Inequality in America: Wealth, Jobs and Race


Robert Reich wrote a biting Op Ed about inequality in America  upon reflecting on the tax filing day. As disturbing as his assessment is, it fails to capture the underlying statistics that account for the inequality. Indeed, whether measured by wealth, income or job status, the picture is an ugly one, and it is getting more worrisome– especially because the growing inequality intersects so heavily with race. Here are the facts.

 Wealth Inequality

 In July the Pew Research Center released its study of the changing distribution of wealth between 2005 and 2009. The first observation year, 2005, corresponds to the heyday of the housing bubble – two years before the onset of the financial meltdown. The end of the time frame, 2009, corresponds to the lowest point of the Great Recession.

 The study found that wealth among whites (i.e. the difference between the total value of their assets and the total amount of outstanding debt) declined by 16% between 2005 and 2009, to $113,149. Among blacks, wealth declined by 53% to $5677, and among Latinos, wealth declined by a whopping 66% to $6325.

 The racial and ethnic decline in wealth was tied to blacks and Latinos holding a large share of their total wealth in home equity. When the market collapsed, it wiped them out.  Furthermore, Latinos were doubly burdened because they live in states that were severely hit by the housing meltdown – California, Florida, Nevada and Arizona. On the other hand, blacks were hammered by the disproportionate share of subprime mortgages pushed on them.

 Income Inequality

 A good portion of wealth inequality can be traced to the persistence of income inequality in households. For example, the Census Bureau’s measure of household poverty found that median household income of whites in 2010 was $51,848, while for blacks and Latinos respectively it was $32,068 and $37,759. Furthermore, between 2009 and 2010, household income of whites declined by a -1.7%, while for blacks and Latinos it declined by -3.2% and -2.4% respectively.

 As expected, the low income of black and Latinos translates into a higher share of their population in poverty, 27.4% and 26.6%. In comparison, only 9.4% of non-Hispanic whites  lived in poverty in 2010.

 People with lower incomes and wealth are also more likely to go without health insurance. Accordingly, 20.8% and 30.7% of blacks and Latinos do not have health coverage, while this was true for only 12% of whites.

Labor Market Inequality

 Unfortunately, things do not get better when we turn to the labor market.  Blacks and Latinos comprise 11.9% and 15.6% of the civilian labor force. Even so, they make up 20.2% and 20.1 percent of the country’s 12.8 million unemployed workers in March 2012. In other words, they are 27.4% of the workforce but 40.1% of the unemployed.

 Low incomes and high unemployment can be traced in part to the unfavorable occupational concentration of blacks and Latinos – they are both heavily represented in low-paying jobs, where unemployment is more likely to occur. For example, 16.3% of blacks are in transportation-related  occupations and 15.4% are in service occupations.

 The median earnings of those two occupations ($19,324 and $14,402 respectively) are lowest among all work categories. The only exception is sales, $17,046. Among Latinos, 23.3% are in transportation-related  occupations and 21% are in service industries, but 29.4 percent of Latinos are in construction-related  occupations.

 All of these factors lead to the next question. Why does this exist for blacks and Latinos? The answer, America has a tortuous legacy of race relations that it has not yet put fully behind. While it has made remarkable progress, the great worry is that the polarizing political fight to balance the budget may push equality off the list of priorities.

Last modified: April 18, 2012

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