Report details racial and ethnic disparities

Despite improvements in education, social mobility and many critical areas, large racial and ethnic disparities still exist — and are sometimes even increasing — for other important outcomes, according to a recently published Stanford report that examined racial and ethnic disparities in the United States.

The Center on Poverty and Inequality’s “State of the Union,” an annual report examining key trends in poverty and inequality outcomes, detailed substantial disparities across a range of domains, notably in housing, employment and health. The report included research by Mark Duggan, the Trione Director of the Stanford Institute for Economic Policy Research, and Sean Reardon, a SIEPR senior fellow.

“It would be difficult not to be concerned, first and foremost, by the profound racial and ethnic inequalities that persist in many domains,” David Grusky, a SIEPR senior fellow and Director of the Center on Poverty and Inequality, wrote in the report’s executive summary.

What’s more, some government programs have sometimes exacerbated the disparities, he noted.

The American Dream?

The continuing disparities in home ownership in the United States may best illustrate some of the inequities faced by black and Hispanic families.

Less than half of black families (41 percent) and Hispanic families (45 percent) live in owner-occupied housing, as of 2014. For white families, that figure is 71 percent.

Home ownership helps families accumulate wealth and take advantage of sizable tax savings. By contrast, being forced into the rental market can set off a domino effect of events that then make it more difficult to exit from poverty, the report said. Roughly 1 in 6 black and Hispanic households spend more than 50 percent of their income on housing, leaving them with fewer resources to devote to their children’s education, health care and other basic needs.

This fundamental disparity, the report said, can be traced back to the home-mortgage expansion that accompanied President Franklin Delano Roosevelt’s “New Deal,” which was enacted some 80 years ago. Families of color were, in effect, excluded from receiving these mortgages. While white families took advantage of them and prospered, other families were left behind and are still trying to catch up.

“We typically look to policy as a vehicle for equalizing,” said Grusky, a professor of sociology. “But here our policy has fallen short by that standard. The very policies designed to be equalizing, like the commitment to making mortgages widely available, in fact worked to introduce inequalities.”

The persisting earnings gap has made it even more difficult for African Americans and Hispanics to catch up. In 2010, median earnings for black males were 32 percent lower than median earnings for their white counterparts. The earnings gap between white and Hispanic men grew from 29 to 42 percent between 1970 and 2010.

The earnings gap between black and white males has narrowed by only 7 percentage points in four decades.

‘Two Americas’

Since 1980, racial and ethnic disparities in poverty in the U.S. have remained largely unchanged, resulting in what the researchers characterize as “two Americas.”

Whereas blacks, Hispanics and Native Americans are more likely to experience the high-poverty America, Asians and whites are more likely to experience the low-poverty America. One in four blacks, one in four Native Americans and one in five Hispanics are classified as poor. By contrast, only 1 in 10 whites and 1 in 10 Asians are poor. The authors note that whites make up most of the nation’s poor, but that is because there are more whites in the total population.

This disparity arises in part because of racial and ethnic gaps in employment, health and wealth:

Employment: The employment rate for African American men has been 11 to 15 percentage points lower than that for whites in every month since January 2000. During the Great Recession, African American men’s employment rates fell further and recovered more slowly than did white men’s employment.

Health: There are also profound racial disparities in illness and death. For example, blacks are two to three times more likely than whites to suffer from hypertension and diabetes, leading in turn to higher rates of cardiovascular disease.

Wealth: In 2013, a white family’s median wealth was $141,900. The study states that, “for every dollar of wealth held by the median white family, the median African American family had less than 8 cents in wealth, and the median Hispanic family had less than 10 cents.”

Addressing inequality early

The report argues that many fewer disparities would develop later in life by “equalizing starting conditions.”

The deck is stacked against blacks, Hispanics and Native Americans because they are dealt, as the report states, an immediate “one-two punch” at the very moment of birth. They are not just more likely to be born into families with less wealth, education and income, but they are also more likely to live in poor neighborhoods where high-quality schools are more difficult to find, crime is high and other amenities are unavailable.

The report states that simply equalizing starting conditions wouldn’t eliminate racial and ethnic inequalities, but would at least help reduce them. It is not enough to equalize starting conditions because blacks, Hispanics and Native Americans are exposed later in their life to “educational, labor market and criminal justice institutions riddled with discriminatory practices.”

“It is nonetheless especially attractive to cut off at the source those processes of cumulative advantage and disadvantage that convert smaller differences early in life to larger ones in adulthood,” the report states.

“A distinctly American commitment,” said Grusky, “is that, when the race begins, everyone should be lined up at the same starting place. This commitment is not being honored. We don’t even come close to living up to what we claim matters to us.”

In the report’s section on government “safety net” programs, SIEPR’s Duggan, who is the Wayne and Jodi Cooperman Professor of Economics, and Valerie Scimeca, a SIEPR research assistant, detail how sometimes the population groups most in need of assistance are not getting it.

Though blacks and American Indians have the highest poverty rates, they are also “significantly less likely than other racial and ethnic groups to enroll in Medicaid, the largest federal safety net program,” the researchers wrote.

Encouraging signs

For all these problems, the report also stressed that there are some encouraging signs.

Academic performance for all students improved between 1990 and 2015, and black and Hispanic students experienced the fastest improvement. Reardon and Erin Fahle, a doctoral student in education at Stanford, attributed this result to early-education initiatives that equalized opportunities in early childhood. But the researchers also cautioned that such success is still only partial, noting that “Hispanic students lag almost two grade levels, and black students lag roughly two to two-and-a-half grade levels behind whites.”

The report also found a declining gap in social mobility. Although “the persistence of affluence is stronger for whites, while the persistence of poverty is stronger for blacks,” the black-white gap in the persistence of poverty has “closed significantly.”

For white children born into the 20th percentile of household income, the probability of moving upward is about 75 percent – a figure that hasn’t changed much since 1945.

Black children in that same 20th percentile now have about a 70 percent probability of moving up. In 1945, this probability was less than 50 percent. The study attributes policies such as Head Start, school desegregation and school finance reform as contributors to this change.