The great recession period that came as a result of financial and housing crises was hard on the net worth of every American family. But even though the recovery period is mending the damages on the asset prices, it is notable that there is inequity with regards to the benefits in each family. The wealth gap is persistently becoming bigger along the ethnic and racial lines in the USA. For instance, the wealth of a white household in the year 2013 was 13 times the median wealth of the black family. This was an increase of five per cent from the year 2010 according to the research by the Pew Research Center analysis of data from the Federal Reserve's survey of consumer finances ( Weller & Hanks, 2018, April). Further, the same research centre asserts that the white Americans were ten times wealthier than Hispanic Americans in the year 2013. This was an increase of one per cent from the year 2010. The current data is much worse as the figures are much higher than in the previous years ( Kochhar & Fry, 2018). Presently, a black household in the country has 6% of the total wealth a white family owns in the US according to the recent data. A Latino household possesses 8% of a white household's wealth. A variety of factors perpetuates the increasing wealth gap in the country, mostly along the ethnic and racial lines. In this article, the discussion centers on different socioeconomic factors that increase the wealth gap along the racial line in the US.
Socioeconomic status encompasses the household income, educational attainments and psychological wellbeing. Also, socioeconomic involves financial security, quality of life, and the subjective perceptions of social class and social status. It further includes opportunities and privileges people get within the society. Notably, socioeconomic status is a reliable and persistent predictor of various outcomes in human life. Such outcomes encompass the psychological and physical health. In the society, socioeconomic status affects people directly and indirectly. It is a factor that is directly responsible for the differences between people of different ethnic and races with regards to wealth distribution in the US. The ever-widening wealth gap along the racial and ethnic lines in the country links to four critical socioeconomic factors. These are education, homeownership, health care discrimination, and labor market.
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Education is critical for wealth accumulation in the present world. In the current labor market, a person has to own a college certificate to get a well-paying job that is paramount for financial stability and wealth accumulation. However, there is a massive gap between the white Americans versus other Americans from different races with regards to college entries over the last decade. In the year 2011, the college graduates with a bachelor degree comprised of 34% white Americans, 20% blacks and 13% Hispanic Americans. The reason for these differences is the ever-increasing college cost in the country. As a result, households lack option but to take debts to send their children to colleges. However, a college degree provides a minimal escape route for black and Hispanic Americans with regards to wealth accumulation. The return on college education investment still favors the white Americans. The yield on education for the White Americans is $55,869 in comparison to $4,846 and $4,191 of black and Hispanic Americans respectively after completing a four-year degree program in a college ( Popescu et al., 2018). The difference in returns is a result of debt. The black and Hispanic Americans need a high debt to attend a college than a white American citizen. Further, there is a lot of color discrimination in the workplace guaranteeing minimal chances for securing jobs to the black and Hispanic Americans than the white citizens. As a result, the white graduates finish their college degree at a better position due to minimal debts and, this puts them in a better position to start accumulating wealth immediately.
The next socioeconomic factor is the house ownership. In the US, a home takes the more significant percentage of assets a family owns. According to Popescu et al. (2018) , “Homeownership is the central vehicle Americans use to store wealth, so homeownership and access to homeownership are at the heart of that widening wealth gap.” Notably, homeownership also falls within the borders of racial and ethnic lines. In the country, 73% of the white citizens own homes. This is a more significant percentage in comparison to 47% of the Latino and 45% of the Blacks that own homes in the country.
Moreover, the white homeowner's house worth over $80,000 in comparison to $48,000 and 50,000 for Latino and Black homeowners respectively. The disparity links to the value differences in the neighbourhood where the white citizens own homes to the areas where the Latino and Blacks own homes. Other than this, there is discrimination with regards to mortgage interest that also follows the racial and ethnic lines. The citizens of color are likely to receive mortgages of high interest than the white citizens. For instance, Wells Fargo in the year 2011 asserted that “it had steered black and Latino households into subprime mortgages but had offered white borrowers with similar credit profiles prime mortgages.” Such discrimination is an implication that it cost much higher for American citizens of color to own a home than a white citizen. It is also an implication that the wealth gap must exist and will continue to exist as far as ethnic and racial discrimination exists in the country.
Another socioeconomic factor that is behind the racial and ethnic wealth gap in the US is the labor market. The labor market, from an income a person earns, his or her health coverage, paid leaves and workplaces, provides financial stability and wealth accumulation opportunity. However, the 20% of the growth rate with regards to racial and ethnic wealth gap in the country, as well as the unemployment rate of 9% in the last 25 years, directly and indirectly, link to the inequity in the labor market ( Pfeffer, 2018). The contributing factors to differences in the racial outcome of the labor market are discriminations at the workplaces, different levels of social capital, and the geographical barriers. The black and Latino families earn $32,038 and $36,840 respectively. The figures are much lower in comparison to a typical white family that earns $50,400. Popescu et al. (2018) , claim that “In the labor market, the wealth return to a dollar of income is first determined by how much of that income you have the opportunity to save.” The authors further assert that “If you are facing a wealth gap of 80 cents for every dollar a white family makes, that makes you 20% less able to put that dollar into savings, because you may need all of those dollars to fill your consumption needs” (Sullivan & Meschede, 2018). Other than these, there are racial and ethnic-based differences concerning the return on the income each gets in the US. The black and Latino families are the subjects of low yields on their incomes. The low return in income means that such individuals are less likely to turn each additional dollar of their income into wealth. Latino family, for instance, will see a return of $3.63 while the black Americans will see a gain of $4.80 for each dollar they earn. The figures are much lower than the typical white citizens who will see a return of 19.51 for each dollar he or she earns.
The last factor is the racial and ethnic discrimination with regards to healthcare provision and distribution in the country. The citizens of color have the worst overall health status in the country according to the data from the World Health Organization (WHO). Notably, health is a predictor of different social and economic outcomes such as education, income, neighbourhood and environment, low-quality care, and stress. A healthy population is critical for wealth accumulation. However, there is racial bias in most hospitals in the country. The citizens of color suffer the most when they visit the hospital, and this discourages them from seeking quality and affordable care in public hospitals ( Sullivan & Meschede, 2018).
Further, the healthcare system is favoring the white citizens. For instance, the healthcare insurance covers are less burden to the white then the citizens of colors. The white Americans are in a better position to receive healthcare insurance covers than the Hispanic, Black and Latino Americans. Such an advantage places them at a better position to access primary health care and thus, makes then healthier than the rest. As a result, they spend less on health matters and save more money than the citizens of colors. Their savings makes them better placed with regards to health accumulation.
In an art shell, the socioeconomic factor is one of the major contributors to the growing gap in wealth accumulation rate among different races and ethnic groups in America. Currently, there is a big gap between the white Americans and other citizen of color as far as wealth accumulation is concerned. Among the socioeconomic factors that link to this situation are education, labor market, racial and ethnic discrimination in the healthcare system as well as homeownership. These factors affect the degree of wealth distribution among different races and thus, bring about the ever-increasing wealth gap along the ethnic and racial lines in the US.
References
Kochhar, R., & Fry, R. (2018). Wealth inequality has widened along racial, ethnic lines since the end of Great Recession | Pew Research Center . Retrieved from: http://www.pewresearch.org/fact-tank/2014/12/12/racial-wealth-gaps-great-recession/
Pfeffer, F. T. (2018). Growing Wealth Gaps in Education. Demography , 55 (3), 1033-1068.
Popescu, I., Duffy, E., Mendelsohn, J., & Escarce, J. J. (2018). Racial residential segregation, socioeconomic disparities, and the White-Black survival gap. PloS one , 13 (2), e0193222.
Sullivan, L., & Meschede, T. (2018). How Measurement of Inequalities in Wealth by Race/Ethnicity Impacts Narrative and Policy: Investigating the Full Distribution. Race and Social Problems , 10 (1), 19-29.
Weller, C. E., & Hanks, A. (2018, April). The Widening Racial Wealth Gap in the United States after the Great Recession. In the Forum for Social Economics (Vol. 47, No. 2, pp. 237-252). Routledge.
