Academic journal article Centro Journal

Asset-Based Development and the Wealth Profile of Stateside Puerto Rican Households

Academic journal article Centro Journal

Asset-Based Development and the Wealth Profile of Stateside Puerto Rican Households

Article excerpt

Introduction

The general focus of this paper is to describe the wealth gap affecting the Latino population, with special attention to the differences among Latino subgroups. At the center of the discussion, however, is documenting the wealth gap of the Puerto Rican population vis-à-vis other non-Puerto Rican Latinos and Non-Latino groups. A significant volume of academic and journalistic literature has documented the income poverty of the Latino population, but it has focused less on the assets of these poor households relative to other ethnic and racial groups in American society. A shortcoming of such literature is that often Latinos are bundled into one group, ignoring important historical and structural conditions that are definitely critical to explain relative socioeconomic differences between Latino subgroups.

Section I discusses the various theoretical approaches to asset-based development. The same section also discusses the current evidence on the wealth gap between racial/ethnic groups in the US by examining intergroup and intra-group differences. Closing this section is a review of the institutional and policy instruments, and programs used to support assetbased development in the United States. Section II contains the methodology and a description of the data sources. The research relies on the Consumer Expenditure Survey (CES), Public Use Micro-Data Sample of 2008, of the Bureau of Labor Statistics. Section III describes and analyzes the asset, liability, and net wealth attributes of Puerto Rican households relative to other Latino and non-Latino subgroups. Section IV has the conclusions and draws the policy implications of the findings. The final section provides a list of web resources on asset-based development approaches.

I Review of the Literature

1.1 Asset-Building: Definition and Approaches

During the last three decades, income inequality in the U.S. has been increasing. A recent report from Congressional Budget Office of the U.S. finds: "For the 1 percent of the population with the highest income, average real after-tax household income grew by 275 percent between 1979 and 2007.... For the 20 percent of the population with the lowest income, average real after-tax household income was about 18 percent higher in 2007 than it had been in 1979 (CBO 2011)." Since 2007, the recession has further exacerbated structural inequality. The U.S. Bureau of the Census found that real median household income in the United States in 2010 fell by 2.3 percent compared to 2009, while the nation's official poverty rate increased in 2010 to 15.1 percent, which represented the third consecutive annual increase in the poverty rate. The 46.2 million people in poverty in 2010 were the most in the 52-years in which poverty estimates have been published (US Bureau of the Census 2011).

The discussion on income inequality, albeit very important, falls short of addressing more fundamental wealth and asset disparities, especially between racial and ethnic groups in the U.S. In addition, from the standpoint of social policy, the inequality discussion is mostly about income-support programs and social entitlements for low-income households and individuals (Medicare, Head Start, TANF, SSI) in order to assure income stability and maintain basic levels of consumption. Not much consideration is given to the longer-term wealth building dynamics, which affect the capacity of individuals and households to move away permanently from poverty, or about what prevents people from falling back into poverty during economic downturns. The importance of the wealth gap is underscored in a report by Mckernan and colleagues (2013), which found that, in 2010, the racial wealth gap in the United States was three times larger than the racial income gap. By contrast, the asset-building/ development approach to poverty alleviation calls for examining poverty beyond the traditional view of "income poverty."

At the heart of the asset-building approach is a fundamental distinction between income and wealth. …

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