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It's no secret that the great recession took its toll on the wealth of millions of Americans. Conventional wisdom held that people with college degrees did not feel the pinch nearly so much as those with less formal education. Well, a new study out today from the Federal Reserve Bank of St. Louis tests that theory. And the Feds' research finds that having a four-year degree shielded some people but not everyone. NPR's Brakkton Booker reports.
BRAKKTON BOOKER, BYLINE: If you are white or Asian and have a college degree, the new research says you probably did OK.
BILL EMMONS: But the losses were much, much larger for black and Hispanic college graduates, so I'd say that was really stunning.
BROOKER: That's Bill Emmons, one of the authors of the St. Louis fed's office of Household Financial Stability study. During the period they labeled as turbulent, from 2007 to 2013, medium net worth for African Americans with college degrees declined a whopping 60 percent. For educated Hispanics, the drop was even more severe. The median wealth saw a 72 percent plunge in that same period, largely as housing prices plummeted and millions lost their homes. For whites, that dip was just 16 percent. Asians did the best, actually seeing an increase.
EMMONS: That immediately told us there's something unusual. And so then, you know, we wanted to look at the longer period. Was this still true?
BROOKER: Yep. Even when his team went back to 1992, which included the so-called Clinton prosperity years, Emmons says virtually the same qualitative pattern emerged.
EMMONS: Black and Hispanic families had a lot more of their assets concentrated in housing and had much higher debt burdens.
BROOKER: Emmons says he suspects because educated blacks and Hispanics look good on paper, they were prime targets for bad loans, which helped sink the economy.
EMMONS: So we think that probably really increased the sensitivity of many, many black and Hispanic families to a big housing downturn. And that would be very consistent, then, with these enormous losses of wealth.
BROOKER: When it comes to income, Emmons says job market factors also play a role, such as lingering job discrimination and also such factors as career choices. Now, don't get me wrong, he says. Having a four-year degree is not a bad thing.
EMMONS: Hispanic and black college graduate families still make multiples - or they still have wealth that are multiples of non-college families, so the message is not that college is wrong.
BROOKER: Duke public policy professor William Darity says he didn't find these new figures all that shocking. He says, though, he's not anti-education, but points out...
WILLIAM DARITY: It is not the avenue to close the racial wealth gap.
BROOKER: He says researchers have long known that blacks and Hispanics lag behind in terms of wealth and passing on that wealth.
DARITY: And if one racial group has a much greater capacity to transfer resources to the next generation, then that's what is the fundamental source of the kinds of disparities that we observe with respect to wealth.
BROOKER: Darity says a lot more research needs to be done to answer that question. Brakkton Booker, NPR News. Transcript provided by NPR, Copyright NPR.
