the effect. Any white racist buying a home from one of your white neighbours would have you as a black neighbour after the sale. But if you’re the one selling the house to a white buyer, the neighbourhood would be all white after the sale.

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**Author:** ![the\_diego](https://avatars.discourse-cdn.com/v4/letter/t/7bcc69/32.png) [@the\_diego](https://boards.straightdope.com/u/the_diego)\
**Post date:** [February 12, 2014, 4:23am UTC](https://boards.straightdope.com/t/why-do-blacks-and-hispanics-have-such-low-net-worths-compared-with-whites/681108/18 "2014-02-12T04:23:57Z")

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I think you should correlate this with housing loan patterns. Heck, it’s the easiest way to get some tangible net worth. Lotsa blacks live in the cities, right? Where unit prices are kinda steep. No way I’m gonna invest in a downtown unit.

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**Author:** ![flatlined](https://avatars.discourse-cdn.com/v4/letter/f/eb9ed0/32.png) [@flatlined](https://boards.straightdope.com/u/flatlined)\
**Post date:** [February 12, 2014, 5:00am UTC](https://boards.straightdope.com/t/why-do-blacks-and-hispanics-have-such-low-net-worths-compared-with-whites/681108/19 "2014-02-12T05:00:21Z")

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> [@nevadaexile](#):
>
> Umm…not certain what you are implying.
> 
> Please re-read my statement. My neighbor’s homes are worth more than mine if I had to sell because they are White and I am not.I have pictures of my family and African art in the house. It wouldn’t take a genius to discern that the occupant of the home was probably…African American.

I’m having problems understanding this. When one is selling a home, they take all of the personal stuff out. This allows the potential buyers to imagine their stuff there and how it would fit.

As a buyer, I might admire how your home is set up with beautiful art and pics on the walls…but it would not help me to visualize how my stuff would work. At least that’s how it worked when I was buying my home.

If your house doesn’t sell because the buyer can’t see the house due to the artwork and pics and general clutter, you will get offered a lower price or it just won’t sell.

That’s not racism happening, its because you didn’t bother to make your house ready to sell.

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**Author:** ![Dag\_Otto](https://avatars.discourse-cdn.com/v4/letter/d/439d5e/32.png) [@Dag\_Otto](https://boards.straightdope.com/u/Dag_Otto)\
**Post date:** [February 12, 2014, 5:06am UTC](https://boards.straightdope.com/t/why-do-blacks-and-hispanics-have-such-low-net-worths-compared-with-whites/681108/20 "2014-02-12T05:06:52Z")

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[off topic]Regarding the property values, I’ve heard that on Indian reservations (where the tribe owns the land) the one major source of wealth creation, home ownership, is essentially unavailable to many Native Americans who chose to live on the reservation. They can own the structure, but not the land, so no bank will provide financing.[/off topic]

While my grandparents were children of immigrants, they were able to become business owners. Sure, they started as laborers and decided to better themselves. But it’s not lost on me that they were white (surprise, buying property wasn’t an obstacle), while their customers, mostly Navajo, were not even able to vote at the time. At the same time throughout the country, segregation was the rule.

The amount of advantage someone gets from previous generations cannot be overstated. Since it is generational, the time frame required to show improvement from generation to generation takes, well, you know, generations. Segregation, redlining, the inability to vote or own land. etc. each of these is a disadvantage. I’m 47, and my parents were born in the 1930’s. Any of my contemporary’s parents, whether Black, Hispanic, or Native American, would have experienced these disadvantages in the time between 1930-1970, and now we are talking one generation. ONE. Anyone who think that ‘segregation, redlining, the inability to vote or own land’ hasn’t occurred in 30 or so years so everyone is on equal footing now is deluded.

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