NCPA - National Center for Policy Analysis

Does Government Assistance Hurt Those It Is Trying to Help?

July 28, 2011

The gap in wealth between white Americans and minorities is the widest it's ever been, a new report says.  Could it be that the government, while intending to help those in need, in fact ends up hurting them, asks Investor's Business Daily.

New Census data show that the recent economic crash has erased decades of minority gains in wealth.

  • The net worth of whites is now 20 times higher than for blacks and 18 times higher than for Hispanics, both records.
  • There are, of course, many reasons for this.
  • While minority families gained from the economic growth of the 1980s, 1990s and mid-2000s, much of their wealth was tied up in their homes.
  • When the housing market crashed in 2008, so did their net worth.
  • Meanwhile, whites have been helped by the rebound in stock prices in the last two years -- stock market investments make up 28 percent of white Americans' wealth, versus just 19 percent for blacks and 15 percent for Hispanics.

If nothing else, these data point out the failure of federal welfare and antipoverty policies to do what they intended: eradicate wealth differences in our country.

  • Starting in 1964, when President Johnson launched the War on Poverty, the United States has spent an estimated $16 trillion trying to help the less well-off.
  • Today, some 44 million Americans are on food stamps -- in 2007, it was 26 million.
  • But while the United States has more than 70 means-tested welfare programs, the poverty rate today is higher than it was in the late 1960s.

Source: "Gov't Welfare Widens the Wealth Gap," Investor's Business Daily, July 26, 2011.  Rakesh Kochhar, Richard Fry and Paul Taylor, "Wealth Gaps Rise to Record Highs between Whites, Blacks, Hispanics," Pew Research Center, July 26, 2011.

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