The Effect of the Great Recession on Black-White Wealth and Inequality
Liana Fox, Columbia University
Between 2007 and 2009 a combination of the housing market collapse and the Great Recession caused the median net worth of black families in the United States to drop 49%, compared with a 29% decline for white families. As a result, the median white-black wealth ratio increased from 13-1 to 20-1. While black families experienced a greater hit in percentage terms, white families lost much more in absolute levels. These changes have profound implications for inequality and mobility in the United States. Utilizing longitudinal wealth data from the PSID, this paper examines the differential impact of the recent recession on the wealth holdings of black and white families and the implications for overall inequality. I find that the recession has increased inequality by disproportionately negatively impacting assets held by the bottom half of the population.