Jose Garcia

Credit Crunch Reveals Economic Racial Divide

The Credit Card Crunch has caught the nation's attention. From single working mothers to jet setting finance guys, today's economy has everyone watching their bottom line. Unfortunately, few are focused on what is shaping up to be the economic debacle of our generation: the growing racial divide that threatens to undermine the economic future of the nation. The racial and ethnic composition of the United States is changing. Communities of Color will soon make up half the households of our nation. Yet, despite their increased presence, families of color continue to encounter obstacles to entering, and staying in, America's middle class.

Some say it is not that drastic. Well,

* For every $1 that white American families save, a black or Latino family, on average, is only able to set aside 18 cents.
* Around half of all white households with credit cards are indebted, but for black households the number is more than 80 percent, with Latino families close behind.
* Nearly a quarter of credit cardholders of color must set aside more than 40 percent of their income to paying off debt. For whites, that number is only 17 percent.
* The average credit card interest rate for low-income households and people of color hovered around 22 percent - more 10 percentage points higher than the rate paid by high-income whites, according to research by Demos.
* The reality is that credit is costlier for those consumers who are less able to afford it. They face outrageous annual percentage rates, ridiculously high fees, draconian penalties for even slight infractions and, of course, steadily mounting debt. Yet, when the costs of gas, food and housing and everything else go up and incomes don't, where do people turn? Credit. Even as they struggle under the burden of debt, many families have no choice but to take on more impeding their chances of economic mobility.

You may ask yourself: Why is it imperative for this nation to have a racially diverse middle class? Is it personal responsibility that holds them back or has discrimination played a role? Who can create a representative middle class? Please come and join us June 26 from 12 to 2pm on Demos and Opportunity Agenda second event Hurdles to the Middle: Race and the American Dream on our Race and Public Policy series to have a lively discussion about this important issue.

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Posted at 8:15 PM, Jun 12, 2008 in Economy
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