Increasing Racial Gaps in Wealth and Income: The Real U.S.

The organization United for a Fair Economy has a good website with data-filled reports on issues like the racial wealth divide in the U.S. Here are a few excerpts from their most recent report on the “state of the dream”:

The official unemployment rate is 15.8 percent among Blacks and 13 percent among Latinos as of December 2010. The White unemployment rate is 8.5 percent. Including discouraged and under-employed workers would push these unemployment numbers up significantly.

They add this:

With fewer assets to fall back on in hard times, Black and Latino families rely more heavily on unemployment insurance, Social Security and public assistance in times of need. For example, a new analysis shows that well over half of older Blacks (59.1 percent) and Latinos (64.8 percent) depend on Social Security for more than 80 percent of their family income, as compared to only 46 percent of Whites.

They have some data too on the reality of African Americans and Latinos working disproportionately in the government sector (historically one impact of Jim Crow segregation), one reason that blacks are more likely than whites to be in today’s unions:

. . . Blacks are 30 percent more likely than the overall workforce to work in public sector jobs as teachers, social workers, bus drivers, public health inspectors and other valuable roles, and they are 70 percent as likely to work for the federal government. Public sector jobs have also provided Black and Latino workers better opportunities for professional advancement.

They provide data showing how the Bush era tax cuts regularly favor whites, especially those with higher incomes. Recent taxation law too is very racialized in the U.S.:

… income tax extension heavily favors Whites, who are three times as likely as Blacks and 4.6 times as likely as Latinos to have annual incomes in excess of $250,000, according to original analysis in this report.

They also take political aim at the white leadership of the Republican Party, essentially now, as I have shown in here, the “white party” of the United States:

The Republican tax cut agenda rewards wealth for those who already have it, and limits opportunity for those who do not. . . . preferential treatment of capital gains and dividend income further exacerbates the racial wealth divide. . . . Blacks earn only 13 cents and Latinos earn eight cents for every dollar that Whites receive in dividend income. Similarly, Blacks have 12 cents and Latinos have 10 cents of unrealized capital gains for each dollar that Whites have.

There is much additional information on income, employment, and wealth inequality in this useful report (available free in pdf at their website). The current trends in income and wealth inequalities for racial groups in the United States are very disturbing for the future of a supposed “democracy”–and its unrealized ideals of liberty and justice for all.

In 2008, Institute for Policy Studies researcher, Dedrick Muhammad, summarized glaring U.S. racial inequalities in a report similarly titled–“The Unrealized American Dream.” He showed then that the income gap between black and white Americans was closing extraordinarily slowly, for at the rate of change then black Americans would only gain income equality with white Americans in about 537 years. The wealth gap between black and white Americans would take 634 years to close. After his analysis, from 2009 to 2010, the income gap actually increased a little. In addition, the wealth gap has increased significantly over recent years. (See reference and my further discussion in Chapter 9 of this book.)


  1. Manju

    You can’t lump blacks and latinos together because the root causes of the inequality, Jim Crow and Slavery on the one hand and immigration from poorer countries on the other, are not the same.

    You have to be very careful with immigrant communities because the solution may be worse than the problem. Fist the facts…*

    1. Immigrants (particular low-skilled ones) benefit the most from immigration

    2. Middle class to wealthy American also benefit via lower prices (mildly)

    3. Low-skilled native workers will have their wages driven down (about 10% in the past)

    4. low-skilled immigration increases US income inequality (mildly)

    You can’t support a mass immigration of poor folks to the USA and then turn around and complain that the folks are poor by US standards. If you do that, the very program that offers huge benefits to the world’s poor will get shut down.

    You also can’t solve the problem by simply increasing the welfare state. As the world’s most influential left-wing economist says:

    “…open immigration can’t coexist with a strong social safety net; if you’re going to assure health care and a decent income to everyone, you can’t make that offer global.”
    -Paul Krugman

    The group that did the report does not grapple with this central conundrum.

    *My sources for the facts are Paul Krugman and his sources (George Borjas and Lawrence Katz of Harvard). I’ll link up upon request.

  2. Joe Author

    Your point is well taken, to a degree, but you miss the reality that a majority of Latinos in the US are not poor immigrants. The majority are native-born or very long term residents (such as Cuban Americans), although many of those are the children of immigrants. That is, these Latinos have indeed suffered from racial oppression, racist framing, racial discrimination in the US which contributes very substantially to their inequality relative to whites. And of course Puerto Rican Americans live in, or in the states come from, the US colonial “possession” called Puerto Rico. That is, elite white (mostly male) decisionmakers have a lot to do with Latino inequality, past and present. We should not take them off the hook.

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