by Pam Martens and Russ Martens, Wall St On Parade:
A new report from the Government Accountability Office (GAO), the nonpartisan investigative arm of Congress, shows that Black workers experienced devastating declines in their defined contribution plan balances (mostly 401(k) plans) between 2007 and 2013 – an experience not shared by White workers.
According to the GAO, Black working households’ median 401(k) balance declined by a stunning 47 percent between 2007 to 2013, the latest date for which data is available. The median balance for Black working households in 2007 stood at $31,100 versus $16,400 in 2013. To put that 47 percent decline into sharper focus, the GAO found that the 401(k) balance for White working households “did not change significantly over the same period.”
That isn’t actually good news for White workers either since they were likely making regular contributions to their 401(k) plans while the account value went nowhere.
Unfortunately, the GAO report leaves one to draw their own conclusion as to precisely why Blacks experienced this devastating hit to their wealth during the financial crisis years of 2007 through 2009 and its aftermath into 2013. The GAO drops only hints as to what might have happened.
One hint is that Black working households likely experienced greater levels of unemployment during the financial crisis years and had to take loans from their 401(k) plans. The report found that 15 percent of Black working households took loans in 2010, compared to 9 percent of White working households.
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