Will the Pandemic Rob Aging Black Women Again?
WHY YOU SHOULD CARE
The Great Recession of 2008-09 offers important clues to how the pandemic might disproportionately hit the wealth of Black women — especially those who are aging.
By Carly Stern
- Aging Black female homeowners lost nearly four times the share of their lifetime wealth during the Great Recession as compared to their white peers.
With the economy in recession amid the coronavirus pandemic, Americans have lost jobs and incomes at levels unseen since the Great Depression.
For many families, the current economic crisis has come before they’ve had a chance to fully recover from the wreckage of the 2008-09 crash. Yet this fate didn’t touch all demographic groups equally.
Single female homeowners of color lost 38 percent of their wealth during the recession years — compared to a 10 percent loss experienced by White women.
Researchers from the Institute of Women’s Policy Research focused their study, published in 2017, on baby boomers born from 1948 through 1953.
In the recession’s aftermath, the median total wealth of single, white female homeowners who participated in the study was more than 150 percent higher than that of older, single Black women — $161,500 versus $64,025. As the coronavirus now sparks a global economic plunge, experts caution that this divide could widen for those older Black women who never bounced back from the last downturn.
Compounding factors made them especially vulnerable in the Great Recession, experts say. To start, Black women earn roughly 63 cents for every dollar a white man earns, leading to between 3 and 4 million dollars in lost lifetime earnings, says C. Nicole Mason, president and CEO of the Institute of Women’s Policy Research. Black women also marry at lower rates and divorce at higher rates compared to white women, and experience higher rates of chronic health conditions — all of which impedes their financial security, says Fenaba Addo, a human ecology professor at the University of Wisconsin, Madison, who specializes in money, relationships and equality. These disparities that manifest early on in a woman’s life perpetuate and exacerbate as she ages, Addo explains.
Less disposable income makes it more difficult to save for retirement, or to diversify one’s wealth portfolio. Women are 40 percent less likely to invest in stocks than men, cites Mason. As a result, older Black women rely more heavily on earned income and homeownership as viable paths to financial stability, according to the report. “Homeownership seemed like a really safe bet for women,” says Mason. It’s also a cornerstone of the American Dream that’s deeply embedded in the national psyche. “There is a culture in the United States of homeownership … being a marker of social mobility, achievement, of financial security,” says Addo, in addition to being a “vehicle for investment.”
For decades, this group faced systematic obstacles to homeownership. The practice of redlining in the U.S. — refusing to extend loans to families living in certain neighborhoods because of their race — inhibited Black homeownership starting with Reconstruction and continuing through the 1980s, says Mason. Mortgage discrimination also continued to block access. But efforts to combat decades of structural barriers, such as down-payment assistance, helped provide gains leading up to the Great Recession.
Black homebuyers who purchased homes at the bubble’s peak were often victims of predatory lending — when homeowners were unfairly charged higher interest rates and offered subprime loans, even when they qualified for prime loans. For single, older Black women who’d put most of their eggs in the housing basket, this meant that when the bubble burst, the foundation of their financial security had vanished. “All of these things come together and create a perfect storm,” says Mason.
A lifetime of wealth is particularly difficult to re-accumulate when you’re approaching retirement. “If you’ve lost your home, there goes your wealth,” Addo says. The data bears this out: Older single Black women who transitioned out of homeownership lost 96 percent of their total, non-housing financial wealth over six years, according to the report, at a time when they were bracing for added retirement expenses.
Stunted recoveries also mean less wealth to pass on to family members or the next generation. Presumably, those who lost homes were pushed into the rental market — which has seen skyrocketing costs and an affordability shortage. This coincides with climbing health care costs — as well as research showing that senior Black women in the U.S. face a “kin gap,” meaning they are without a partner, children, siblings or parents who are still alive — at rates higher than other demographics. Figuring out how to navigate aging alone is one thing, says Mason, but “aging alone with no money, and no financial support, is an entirely different story.”
Lack of recovery from the last recession means that older, single Black women are more vulnerable to the downturn now slamming the U.S. “In times like this, savings and assets really matter,” Mason says. These findings also serve as a sobering reminder that the financial pitfalls American society frames as individual failures have wide-reaching effects: When savings run dry, many have no choice but to turn to public systems.
Mason is encouraged that today’s policymakers are drawing on lessons from the last recession to try to protect people from job loss, foreclosures and eviction. Creating targeted aid programs so money reaches those who need it most will be crucial to reviving the economy. But one spillover effect from the last recession that no stimulus package can erase? The fear among those who lost everything a decade ago of putting their life savings into home equity, only to see them go down again. People must have “enough emergency savings … so they’re not one economic shock, one recession, away from poverty,” says Addo.