Race Still Matters -- Green Lining -- Golin

8/4/2019 Race Still Matters -- Green Lining -- Golin

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issue brief | october 2009

RACE STILL MATTERSMaking the Case for a Racial Lens in Measuring Poverty and Inequality

Ilana Golin

Research Associate, Greenlining Academy

THE GREENLINING INSTITUTE | A MULTIETHNIC PUBLIC POLICY RESEARCHAND ADVOCACY INSTITUTE | WWW.GREENLINING.ORG

Introduction: A Dream Deferred

THE GREENLINING INSTITUTE1918 UNIVERSITY AVENUE, 2ND FL.

BERKELEY, CALIFORNIA 94704T: 510-926-4001F: 510-926-4010

WWW.GREENLINING.ORG

ContactChristian Gonzalez-Rivera

Research ManagerT: 510-898-0507

E: [email protected]

TheUnitedStatesdefinesitselfbya

collectivedreamofeconomic

opportunity. Thepromiseofupward

mobilityisatruthweasanationholdtobe

selfevident,yetthispromiseisnotarealityfor

manypeopleofcolor.Moreover,ourcountrys

legacyofdiscriminatorypoliciesandpractices

contributestoaclimateinwhich raceisa

contentioustopicformanytodiscuss.

DebatesabouttheAmericanDreamoftenleave

raceoutoftheconversation,andinstead

highlightsocioeconomicstatusasthemore

salientissue. Indeed,forsome,Barack

Obamaselectiontopresidencyservesas

evidencethattheracialplayingfieldisfinally

level. Butoneneedonlylookasfarastodays

headlinestounderstandthatracestillplaysa

significantroleinUSpoliticsandpolicies.

Moreover,theconfluencebetweenraceand

classissignificant. Accordingtothe2007US

Census,peopleofcolormakeupabouta

quarterofthenationspopulation,yethalfof

Americanslivinginpovertyareminorities.

Currentdatashowsthat12.5%ofall

Americansarelivinginpoverty. Brokendown

T H E G R E E N L I N I N G I N S T I T U T E

byraceandethnicity,thisincludes:8.2%of

Whites,10.3%ofAsians,24.3%ofBlacks,an

21.5%ofLatinosofanyrace. Inotherwords

oneinfourBlacksandoneinfiveLatinosliv

inpoverty,comparedtolessthanoneinten

Whites.

Inshort,raceandpovertyareheavily

intertwined,andthusraceisimplicitinaho

ofpressing

policy

arenas.

Failing

to

report

a

collectdataonraceandethnicityobfuscates

thedisproportionateimpactofpovertyon

peopleofcolor.

The New Majority

Americaisonthevergeofbecominga

minoritymajoritycountry. Already,

California,Hawaii,NewMexico,andTexas

havearacialcompositionthatislessthanha

White. AccordingtotheUSCensusBureau,

thenationisprojectedtobe54%minorityby

2050. Theshiftwillhappensooneramong

children:by2023,morethanhalfareexpecte

tobefromaminoritygroup,andby2050,th

proportionwillbe62%.

Theeconomicimplicationsofthese

demographicshiftsaresignificant. For


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White Latino Black Asian

65.60%

15.40%12.80%

4.50%8.2% 20.6% 24.3%10.3%

0%

10%

20%

30%

40%

50%

60%

70%

R ac i a l R e p re se n t a t i o n o f t h e US Po p u l a t io n a n d

P e rc e n t o f E a c h R a c e Wh o a r e L o w e r - I n c o m e

PercentofRaceWhoar e

LowerIncome

Representation

inUS

Population

Only54%ofBlacksand66%ofLatinosownbank

accounts,comparedto86%ofWhites.(FirstData

Corp.,2008) Whileover75%ofWhiteshavehealthinsurance,only

about60%ofAsians,57%ofBlacks,andlessthan50%

ofLatinosdo,reflectingalackofgoodjobsamong

communitiesofcolor(PPIC,2002).Thus,ournationschangingpopulationpatternspointtoa

seriousimpact:ifwedonotinvestinthesuccessof

communitiesofcolor,withinonegeneration,asignificant

portionofourcountrycouldbestruggling. Thispotential

scenarioisnotonlyanaffronttoournationalvalues,but

alsohasenormousfiscalimplications. Americas

economicstandingrestsonbuildinghumancapitalwith

theskills,education,andhealthtomaintainournations

powerfulglobalposition. Strategicinvestmentsinall

communitieswillprovidereturnstothecountryasa

whole.

Intergenerational Mobility &

Asset-Building

IntheUnitedStates,accessto

opportunitiesisthekeytoachieving

theAmericandream. Success

dependsonindividualscurrent

assets,aswellastheircapacityto

growthoseassets. Although

comparingincomelevelsacrossracial

andethnicgroupscanprovideusefulinformationaboutthelabormarketat

aparticularpointintime,social

scientistsagreethatamoreaccurate

measureofeconomicmobilityis

wealth.Whileincomeisthemoney

thatpeoplereceivefromwork,

governmentbenefits,orinvestments,

wealthreferstosavings,realestate,

The Nations Changing Dem ographics

Thecurrentminoritymajoritystatesare:

California,Hawaii,NewMexico,Texas

Withmorethan40%peopleofcolor,thenextstates

expectedtobecomeminoritymajorityare:

Arizona,Georgia,Maryland,Mississippi,andNewYork

RACE STILL MATTERS | PAGE 2

instance,thepurchasingpowerofLatinos,Blacks,and

AsianAmericanscombinedtripled from1990to2008,

reaching$1.5trillion. (Humphreys,2008). AndtheUS

DepartmentofCommerceprojectsthatthepurchasing

powerofpeopleofcolorwilltripleagainby2045.

Atthesametime,peopleofcolordisproportionately

attendinferiorschools,lackhealthinsurance,andfacedetrimentalhousingconditions. Forexample:

Themedianhouseholdofcolorhas$0.15forevery

dollarofWhitewealth(Oliver,1995). Povertydisproportionatelyaffectschildrenofcolor:

61%ofLatinochildren,60%ofBlackchildren,and

30%ofAsianchildrenliveinlowincomefamilies.

ThefigureforWhitesis26%(NCCP,2009). 35.6%ofchildrenofcolorareraisedinsingleparent

households,comparedto19.6%ofWhitechildren(US

Census,2008). BlacksandLatinoswere2to3timesmorelikelyto

receiveasubprimeloan,andaremorelikelytobein

foreclosure(NCRC,2007). While75%ofWhitesowntheirownhomes,only

59.5%ofAsians,49.1%ofLatinos,and47.4%ofBlacks

do(USCensus,2008). EvenamongborrowerswiththehighestFICOscores

(720orhigher),13.5%ofLatinoand12.8%ofBlacks

receivedhighcostloans,comparedto2.6%ofWhites.(FederalReserveBankofSF,2009).


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securities,andotherfinancialassets. Inshort,wealthis

definedasonesnetworth,orwhatonetrulyownsafter

alldebtshavebeensubtracted.

Wealthmattersbecauseitprovidesacushionwhenthe

economytakesadownturnorwhenpersonal

circumstancesnecessitatequickaccesstomoney.Wealth,

notincome,iswhatenablesafamilytoliveinasafer

neighborhood,provideforhealthandeducationneeds,

andevenimpartgreaterpoliticalinfluence.

ApproximatelyhalfofthewealthiestpeopleinAmerica

inheritedfamilyfortunes.Buttheeffectofinherited

wealthcanbeseenonamoremodestlevelaswell.For

example,acouplethatbuysahousewiththefinancial

helpfromtheirparentsorastudentthathashisorher

collegeeducationpaidfor,arebenefitingdirectlyfromthe

accumulatedwealthofpreviousgenerations(Gilbert,

2002).

ThelatestSurveyofConsumerFinancesdataindicates

thattheracialwealthgapiswidening. Thissurvey,

supportedbytheFederalReserveBoard,showsan

increasinglywiderchasminracialwealthinequalityfrom

the1990stotoday. In1998,thenetworthofWhite

householdswas,onaverage,$100,700higherthanthatof

Blackhouseholds. By2007,thegaphadincreasedto

$142,600. Thisdataiscollectedeverythreeyears,and

everytimeithasbeencollected,theracialwealthgaphas

widenedfurther.

Inexaminingfamiliesovertime,EdwardN.Wolff,a

seniorscholarattheLevyEconomicsInstitute,foundthat

Blackswouldhavegainedsignificantgroundrelativeto

Whitesinthepast30yearsifthetwogroupshadinherited

similaramountsandhadcomparablelevelsoffamily

income. Eveniftheracialincomegapcouldimmediately

beeliminated,itcouldtakeanothertwogenerationsfor

thewealthgaptoclose(Wolff,2001).

Researchdrawingondatathatspansthirtyyearsandtwo

generationsshowsreversemobilitytrendsamongWhites

andBlacks.WhiteAmericansaremorelikelytobe

upwardlymobilethandownwardlymobile. Theopposite

istrueforBlacks. Forexample,theproportionofBlacks

whomoveupthewealthladderis5%,whilethe

proportionmovingdownitis48%(Hertz,2005).

Thistrendholdsacrossallincomelevelsandis

particularlystrongatthetopoftheincomedistribution,

indicatingthathigherincomeBlackshaveespeciallypoor

prospectsofstayingontheirparentsrungoftheladder

(Hertz,2005). SuchresultsindicatethattodaysBlack

Whitewealthgapcannotbeexplainedsolelybythefact

that,onaverage,Blackswereborntofamiliesthathad

fewerresourcestoinvestintheirchildren.

AsimilarpatternexistsamonglowincomeBlacks.

Controllingforfamilysize,parentsincomeand

education,Blackfamilieshavea14%higherrateof

persistenceinthebottomincomequartilefromone

generationtothenextthanWhitefamilies. Differencesin

mobilitybetweenWhitesandBlackspersistevenafter

controllingforadditionalparentbackgroundfactorsand

childrenseducationandhealth,aswellaswhetherthe

householdheadwasfemaleorreceivingwelfare.(Hertz,

2006).

Moreover,middleclassstatusismoredifficultformany

peopleofcolortomaintain,comparedtotheirWhite

counterparts. ArecentstudyconductedbyDemosfound

thatoneinfive(21%)Whitefamiliesisathighriskof

slippingoutofthemiddleclass,ascomparedtoonein

three(33%)Blackheadedhouseholdsandtwoinfive

(41%)Latinofamilies(Demos,2007).


The racial wealth gap is widening.

In1998,thenetworthofWhitehouseholdswas,on

average,$100,700higherthanthatofBlackhouseholds.

By2007,thegaphadincreasedto$142,600.

Percentremainingin

bottomquartile

Percentacquiring

topquartile

Whites 62.9% 3.6%

Blacks 32.3% 14.2%

Blacks are M ore Likely to Stay in Poverty thanWhites

Source:Hertz,2005


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The Myth of the Model Minority

Bymanyaccounts,AsianAmericanshaveappearedtodowellforthemselvesintermsofeducation,employment,and

assetbuilding. Butacloserlookatthedatatellsamorenuancedstory.

First,notallAsianAmericansarethesame. Breakinginformationdownintonationalitycategoriesisrevealing. For

instance,while46%ofChineseAmericansand41%ofJapaneseAmericanshavecollegedegrees,only9%of

Cambodian,Hmong,orLaotianAmericansdo. Amongthislattergrouping,52.7%havenotcompletedhighschool,

comparedto24%ofChinese,10%ofJapanese,and15.3%ofWhites.

Second,themostcommonlycitedinformationcanbemisleading. Census

datashowsthat,asawhole,AsianAmericanfamilieshavehighermedian

incomesthanWhitefamilies. ButsincethetypicalAsianAmericanfamily

tendstohavemorememberswhoareworkingthanthetypicalWhite

family,suchdatagivesthefalseimpressionthatAsiansaredoingbetter

thanWhites. Amoreaccuratemeasureofeconomicwellbeingismedian

personalincome. AnalysesalongthismeasureindicatethatAsian

AmericansarestilltrailingWhites.

Third,despitesomesuccessesinattainingaccesstoeducationandsecuringhigherincomes,AsianAmericanscontinue

tobeunderrepresentedinleadershippositions.JustlikeBlacksandLatinos,theyareunderrepresentedinpolitical

positionsatthefederal,state,andlocallevels. And,justlikeBlacksandLatinos,theyareunderrepresentedasCEOs,

boardmembers,andhighlevelsupervisors.

Inshort,theAsianAmerican,NativeHawaiian,andPacificIslanderpopulationisverydiversewithover50different

race/ethnicitieswhospeakover100differentlanguages.Theheterogeneityinlanguagesandculturesnecessitate

breakingdownaggregate(oraverage)dataintospecificsubgroupsbecauseissuestendtogetlostorloseimportance

inaggregateddata.Withmorecredibleinformation,wecanbetterunderstandthispopulationsrepresentationinthe

A s i a n A m e r i c a n s A r e V e r y D iv e r s e

Chinese,22.6%

Indian,16.4%

Filipino,18.3%

Vietnamese,10.9% Korean,10.6%

Japanese,7.8%

Other,7.5%

Bangledeshi,0.1%

Cambodian,0.2%

Hmong,1.7%

Laotian,1.7%

Pakistani,1.5%

Taiwanese,1.2%

Thai,1.1%

Other,15.0%

Median

Personal

Income

Median

Family

Income

Whites $23,640 $48,500

Asian

Amer.$20,200 $59,000

Personal vs Family Income


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Race & The Labor MarketWhiletheaccumulationofwealthdoesnotnecessarily

dependonemployment,thetypeofjoboneholdsand

accompanyingincomelevelundoubtedlyplaysan

importantroleinanindividualsabilitytoacquireand

maintainassets.

Peopleofcolorcontinuetobehitdisproportionably

harderbythecurrenteconomicrecession,highlighting

theirmorevulnerablepositioninginsociety. Accordingto

aJuly2009assessmentbytheUSBureauofLabor

Statistics,theunemploymentrateforWhiteswas8.6%,

comparedto12.7%forLatinos,and14.9%forBlacks. And

accordingtoAlgernonAustinattheEconomicPolicy

Institute,Evenwhenthenationalunemploymentpicture

isgood,theBlackunemploymentrateismorethantwice

thatoftheWhiteunemploymentrate.

TheunemploymentrateforBlacksexceedsthatofWhites

ateveryeducationlevel,makingitclearthattheproblem

ofjoblessnessamongBlackscannotbesolvedby

educationalone. Thedisparitiesamongthecollege

educatedstronglysuggestthateveniftheBlack

educationalattainmentdistributionwasexactlythesame

astheWhitedistribution,Blackswouldstillhaveahigher

unemploymentratethanWhites(EconomicPolicy

Institute,2008).

Agrowingbodyofresearchabouthiringpractices

indicatesthatdiscriminationcontributestotheseracial

disparities. Onesuchstudylookedattherateinwhich

employerscalledapplicantsbackforsecondjob

interviewsandfoundthatalthoughexoffendersreceived

alowercallbackratethanthosewhohadnotbeen

incarcerated,Whiteexoffendershadacallbackrateequal

toBlackswithoutcriminalrecords.(Pager,2005).

Similarly,inanexperimentwhereresearcherssubmitted

resumessomewithBlacksoundingnameslike

LakishaandJamal,andsomewithWhitesounding

nameslikeEmilyandGregtoemployerswithopen

positions,thosewithWhitesoundingnamesreceived

twiceasmanycallbacksforinterviews,despite

comparablelevelsofeducationandexperiencebetween

thetwogroups. Thestudyfoundlittleevidencethat

employerswereinferringsomethingotherthanracial

differences,indicatingthatdiscriminationisaprominent

factorinemploymentdecisions(Bertrand,2004).

Whilefurtherinvestigationisneededtoascertainthe

pervasivenessoftheproblem,dataclearlypointstoracial

discriminationinhiringpractices,evenifitisnot

intentional. Infact,intheresumestudy,federal

contractorsandemployersthatdescribethemselvesasan

EqualOpportunityEmployerintheirjobannouncements

discriminatedjustasmuchasotheremployersinthe

sample. Themessageisclear: theEqualEmploymentAct

isnotenoughtoensurenondiscriminatoryhiring

practices.

Race and Homeownership

Inadditiontoaccesstoemploymentopportunities,

homeownershipisacriticalcomponentofestablishing

wealth.Homeownershipratesvarysignificantlybyrace,

2.5%

1.7%

2.7%

1.6%

5.0%

5.0%

7.2%

3.8%

0% 2% 4% 6% 8%

March2007

March2009

U nemplo y m ent of C ol leg e-Educat ed

Persons, by Ra ce

As ia n La tino Bla c k W hite

0%

20%

40%

60%

80%

W hite As ia n La tino Bla ck

N a tl . H o m e o w n e r s h i p R a t e b y R a c e ,

2 0 0 8



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withWhiteshavingthehighestratesofhomeownership

andBlackshavingthelowest(USCensus,2008).

Historically,thelowerpercentageofBlack

homeownershipcouldbetracedtodiscriminationinthe

lendingindustry. Analysesconductedintheearly1980s

demonstratedthatthepercentageofBlackresidents

within

census

tracts

was

inversely

related

to

the

number

ofhousingloans.Moreover,studiesshowedthatpeople

ofcolorpaidmoreforhousing,facedmorerestrictionsin

bothlocationandhousingquality,andpaidmorefor

loansfromprivatelenders(Horton,1992).

Inrecentyears,thecreditpendulumhasswunginthe

oppositedirectionandBlacksandLatinoswere

disproportionatelytherecipientsofhigherpricedhome

loans,evenwhencontrollingforincomeandcreditscores.

AccordingtotheFederalReserve,amongborrowerswith

thehighestFICOscores(greaterthan720),13.5%ofLatino

and12.8%ofBlacksreceivedhighcostloans,whileonly

2.6%ofWhiteborrowerswiththesamescoresreceived

suchloans(FederalReserveBank,2009).

Theimpactsoftheseinequitablelendingpracticesare

comingtolightastheforeclosurecrisiscontinuesto

unfold. InCalifornia,astatehitparticularlyhardbythe

crisisandaminoritymajoritystate,theforeclosurerates

arehighestinneighborhoodsthatpredominantlyhouse

peopleofcolor. TheFederalReservefoundthatcommunitiesofcolorhadaccesstoverydifferent

mortgagemarketsthantheirWhitecounterparts,with

45.2%ofLatinoand42.9%ofBlackborrowersreceiving

theirloansfromindependent,nonfederallyregulated

mortgagecompanies,comparedto29.2%ofWhites. Itis

importanttonotethatthemajorityoftheBlackandLatino

householdsforecloseduponwerenotpoorhouseholds,

butrathermiddleclass,earningbetween$60,000and

$120,000peryear(FederalReserveBank,2009).

Amongthosewhodomaintaintheirhomes,peopleof

colorcanexpecttopaywhathasbeentermeda

segregationtax. Thisexpressionreferstothe

phenomenonwherehomesofsimilarqualityina

neighborhoodoccupiedbypeopleofsimilarincomehave

significantlydifferentvalues,dependingonwhetheritis

majorityWhiteormajorityBlack. DavidRuskatThe

BrookingsInstitutionfoundthatBlackhomeowners

received18%lessvaluefortheirhomesthanWhite

homeowners. Thisdiscrepancyisprimarilyduetothe

highdegreeofracialsegregationinneighborhoods(Rusk,

2001).

Recommendations

Policycandomorethansetstandardsandenforce

regulations. Policycanalsoshiftculturalnormstomake

theAmericandreamattainableforallpeople. Realizing

thispotentialwillimproveourentirenation,forwhenour

workplaces,neighborhoods,andschoolsreflecttherich

diversitythatmakestheUnitedStatesunique,we

capitalizeonasignificantcomparativeadvantage.

Tothisend,weofferthefollowingrecommendations:

Collectmoredatafromdiverseracialandethnicgroups.

Theracialterminologyandcategorizationsusedbythe

federalgovernmenthavesignificantimplicationsfora

hostofarenas,fromresearchgrantstopolicyinitiativesat

alllevels. DelineationssuchasWhiteandNonWhite

arenotsufficientforacountryonthebrinkofbecoming

majoritypeopleofcolor. Thefederalandstate

governmentmusttaketheleadincollectingdatafrom

communitiesofcolorandhavetheforesighttolookat

impendingdemographicshiftsinordertodetermine

whichdatawillbeneededmost. Scholarsand

policymakersrelyonrobustdatasetstoundertake


Disaggregated Data is Crucial to Understandingour D iversity

Disaggregateddataisneeded,regardlessofareaof

studyto:

Identifypatterns(similarities,differences)

Develop,monitor,andimproveprograms

Preventissuesfromgettinglostinaggregatedata

Identifyandaddressspecificneeds(e.g.education,

health,employment)

Provideevidencetoinformandinfluenceprograms

andpolicies

Advocatefor,andenableappropriateallocationof

resourcesatcommunity,local,state,andfederal

levels


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rigorousanalysisofpublicproblemsandpotential

solutions;informationmustbecollectedfromdifferent

groupsofAmericans,includingBlacks,Latinos,Asianand

PacificIslanders,NativeAmericans,aswellassub

populationswithinthesegroups.

Developfederalprogramsthatdiscouragedefacto

segregation.

Theliteratureonracialdisparitiescitessegregation,

particularlyindiversemetropolitanareas,asacritical

contributortoahostofsocialwelfareproblems,from

educationtoemployment. Thespatialmismatch

betweenwherepeopleofcolorliveandwherejob

opportunitiesarelocatedcontinuestobeabarrierto

mobilitywithinthelabormarket(Brookings,2005).

Moreover,thesegregationtaxincurredbyminority

homeownerswillpersistunlesseffortsaremadeto

diversifyneighborhoods.

TheUnitedStateshasahistoryoffederalgovernment

interventiontoencouragestablehousingsettlements. The

HomesteadActof1862andtheG.I.Billof1944are

instancesofsuchinterventions. Thecurrentforeclosure

crisisisanunprecedentedphenomenonthatpresentsa

uniqueopportunitytodeveloppoliciesatthefederallevel

thathelpcommunitiesofcolor,whilesimultaneously

stimulatingtheoverallnationaleconomy.

StrengthentheCommunityReinvestmentAct

TheCommunityReinvestmentAct(CRA)servesasan

exampleofsuccessfulfederallegislationthathas

simultaneouslysupportedlowincomecommunitiesof

colorandhelpedbanksfindprofitablemarketsthat

otherwisewouldhavebeenavoided. Asournationgrows

morediverseandourbankingsystemmorecomplex,now

isthetimetostrengthentheCRAbymakingitapplicable

toallfinancialinstitutions,includinginvestmentbanks,

hedgefunds,largecreditunions,insurancecompanies,

andanyotherinstitutionsthatprovidefinancialservices.

Furthermore,tosucceedinthefuture,CRAshouldfocus

onavarietyofassetandwealthbuildinginitiativesand

regulatorsshoulduseacoordinatedapproachtotrack

progress. Indicatorsthatregulatorscanfocusoninclude,

butarenotlimitedto:homeownership,business

ownership;checking,savings,andretirementaccounts;

stockownership;andemployment.

Conclusion

ThefutureofAmericadependsontheproductivity,

health,andwealthofitsworkersandleaders,themajority

ofwhomwillbepeopleofcolorbytheyear2050(US

Census,2008). Therefore,thefutureofAmericadepends

onthepoliciesweadopttodaythatwillsupportthe

successofBlacks,Latinos,andAsianAmericans. This

includesfindingasolutiontoimprovingeducational

outcomes,providingaffordablehealthcaretoall,and

creatingentryleveljobopportunitieswiththepossibilityofadvancement.

Americanpolicyhastheresponsibilitytoensurethatwe

aretrainingthenextgenerationtoassumethereinsofour

prosperity. Failingtodosowillhavegraveimplications

forourabilitytomaintainourstandardoflivingandour

globalleadershipposition.


Poverty dispropor tionately affects people ofcolor

Failingtoreportandcollectdataonraceandethnicity

obscuresthedisproportionateimpactofpovertyon

peopleofcolor.


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Race Still Matters -- Green Lining -- Golin