Brynn Anderson/AP Photo
Dylyn Price, right, and her son Devone stand outside of their rented townhome, June 22, 2021, in Athens, Georgia. Price received about $5,800 in rental assistance during the pandemic, a period when the racial income gap closed slightly.
Addressing racial disparities in income, wages, health, housing, and employment is an essential component of seeking economic justice. Doing so is also politically necessary so that Black voters see themselves in the policy agenda and to help build a multiracial coalition.
Commentators like Ruy Teixeira (of The Liberal Patriot) attack the “woke” agenda, and argue that Democrats must moderate on social issues. This line of argument ignores the racial disparities that limit the opportunities of Black people and in fact the nation, and pays no attention to the politics and policies that can eliminate racial disparities. This is a mistake on substantive and political grounds.
One need not adopt “woke” discourse on race to challenge racial inequities. I certainly don’t. But belittling the importance of racial inequities and lack of racial justice is simply wrongheaded. It is far better to engage about the best ways to eliminate racial inequities while building a broad-based movement to eliminate economic and racial injustice, with a heavy emphasis on universal policies that will uplift all low-income and middle-class Americans, but will also consciously reduce racial inequities.
How Big Are Racial Disparities?
There are endless ways to argue about the precise size of racial gaps. However, racial disparities are persistent, pervasive, and sizable, and anyone arguing to the contrary is not being factual.
There are numerous sources that provide authoritative analyses of racial disparities, including the Federal Reserve Board, the Urban Institute, and the Economic Policy Institute. Explaining what generates racial disparities can be found in a new book, The Economics of Structural Racism, or in the stratification economics literature.
Wages: Black hourly wages have been persistently lower than those of whites, and the disparity grew from 17.3 percent in 1979 to 26.3 percent in 2019, according to Wilson and Darity.
Unemployment/Employment: The share of population in the labor force (those employed or unemployed) is somewhat lower for Blacks (83.9 percent versus 81.5 percent), though Black women are more likely to be in the labor force than white women. Unemployment has been consistently higher (and persistently double) for Blacks than whites since the late 1970s. From 1979 to 2019, unemployment averaged 6.2 percent, with Black unemployment averaging 11.9 percent. Black unemployment is even double that of whites at comparable levels of education.
Income: The typical (median) Black household income has been roughly 60 percent of the typical (median) white household’s since the early 1970s. This gap closed somewhat during the period when pandemic aid was offered: In 2022, Black median income was 65.2 percent of that of whites.
Poverty: Poverty has fallen since the late 1960s when one uses a metric that includes all cash and noncash benefits provided to low-income households. The poverty rate, in fact, fell from 18.6 percent in 1967 to 12.0 percent in 2019, and fell even further to 7.8 percent in 2021 when there was pandemic relief. Poverty among Blacks has tended to be at least double that of whites, with Black poverty 2.3 times that of whites in 2019, and falling to 1.9 times in 2022 when there was pandemic relief.
Mobility: “[B]lack and American Indian children have substantially lower rates of upward mobility than the other racial groups,” according to census research. “[B]lack children born to parents in the bottom household income quintile have a 2.5 percent chance of rising to the top quintile of household income, compared with 10.6 percent for whites … Black children born to parents in the top income quintile are almost as likely to fall to the bottom quintile as they are to remain in the top quintile.” Other research shows “that in every cohort since 1880, black men have had less upward mobility and lower average income than [similar] white men.”
Wealth: New research has been able to track average per capita racial wealth gaps back to the Civil War. Not surprisingly, Blacks had very little wealth after being emancipated: Over 80 percent had no wealth in the 1870s. It took until the 1940s for half of Black households to have achieved some wealth (meaning more assets than liabilities). The racial wealth gap closed in the first few postwar decades as Black wealth rose from 14.3 percent of white wealth in 1949 to 20 percent in 1983. The dramatic growth in wealth inequality of the last four decades (better known as the increased wealth of the top 1 percent) knocked Black wealth back to 16.7 percent that of white wealth.
Health: The Centers for Disease Control and Prevention (CDC) reports that “racial and ethnic minority groups, throughout the United States, experience higher rates of illness and death across a wide range of health conditions, including diabetes, hypertension, obesity, asthma, and heart disease, when compared to their White counterparts.” Black life expectancy in 2018 was four years lower than whites’. This was an improvement over 1950 (8.3 years) or 1900 (14.6 years). The pandemic, however, increased racial disparities in health (from 3.9 to 5.6 years), as life expectancy declined for both whites and Blacks, but more so for Blacks.
Can these disparities be explained by behaviors and choices made by Blacks, cultural factors, or other explanations not based on racial discrimination? No, these disparities are overwhelmingly explained by racial discrimination and practices of employers and institutions that disadvantage Black people. The late Bill Spriggs rightly admonished economists in 2020 for relying on “the assumption that African Americans are inferior until proven otherwise.”
Even Glenn Loury, a conservative Black economist who challenges the current racial discourse, acknowledges a whole range of factors beyond “counterproductive behaviors” that cause disparities, including racial segregation.
Policies to Address Racial Disparities
Key to addressing racial disparities is improving the labor market by building worker power and improving job quality and employment. It is also essential to improve social insurance and the overall safety net. This is best done through universal policies, which “aspire to serve everyone without regard to group membership, status, or income.” It is also important to target some universal approaches and to adopt some race-specific policies.
Universal policies
Given the difficulty or inability of Black workers to find employment and especially high-quality jobs, it is not surprising that fighting for full employment has long been a key priority, as it was in the 1963 March on Washington for Jobs and Freedom, which demanded a federal program to “place all unemployed workers—Negro and white—on meaningful and dignified jobs at decent wages.” Excessive unemployment since 1979 was the largest factor driving the suppression of wages for low- and middle-wage workers and affected Black workers the most.
Recent full-employment policies have improved employment opportunities for everyone and helped Black workers specifically. Arin Dube reports that “wage growth for Black workers has outpaced those of white workers in recent years for the first time in decades,” and points to a six-percentage-point decline in the Black-white wage differential in the last five years. The unemployment rate for Black workers in 2023 was 5.5 percent, compared to 3.3 percent for white workers. As Dube reports, “This gap of 2.2 percentage points was lower than anytime since 1972—the earliest such data available.”
More can be done. Budget, monetary, and public-investment policies can be used to achieve persistent low unemployment. Schemes for guaranteed jobs or using the federal government as the employer of last resort have also been proposed.
The suppression of wages since the late 1970s has been driven by policies that have diminished the power of workers relative to their employers. Excessive unemployment is one dimension. Another is the weakening of unions, the erosion of labor standards (minimum wage, overtime pay, misclassification as self-employed), noncompete agreements, increased wage theft, and so on. Rebuilding the labor movement, raising labor standards, and improving their enforcement are key to lifting all workers and will disproportionately assist Black workers.
Joblessness has been persistently high in distressed communities in urban areas, some small cities, and rural areas. So economic development policies aimed at business and individuals in localities with high unemployment will help both rural and inner-city communities and be disproportionately helpful to Blacks.
As important as high wages are, they will be insufficient to lift many families to a decent, livable income. So government assistance is needed. Black people are more vulnerable to poverty, illness, and economic insecurity. So social insurance programs (Social Security, Medicare, Medicaid) and safety net programs (SNAP, housing, health care—Obamacare—and energy assistance) are particularly important. Research shows Blacks “benefit disproportionately from many of Social Security’s features, including a progressive benefit structure and survivors and disability benefits.” Social Security is especially important for Black children, who are more likely to have parents who are disabled or do not survive.
Various tax credits provide income to low-income households, including the Earned Income Tax Credit, the Child Tax Credit, and the Child and Dependent Care Credit. The temporary expansion of the Child Tax Credit in the 2021 American Rescue Plan Act (ARPA), as well as making the credit available regardless of tax liability, showed the important role tax credits can play in lowering poverty across the board and especially for Black households. Census research finds that this expansion/improvement lifted 716,000 Black children out of poverty, with their poverty rate dropping from 14.5 percent to 8.1 percent. Other research confirms these results.
Targeted universalism
Universal programs will more effectively address racial inequities if they take into account the social location (a term I learned from Bill Spriggs) and needs of Blacks. This strategy can be termed targeted universalism, “which means setting universal goals pursued by targeted processes to achieve those goals.” Congressman Jim Clyburn (D-SC) pursued such a strategy in the early Biden legislation with his 10-20-30 formula, directing at least 10 percent of Rural Development investments to counties where 20 percent or more of the population have lived below the poverty line for the last 30 years.
The Biden student debt relief plan is an illustrative example of targeted universalism, though unfortunately struck down by the Supreme Court. The relief was for $10,000 per student debtor, with an additional $10,000 for those with exceptional financial need who had Pell grants. “Nearly 71 percent of Black undergraduate borrowers are Pell Grant recipients, twice the share of White borrowers,” The Washington Post notes. This structure of relief ensured that the program effectively reached Black student debtors.
Addressing climate change is a universal goal that will especially help Black and low-income communities because they are most heavily impacted. The recent Inflation Reduction Act of 2022 (IRA) targets disadvantaged communities with “over $60 billion in critical clean energy, climate and electrification measures.” This spending reduces pollution while making economic development more equitable.
The economic justice measures in the IRA are an example of the broader Justice40 program, an effort to mandate that 40 percent of certain climate, energy, affordable-housing, and other investments go to disadvantaged communities. This commitment in the IRA, along with designating incentives for clean-energy investments to labor standards, improves job quality and lifts low-wage and Black workers.
That Blacks disproportionately experience unemployment means that providing a robust and fair system of benefits will disproportionately assist Blacks. Expanding coverage to include those with intermittent or short-term employment or with part-time hours will make the program more racially equitable. Federalizing the program would help set minimal standards that would lift up the many Black workers in Southern states that have weak programs.
The CHIPS and Science Act of 2022 is one of the pillars of the Biden economic-policy agenda. The bill requires grant recipients of billions in semiconductor funding to provide “opportunities for small businesses and disadvantaged communities.” One major component—the Regional Technology and Innovation Hubs program—ensures funding is equitably distributed nationwide, investing in women, Black, Latino, Native American, low-income, and other underrepresented communities.
The science section includes funding for historically Black colleges and universities (HBCUs), minority-serving institutions (MSIs), and emerging research institutions (ERIs). HBCUs provide about one-fourth of all Black STEM doctoral degree students, so strengthening these programs is necessary to build a diverse STEM workforce. The bill also strengthens the research capacities at HBCUs. Not surprisingly, the NAACP applauded the bill as “a major step towards a more inclusive and equitable STEM community.”
Other policies include diminishing residential segregation and providing housing that is affordable to moderate-income families, as well as down payment assistance programs that target first-time or first-generation homebuyers. There could also be a broad suite of policies to improve K-12 education outcomes. Another targeted universal program is a baby bonds program, which involves government-funded investment accounts for all infants upon birth, “with the largest amounts going to children from the lowest-wealth families.”
Race-specific policies
Race-specific policies are explicitly targeted at demographic groups, such as those facing anti-Black discrimination. It will not be possible to fully eliminate racial disparities without having some effective race-specific policies. Essentially, “America needs [some] race-specific remedies to redress race-specific crimes.”
Employers discriminate against Blacks in hiring, promotions, and pay. Simple fairness demands the end to such discrimination, to unlock potential contributions that help the economy be more productive for everybody. Yet it is extremely difficult to hold employers accountable. Individual workers are not protected from retaliation, do not have adequate information and resources to challenge employers, and are hampered by forced arbitration clauses and nondisclosure agreements. Reforms are needed.
Affirmative action in university enrollment is needed to offset “unlawful and unconstitutional public and private policies of the past” that disadvantage Black college applicants. Alternatives, such as targeting wealth and ignoring race, will diminish Black enrollment, especially for middle-class Black students, and fail to repair historical harms that instigated the need for affirmative action.
Many advocates have proposed compensating African Americans, or American descendants of enslaved people (ADOS), for the theft of their labor and the brutality suffered. Reparations are sometimes misunderstood as being payments for slavery when, in fact, it also includes all the policies that subjugated Blacks since emancipation: Jim Crow, racial residential and occupational segregation, and racially unfair government programs (labor protections, the GI Bill, etc.).
There is a simple moral fairness to acknowledging these historical injustices and compensating people for the harms done to them. Reparations options primarily involve payments to individuals. But because one-time payments will not permanently fix inequities, other proposals include the universal and targeted policies discussed above, to address the deep racial inequalities embedded in our institutions. A reparations program can lead to racial healing, but it will take enormous public education and political organizing for that to be accepted.
Rethinking White Privilege
That whites have not faced the same disadvantages as Black people is both true and insightful. In the economic mobility race, Blacks start behind and face additional hurdles. This is a core truth in the concept of “white privilege.”
But we should find a better way to express this. The fact is that some of the Black disadvantages do not reflect privilege showered on whites, but discrimination in which Blacks are not provided the rights and services every citizen deserves: financing for housing, ability to buy a house, workplace protections, neighborhood public services. As Richard and Leah Rothstein point out, the minimum wage was established with exclusions for occupations and sectors where Black workers were prevalent. Are the white workers who benefited from the new minimum wage “privileged,” or were they provided a protection that all workers deserved? Are we saying that whites with minimum-wage protections are “privileged” and should abandon those protections? No, of course, minimum wage protections should be extended to all workers.
Also, “white privilege” presumes everything Blacks lose is gained by whites, that everything about race is a zero-sum contest. It is certainly frequently the case that certain whites benefit when Blacks are excluded in housing, employment, and other matters. Other benefits may accrue to employers and those sharing in corporate profits. On the other hand, as Heather McGhee and Ian Haney López have pointed out, racism also undercuts racial solidarity in the workplace and the public provision of social benefits, and consequently also hurts both white and Black working-class and low-income families. “White privilege” is an inadequate or flawed concept to describe racial dynamics in the economy.
People are frequently asked to renounce and give up their “white privilege.” Advocates of this approach fail to delineate how renouncing white privilege connects to actually eliminating racial inequities in housing, criminal justice, health, or employment. We should ask ourselves what would happen if 25 million whites decided one weekend to forgo their “white privilege” and did nothing else to address racial inequities. One hand clapping, at best.
Conclusion
There are persistent and pervasive racial disparities in income, wages, health, housing, and employment. Eliminating these disparities will help Black people as well as lift all low- and middle-income Americans. There is a basic fairness and moral urgency to this agenda. It can also be a political winner since most of the programs and efforts will involve universal policies, including ones that are designed to ensure that Black workers and households do benefit. To realize this agenda requires building an effective multiracial coalition that can challenge corporations, employers, and the wealthy who benefit from the current system.
