Minorities’ Wealth is Not Protected by a College Degree

New York Times: “A new report by the Federal Reserve Bank of St. Louis “raises troubling questions about the ability of a college education to narrow the racial and ethnic wealth gap. ‘Higher education alone cannot level the playing field,’ the report concludes.”

“Economists emphasize that college-educated blacks and Hispanics overall earn significantly more and are in a better position to accumulate wealth than blacks and Hispanics who do not get degrees.”

“But while these college grads had more assets, they suffered disproportionately during periods of financial trouble.”

“From 1992 to 2013, the median net worth of blacks who finished college dropped nearly 56 percent (adjusted for inflation). By comparison, the median net worth of whites with college degrees rose about 86 percent over the same period, which included three recessions.”

“There is not a simple answer to explain why a college degree has failed to help safeguard the assets of many minority families. Persistent discrimination and the types of training and jobs minorities get have played a role. Another central factor is the heavy debt many blacks and Hispanics accumulate to achieve middle-class status.”

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  1. “There is not a simple answer to explain why a college degree has failed to help safeguard the assets of many minority families. Persistent discrimination and the types of training and jobs minorities get have played a role. Another central factor is the heavy debt many blacks and Hispanics accumulate to achieve middle-class status.”

    I think the NYT is being a tad disingenuous here.

    Heavy debt is hardly a stranger to the average white middle-class person — one thing the Great Recession made painfully clear. But whites are typically more able to refinance their debt or fall back on other resources. For instance, middle-class whites often still have access to the wealth of their older relatives (the “Silent Generation” and the “Greatest Generation”), who were the last real recipients of America’s now-defunct upward mobility. If Sonny’s mortgage is suddenly underwater or he loses his job, Mommy and Daddy can help tide him over — a resource most middle-class blacks and Hispanics lack.

    Still, discrimination is really the big, bad culprit / elephant in the room here. Discrimination, however subtle, limits the jobs many blacks and Hispanics are considered “fit” for, or certainly affects who gets hired first.

    But where discrimination really bites is in real estate — America’s classic ticket to the middle class. HUD and EEO policies notwithstanding, communities in the US today have become nearly as segregated as they were back before integration became a national goal.

    Decades, even centuries, of official government, banking, and construction policies have severely limited just where non-whites are even “allowed” to buy. It has also meant that homes in predominantly black or Hispanic neighborhoods are nearly universally worth a lot less than those in white ones — and they take much, much longer to recuperate from devastating events like a natural disaster or a widespread recession. Numerous studies indicate that home-owning non-whites suffered deeper real estate losses than did whites during the Great Recession. Even worse, most have not recouped anything close to their former values, whereas the average white homeowner is now at or close to those pre-2007 levels.

    Gentrification is often another devil. In city neighborhood after city neighborhood, the influx of white-owned “development” into predominantly non-white areas has often ended in rising rents and prices that push the former, poorer residents out. (In fact, in many larger U.S. cities, many middle-class whites are being priced out of their newly gentrified neighborhoods as the elite rich push them out.)

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