Report: Bachelor’s Degrees Don’t Protect Black, Hispanic Wealth - Higher Education
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Report: Bachelor’s Degrees Don’t Protect Black, Hispanic Wealth

by Autumn A. Arnett

081815_MoneyA recent study commissioned by the Federal Reserve Bank of St. Louis both shocked some and confirmed for others what they already knew: college is not working the same way for Black and Hispanic Americans as it is for other groups.

The findings, which St. Louis Fed economist and one of the report’s authors William Emmons called “really quite striking to me” revealed that having a college degree does not protect Hispanic and Black families’ wealth: In fact, Black and Hispanic families with college-educated members saw a steeper decline in household wealth in turbulent economic times than those that did not have college-educated members.

“We expected college to have a positive effect for all groups,” said Emmons. But according to the study, the reverse was true for Black and Hispanic families.

“Median wealth declined by about 72 percent among Hispanic college-grad families versus a decline of only 41 percent among Hispanic families without a college degree. Among blacks, the declines were 60 percent versus 37 percent,” the study found.

Dr. Earl Smith, professor emeritus of sociology at Wake Forest University, called the study’s findings “puzzling” and challenged experts to account for why the idea of “the American Dream” has been so clearly withheld from families of color.

Emmons said there are two major areas in which disparities were evident and which presented problems for wealth security of these groups.

The first, he said, which account for short-term issues around the recession, were financial aspects ― the types of assets and liabilities that the typical family had and, specifically, exposure to the housing crash.

For many Black and Hispanic families, their investment portfolios are not as diverse as for their White and Asian counterparts, and many of their assets are related to real estate, Emmons said. So though many people across the country were hit by the Great Recession, those who had diverse stock portfolios have seen greater recovery as the stock market has recovered, but those whose assets were primarily in the form of real estate, they have not seen the same bounce back.

“The change in the value of houses and loss of wealth” associated with reliance on housing as assets has been detrimental to families of color, many of whom saw “higher boom and bigger bust” in the values of houses where they often live. “There’s the initial drop in house prices, but then there’s the recovery,” said Emmons, who added that “part of the story is that those families … have had a harder time recovering” from the housing crash.

“Less exposure in the stock market and higher exposure in the housing market means they’re having a harder time bouncing back,” even after the end of the recession, said Emmons.

Smith is hesitant to accept the idea that families of color are facing less wealth stability solely because of their own poor financial decisions, like taking on more housing loan debt.

He argues that there are systemic disadvantages in place that need to be considered. For example, he said, families of color “start with blocked access that leads to slow starts” in wealth accumulation.

“Black wealth has not had time to adequately accumulate [and] does not do so quickly,” Smith said.

“Racism, low-wage non-union jobs and paying more for less” are also “in the mix,” argued Smith.

Emmons agreed that longer term, there are greater societal issues at play. For one, he said, “Black and Hispanic families are not enjoying the same kind of gain” in wealth that their White and Asian counterparts have enjoyed.

Also, “There’s strong evidence that there continues to be strong discrimination in the job market,” Emmons continued, citing repeated studies in which identical resumes are presented with “White-sounding” names, versus more ethnic names and the resumes with White-sounding names are given preference.

The name studies are “just the tip of the iceberg … that could simulate into [huge disparities] in the job market” and the types of jobs ― and thus the types of salaries -― afforded to people of color with college degrees.

Another huge factor in job market considerations is college majors, and college choices. One thing Emmons said researchers have found is a reticence among Black and Hispanic prospective students to even apply to the most highly competitive schools, despite the fact that they may be more than qualified for admission. He attributes a combination of factors, including the notion that they may not be able to afford the institutions and the idea that they might not be welcomed or made to feel comfortable on the campuses once they arrive. But, he said, the appearance of these institutions on a resume often “provide a boost in the job market.”

“Blacks and Hispanics, as well as women, are underrepresented in fields like technology” and medicine, which often yield higher earnings, Emmons said. Not only that, but Black and Hispanic graduates are “more likely to work in the public sector, versus the private sector, than Whites, and there’s been downward pressure in government jobs,” with salaries and hiring decreasing or freezing and many people being laid off in times of recession.

Despite the survey’s findings that in households of color, those with a college degree actually fared worse than their less-educated counterparts, Emmons admonished folks not to “throw the baby out with the bath water.”

“I think we have to be realistic and sober and say that education is not a silver bullet,” he said, but said it is important that people continue to strive for higher educational attainment, as there is still a tremendous amount of benefit by way of increased opportunity available to those who obtain degrees.

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