DEBT | Puzzling Data on Blacks and Hispanics

The underlying wealth data, from the St. Louis Fed.
Getting a college education doesn't seem to help
raise wealth for Hispanics and blacks.

I just had a chance to spend some time with an article in the business section of The New York Times on Monday by Patricia Cohen, Racial Wealth Gap Persists Despite Degree...

The article is a challenge to read because it seems to contradict conventional wisdom.

Between 1992 and 2013, according to a survey of consumer finances published by the Federal Reserve Bank of St. Louis:

• White and Asian people with degrees from four-year colleges saw a growth in median real net worth of about 80 percent, while those without a college degree saw a decline of about 10 percent for whites and 45 percent for Asians.
• But college-educated Hispanics saw a decline of about 30 percent in their net worth and college-educated blacks saw a decline of more than 50 percent.
• Meanwhile Hispanics without a college degree raised their median net worth by 30 percent, and blacks without a college degree saw very little change in their net worth.

It looks as though a college degree doesn't pay off for blacks and Hispanics. The article attempts to explain the situation by noting that college students acquire debt while they are not earning money. They are less likely to inherit money. Above all, say the researchers who did the study, families that already have money are better able to guide their children in how to borrow and spend their money.

College-educated Hispanics and blacks take on much more debt relative to their income - 130-160 percent - than whites and Asians, whose median debt-to-income ratio is 100 percent for whites and 80 percent for Asians.

A good story, well told by Patricia Cohen.

Unemployment Rates Decline for Men, Women, Blacks and Youths

Seasonally adjusted unemployment rates in the civilian population. The

rates fell from October in every category, but black rates remain 

twice as high as white rates. Youths are 16-19 years old. Source: Chart
by CityEconomist based on BLS Table A2, December 7, 2012.

The overall job numbers this morning, for November, were good. The unemployment rate fell to 7.7 percent from 7.9 percent and jobs increased by 146,000, although some prior figures were adjusted downward.

But how broadly in the working population was the improvement felt?

Answer: The seasonally adjusted unemployment numbers, for November 2012, show declines from October for both whites and blacks, and in the major categories of the civilian population.

The bad news is that the differences are still stark. Blacks have an unemployment rate approximately twice as high as whites.

The improvement in the black unemployment figures was substantial across the board, between 1.0 and 1.1 percentage points. The improvement in the larger base of adult whites was 0.1 to 0.2 of a percentage point. The rate for white youths fell by 0.4 of a percentage point.