Groups that are being left behind
Economic well-being is determined not only by absolute wealth but also by where groups stand in comparison to each other. While households led by white, college graduates are pretty much back to their pre-crisis level, white, working-class families have not only not regained their wealth, but they have lost ground in almost every measure of well-being. Households led by someone with only a high school degree earn less, have poorer health, lower rates of marriage and fewer instances of homeownership than any other group, according to a study by the Federal Reserve Bank of St Louis.
Education is not the only story
Black and Hispanic college graduates have begun to move up the economic ladder in terms of wealth and income, and yet they still lag far behind their white counterparts. White families headed by a college graduate had six times the wealth of comparable black and Hispanic families. In fact, like white high school graduates, black college graduates declined in the non-financial measures of well-being including health, homeownership and marriage rates.
Pre-crisis wealth may explain the disparity
One possible explanation for the disparity is the basis of a family’s wealth before the 2007 economic crisis. For most families in the bottom half of the wealth spectrum, their biggest asset was their home, while those at the top of the income ladder held most of their wealth in stocks. While the stock market has come back, those who lost wealth by virtue of the housing collapse have not regained their financial footing. And, besides the fact that black families tended to have their wealth invested in their home, they also tended to have borrowed more relative to the value of their homes so that mortgage payments dogged them well into the housing crisis.
The interaction of education, class and race
Although the white working class has lost economic ground to their college-educated counterparts — declining in their share of income from 45 percent to 27 percent in 30 years — they are still better off than black and Hispanic working-class families. But, those black and Hispanic working-class families have begun to catch up with their median income increasing while the white working-class families’ income decreased. Still, among college graduates, black and Hispanic families’ race still seems to be a factor since they still lag far behind similarly situated white families.
Wealth and income are not the only measures of economic well-being. Home ownership, health and marriage rates are also measures. Where a particular group is on the economic ladder in comparison to other groups also plays a role in determining how well off they are. Factors such as class, education and race make understanding the real impact of the economic recovery difficult to quantify.
Have something to add to this story? Comment below or join the discussion on Facebook.
Header image: ShutterStock