Race and Economic Disadvantage

The United States has a long history of racism, segregation, discrimination, and legalized oppression of people based on their skin color. Even today, despite progress on many fronts, economic disadvantages persist associated with race and ethnicity. Areas where this is seen most starkly are in unemployment, salaries and wages, and poverty.

Unemployment. Unemployment among African Americans is generally twice as high as for whites while the rate for Hispanics is 50% higher. This was true before the 2008 economic downturn and it is still true today. For example, in February, 2012, the unemployment rate was 14.1% for African Americans, 10.7% for Hispanics, 6.3% for Asians, and 6.5% for whites.

There are multiple reasons for the higher rate of unemployment. The Black and Hispanic workforce is younger than the white workforce (unemployment is higher among younger workers compared with older ones) and lower numbers of Blacks and Hispanics get a college degree (unemployment is higher among people with less than a college degree). But even when these factors are taken into account, large differences persist. Experts conclude that racial discrimination in the labor market continues to play a role.

Salaries and wages.  Racial discrimination in employment persists, as does the “steering” of African Americans, Hispanics, and other people of color into lower-paying jobs or jobs with fewer opportunities for advancement.

Pay is tied to education levels and the prestige of the schools that someone attends. People of color are less likely than whites to graduate from college and, when they do, typically attend less prestigious schools. These differences are rooted in issues of affordability (the cost of college education has skyrocketed in recent years) and the quality of the neighborhood schools that are available to students.

But there is also discrimination in the workplace. One careful examination of whites and African Americans found that nearly 90% of occupations are racially segregated. For example, African Americans are less likely to be working in high-paying occupations, and more likely to be working in lower-paying ones, than their education and skills would indicate. The reverse is true for whites.

Poverty.  African Americans and Hispanics are more likely to be poor than whites. In 2011, 10% of whites were poor, but among African Americans and Hispanics, 27% lived in poverty. However, among the poor, whites are the largest racial/ethnic group.

Poverty is the result of unemployment and low wages, and an inadequate social safety net. Since African Americans and Hispanics face higher rates of unemployment and lower wages, it is not surprising to find they are more likely to be poor.

It is a myth that poverty cannot be substantially eliminated. In the mid- to late-1990s, unemployment fell and wages at all levels of the income scale (not just at the top) were rising. The result was a dramatic fall in poverty, especially among African Americans and Hispanics. In just seven years, poverty among African Americans fell from 33% to 22% while among Hispanics is was down from 31% to 22%. However beginning in 2000, unemployment rose, wages stagnated, and poverty rose again.

Racism is present in the economy.  The workings of the economy are often thought to be fair and rational. We assume firms hire and pay an employee based on his or her education. We assume poverty is intractable. But the outcomes we see tell a different story. Race and ethnicity matter. Unequal treatment that disadvantages people of color is common.

In 1967 Dr. Martin Luther King, Jr., wrote: “Depressed living standards for Negroes are not simply the consequence of neglect. Nor can they be explained by the myth of the Negro’s innate incapacities, or by the more sophisticated rationalization of his acquired infirmities (family disorganization, poor education, etc.). They are a structural part of the economic system of the United States.”

Discussion Questions

  • Racial discrimination in employment and “steering” of African Americans, Hispanics, and other people of color into lower-paying jobs or jobs with fewer opportunities for advancement happens routinely today, as does discrimination in banks’ decisions about loans, insurers’ willingness to issue insurance and at what price, landlords’ decisions about whether to rent to potential tenants, and real estate agents’ choices about properties to show to clients. Is the Church called to address these problems? What can we do about them?
  • Someone’s level of education – whether he or she completed high school or college, for example – is a major determinant of their pay. People with more education tend to have higher wages and salaries. Generally, two groups of people with similar levels of education and experience also have similar wages and salaries. However, this is not true when people of different races are compared. What factors might explain the lower pay received by African Americans, Hispanics, and other people of color compared with Euro Americans?
  • In the U.S., most people need a job to support themselves and their family. But what if there are not enough jobs for everyone? Is this a concern for the Church or is it too political?  Should the nation have a policy to ensure that everyone who wants a job has one?
  • We often suggest that people in low-wage jobs go back to school for more education that will allow them to get a better job. But if everyone had an advanced degree, we would still need people to do home health care, clean floors, and work in other low-wage jobs. Education can help an individual get a higher-paying job and better life, but education won’t change these low-wage jobs. Does society (do we) have a responsibility to improve, or require employers to improve, low-wage jobs? What is society’s responsibility to workers in these jobs? How can people of faith help people in low wage jobs?



Ms. Edith Rasell, Ph.D.
Minister for Economic Justice
700 Prospect Ave.
Cleveland,Ohio 44115