Jennifer Wheary is a Senior Fellow at Demos, a New York based think tank, and co-author of the report, The Downslide Before the Downturn: Declining Economic Security Among Middle Class African Americans and Latinos, 2000-2006.
African American and Latino families are the most endangered members of the Middle Class. This is according to a new study by Demos and the Institute on Assets and Social Policy at Brandeis University.
Demos and Brandeis found that in 2006, well before the current downtown took root, 84 percent of African American and 88 percent of Latino middle-class families lacked the financial security needed to weather an economic storm.
The researchers measured the strength of middle-class families across five key markers of economic stability: assets, education level, budgets, housing costs, and healthcare. Those middle-class families who were strong in the majority of these areas were considered to be financially secure. The researchers found that financial security for the middle class has declined since 2000.
In 2006, 88 percent of Latino and 94 percent of African-American middle-class households could not meet even three-quarters of their essential expenses if they lost their incomes and needed to cover them using assets alone. This is up from 82 percent and 89 percent in 2000, respectively.
Part of the reason for the decline in asset security was due to the fact that the median value of financial assets held by members of the African American middle-class declined by 33 percent in the six year period, while those held by Latinos declined by 60 percent.
In addition to experiencing a decline in assets, African-American and Latino middle-class households were also faced with rising housing costs and decreased access to healthcare. Between 2000 and 2006, median housing costs increased 9 percent for African American middle-class households and 8 percent for Latino households. During the same period, the number of families in which at least one member lacked health insurance increased--from 18 percent to 30 percent for African Americans and from 26 percent to 39 percent for Latinos.
Demos and Brandeis also found that African-American and Latino middle-class families were in a poorer position than other middle-class families.
In 2006, 24 percent of middle-class families were financially secure, but only 16% of African Americans and 12% of Latinos experienced that same financial security.
Experts worry about the impact of financial insecurity on the ability of African-American and Latino middle-class families to recover from the current downtown.
A report released last week by the Pew Hispanic Center shows that African Americans and Latinos experienced the most dramatic decline in home ownership rates in recent years among all ethnic groups. African-American homeownership rates increased from 43 percent in 1995 to nearly 50 percent in 2004. But by 2008 the rate had dropped to 48 percent.
The most recent employment data also shows that unemployment is affecting African Americans and Latinos more than other groups. While the national unemployment rate hit nearly 9 percent last month, the African American unemployment rate reached 15 percent, and the Latino unemployment rate was more than 11 percent.
The Demos and Brandies data, along with the most recent economic indicators, suggest that the downward slide seen by the African-American and Latino middle classes has been going on for a while and could continue for the foreseeable future.