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Hispanics and African-Americans Struggle to Stay Middle Class

Hispanic Business, News Report, Rob Kuznia Posted: May 23, 2009

As the weight of a sputtering economy drags down millions of Americans, a new study finds that middle-class Hispanic and African American families are the hardest hit -- with four in five such households struggling to stay in the middle class.

Called "The Downslide Before the Downturn," the study, released this week by Demos and the Institute for Assets and Social Policy at Brandeis University in Massachusetts, measured the financial security of middle-class families between 2000 and 2006.

The conclusion: in the years leading up to the recession, the financial stability of the middle class -- particularly among Hispanics and African-Americans -- steadily worsened, with many families in danger of being knocked out of the middle class altogether.

(Click here to read the report.)

The study concluded that in 2006, 88 percent of Hispanic middle-class households, and 84 percent of African-American ones, were not financially secure.

The survey also found that the financial stability of these two cohorts had weakened over time.

For instance, in 2000, the percentage of families in these groups experiencing financial instability was significantly smaller: 77 percent for Hispanics and 74 percent for African Americans.

Similarly, the study also found that the financial health of the average middle-class family across the United States also wilted.

In 2006, 76 percent of all middle-class families in the United States were economically insecure, according to the study. In 2000, that figure was markedly lower, 71 percent.

"These results show the precarious position of families who struggle to make it into the middle class amidst policies that do not support broad economic opportunities," said Jennifer Wheary, one the report's co-authors and a Senior Fellow at Demos, in a statement. "Even before things started to slip, African-American and Latino middle-class families were already on weaker footing, a position that sets them up to lose more ground than they can afford in the current economy."

Using government data, the study measures the financial security of the middle class by rating household stability across five core economic factors: assets, educational achievement, housing costs, budget and healthcare. Families were ranked as either "secure," "borderline" or "at risk."

Among other findings:

-- In 2006, 88 percent of Hispanic and 94 percent of African-American households lacked sufficient assets to weather a financial emergency, up from 82 percent and 89 percent in 2000, respectively.

--The median value of financial assets held by Hispanics fell by 60 percent in the six-year period, while those held by African Americans declined by 33 percent during the same time.

--From 2000 to 2006, median housing costs increased 7.5 percent for Hispanic households and 9 percent for African American households.

-- The same period witnessed a sharp increase in the number of families in which at least one member lacked health insurance -- from 26 percent to 39 percent for Hispanics, and from 18 percent to 30 percent for African Americans.

Tom Shapiro, Professor and Director of the Institute on Assets and Social Policy at Brandeis University, said he is particularly alarmed by the statistic showing the decline in assets.

"Most of these families had few assets to start with," he said. "With the value of these assets declining just as families need them most, they will not only find it difficult to weather uncertain times. They'll also experience setbacks that will be felt by future generations. All this points to a need for policies that support asset building even in hard times."


Related Articles:

Chrysler Closures Hit 32 Minority-Owned Companies

Recession Continues to Curb Blacks' Dream of Home Ownership

Will Small Businesses Cash in on Stimulus Dollars?


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