This week, the Urban League released the 38th edition of its annual State of Black America report, with the theme One Nation Underemployed: Jobs Rebuild America. With an emphasis on growing economic inequality, the report features the 10th installment of the Urban League’s Black-White Equality Index, and the 5th installment of the Hispanic-White Equality Index. At the national level, these numbers tell an all too familiar story of racial economic inequality in America that persists through the ups and downs of the business cycle.
Though the recession briefly narrowed the black-white unemployment rate gap to a ratio of 1.7-to-1 in 2009, the black unemployment rate is again double the rate for whites, while the Hispanic unemployment rate has remained between 1.4 and 1.5 times higher than whites since 2007. The widening disparity between low, middle, and high incomes—i.e. increasing overall inequality—has also expanded racial income gaps, since African American and Latino households are more likely to have incomes below the national median. According to the report, black median household income is about 60 percent of that of whites (down from 62 percent before the recession) and Hispanic median household income is 71 percent of that of white households (down from 74 percent before the recession).
With the addition of a metro-level analysis of unemployment and income inequality in State of Black America 2014, a slightly more nuanced picture of racial and ethnic inequality in America emerges. Based on data from the 1-year sample of the 2012 American Community Survey, the report suggests that the state of black and brown America depends on what part of America you live in—although at least for African Americans, it’s really not all that great anywhere. According to the report’s listing of metro area unemployment rates, the black unemployment rate ranged from a low of 9.0 percent in Oklahoma City, Okla. (the only metro area with a black unemployment rate under 10 percent) to a high of 24.5 percent in Sacramento, Calif. When it comes to the income gap, at best, the median black household income has 78 cents for every dollar of white income in the Riverside, Calif. metro area.
Nonetheless, there are at least three general observations from the metro level analysis of inequality that raise interesting questions about the various forces that create winners and losers among different groups of workers.
- Greater racial equality within a metro area tends to come at the expense of at least one racial or ethnic group. There is very little overlap between metros where outcomes are “most equal” and metros where outcomes are the best for all groups, as reflected by lowest unemployment rates or highest incomes. The one metro that ranked within the top ten for Hispanic-white unemployment equality as well as lowest Hispanic and white unemployment rates was Madison, Wisc. Coincidentally, Madison also ranked last in black-white unemployment rate equality with a black unemployment rate that is over four times higher than the white unemployment rate. There were no metros that ranked within the top ten for racial income equality and the highest median incomes for at least two of the groups.
- Black and white unemployment rates tend to be lower in metro areas where the government is a major employer. Three metros are among those with the ten lowest unemployment rates for both blacks and whites— Oklahoma City, Okla., Washington, DC, and Harrisburg, Penn. The government is a major employer in all three. Of the three, only Oklahoma City had a smaller black-white unemployment rate gap than the nation.
- Metro areas where nominal median household incomes are highest for at least two groups tend to be metros with higher costs of living and greater income inequality. There are four metro areas on both the black and white top ten lists for highest median household income—Washington, DC, New York, NY, Baltimore, Md., and Boston, Mass. There are six metros among the ten highest median household incomes for both Latinos and whites—Washington, DC, Baltimore, Md., San Jose, Calif., Oxnard, Calif., San Francisco, Calif., and Bridgeport, Conn. All of these metro areas have black-white or Hispanic-white income gaps that are higher than the national average.
Though specific and targeted policy prescriptions for addressing racial disparities will require a more rigorous analysis of these patterns, there are at least three ideas that seem immediately obvious. First, there is an important role for government to play in reducing unemployment by creating jobs that are accessible to all. Second, since 56.6 percent of African American households and 50.8 percent of Latino households are in the lower half of the income distribution (compared to 35.5 percent of white households), increasing the minimum wage and raising wages for middle income workers are essential to narrowing racial income gaps. Finally, while State of Black America draws specific attention to racial disparities, the fact remains that unemployment rates are up and incomes are down across all racial and ethnic groups since before the recession. The goal of eliminating racial disparities in American economic life must go hand in hand with improving economic outcomes for all groups. The lesson of the 1990s is that this is best accomplished through policies that promote strong economic growth.