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This Week in PubHub: Race, Place, and the Wealth Gap

February 10, 2012

(Kyoko Uchida manages PubHub, the Foundation Center's online catalog of foundation-sponsored publications. In her previous post, she looked at four reports that addressed the topic of protecting the rights of people with disabilities.)

Research shows that racial/ethnic disparities in a variety of areas, including wealth, health, and educational attainment, have worsened over the past two decades. This week in PubHub, we highlight four reports that examine the extent of these disparities, as well as how they are linked and reinforce one another.

According to the Pew Research Center report Wealth Gaps Rise to Record Highs Between Whites, Blacks and Hispanics (39 pages, PDF), the median net worth of white households in 2009 was twenty times that of African-American households and eighteen times that of Latino households -- a wealth gap, in both cases, nearly double what it was in 1984, thanks in part to the bursting of the subprime mortgage bubble and the recession that followed. Indeed, since 2005 Latinos and African Americans -- many of whom live in states characterized by housing market volatility and/or who derive more than half of their net worth from home equity -- saw their median household wealth fall by 66 percent and 53 percent, respectively, compared to only 16 percent among whites.

What factors other than the housing boom and bust are driving disparities in household wealth and asset accumulation? The Urban Institute report Private Transfers, Race, and Wealth (36 pages, PDF) examines the role of financial support from extended family members and friends, large gifts, and inheritances in asset accumulation and finds that African Americans and Latinos are much less likely to receive large gifts and inheritances than whites -- a fact that contributes significantly to racial and ethnic wealth gaps. Funded by the Annie E. Casey and Ford foundations, the report also found that large gifts and inheritances are a bigger factor in wealth accumulation among African Americans than among whites or Latinos, and that the disparity in private transfers of wealth accounts for an estimated 12 percent of the black-white wealth gap.

Does the wealth gap influence racial/ethnic disparities in child development, health, and economic mobility? And if so, how? According to Diverging Pathways: How Wealth Shapes Opportunity for Children (16 pages, PDF), a report from the Insight Center for Community Economic Development based on 2007 data, 32 percent of white households with young children were income-poor while 14.2 percent had no assets, compared to 69 percent of Latino and 71 percent of African-American households that were income-poor and 40 percent (for both groups) that had no assets. Lacking the financial resources to pay for high-quality early childhood education or college tuition, children in income- and asset-poor households face a future of limited economic opportunity, the report argues. Indeed, racial/ethnic disparities in child outcomes related to health status and skills development appear as early as the age of 2. The report also notes that while there is an inverse correlation between a mother's educational attainment, economic insecurity, and child outcomes, the wealth gap between households headed by white and African-American mothers with bachelor's degrees increased fivefold between 1994 and 2007. Funded by the Annie E. Casey Foundation, the Eunice Kennedy Shriver National Institute of Child Health & Human Development, the Michigan Center for Urban African American Aging Research, and the National Institutes of Health, the report calls for helping economically vulnerable households of color build wealth and accumulate assets as a way to improve child well-being.

Would narrowing the wealth gap in and of itself eliminate disparities in health status and child outcomes? Any effort to mitigate the former must first address the links between location, race/ethnicity, and socioeconomic status as well as the physiological effects of bias and discrimination, Why Place & Race Matter (113 pages, PDF), a report from the California Endowment and PolicyLink, argues. According to the report, race/ethnicity is a greater determinant of health status than income, while structural racism continues to shape the economic, social, and physical environments of low-income communities of color -- which, in turn, affects the health status of residents of those communities. Among other things, the report argues that strategies for building healthy, thriving, sustainable communities must be race-conscious and focus on addressing both community conditions and individual interventions simultaneously.

To mitigate racial/ethnic wealth gaps, these reports suggest, policy makers and funders first need to address disparities in health, environmental justice, educational achievement, neighborhood safety, and other areas. Do you agree? And, if so, what strategies are working and deserve more attention and support? Share your thoughts in the comments section below.

And don't forget to visit PubHub, where you can browse more than two hundred and sixty reports on topics related to minorities.

-- Kyoko Uchida

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