Income Inequality and Race In The United States

                Income inequality is one of the most pressing economic crises in the world right now. In the United States, income inequality has been rising for the past four decades; a similar but less severe pattern has been present in Europe since 1980. In fact, this inequality has risen to the point to where the top 10% of American income holders receive nearly 50% of all income. (Piketty and Saez, 2014)

                What about when income inequality is viewed through a different spectrum - not through percentiles of income relating to class, but through race?  In that view, the income gap is stable. For the past thirty years, white families have earned about twice as much money as black and Latino families make. However, the wealth gap, which measures the difference in property and capital possessed by white families versus black and Latino families, is much larger. In fact, during the recent recession, the gap heavily increased. Before the recession, in 2007, white families had four times the wealth of black and Latino families. After the end of the recession, in 2010, the gap had increased so that white families had six times the wealth of black and Latino families. (McKernan et al. 2013)

The wealth gap is significantly more than the income gap because wealth can be accumulated over generations through inheritance, while income varies year over year and from person to person But the income gap is the primary mover of the wealth gap.  Asset ownership is concentrated in the upper income percentiles. (“Widening Wealth Gap”, 2014) This means those who are able to receive more money can invest more of it, while people with no disposable income can’t invest any of their money except on necessities. In effect, the income is going to those who already hold the capital, while the capital holders will receive income from their assets. (Porter 2014) This means that, if there is already a notable racial income gap, the racial wealth gap will persist and enlarge.

Racial income inequality has led to a resurgence in income segregation - the geographic segregation of families and indivuals based on the income they receive. As it became illegal to discriminate against black families in real estate ownership in the 1960s and 1970s, income inequality became more linked to income segregation. In 1970, income segregation was lower for black families than for white families; but by 2000 it was significantly higher. This means that black families have begun to live more and more in communities where the average income is closer to their income. (Reardon and Bischoff 2011)  Since the income gap has remained the same size while income segregation has increased, this means that black communities have begun to once again become synonymous with poor communities, despite there no longer being any legal segregation. Moreover, because black incomes remain low, the communities will become isolated in their poverty, disconnected from higher-income communities by income, not by race.

Worse, racial income inequality negatively affects not only poor minorities’ economic and societal standing, but their bodily health as well. Many studies have shown that people with higher incomes can expect to live longer, healthier lives than people with smaller incomes. Life expectancy after retirement at age 65 has increased six years between Americans born in 1912 and those born in 1941 in the top half of the income distribution. But the same measure of life expectancy after retirement for the bottom half of the income distribution increased only 1.3 years in that time period. (Waldron 2007) A specific example is breast cancer mortality rates. In 25 American cities studied, black breast cancer mortality rates were greater than almost all the corresponding white mortality rates. Revealingly, the researchers found that median household income and racial segregation were significantly related to the ratio between the two mortality rates. (Whitman, Orsi and Hurlbert 2011)

It is clear that income inequality is an enormous problem in America, and the problem is only getting worse as poverty and class become more and more racialized in their demographics. Public policy changes must be made if the government wants this problem to get any better.

Works Cited

McKernan, Signe-Mary, Caroline Ratcliffe, Eugene Steuerle, and Sisi Zhang. 2013. "Less Than Equal: Racial Disparities in Wealth Accumulation." Washington, DC: Urban Institute.

Piketty, Thomas, and Emmanuel Saez. "Inequality in the long run." Science 344, no. 6186 (2014): 838-843.

Porter, Eduardo. "A Relentless Widening of Disparity in Wealth." New York Times, March 11, 2014. Accessed September 23, 2014. http://www.nytimes.com/2014/03/12/business/economy/a-relentless-rise-in-unequal-wealth.html.

Reardon, Sean F., and Kendra Bischoff. "Income Inequality and Income Segregation." American Journal of Sociology 116.4 (2011): 1092-1153.

Waldron, H. (2007). Trends in Mortality Differentials and Life Expectancy for Male Social Security–Covered Workers, by Average Relative Earnings (ORES Working Paper No. 108). Retrieved from Social Security Administration Office of Policy website: http://www.nber.org/papers/w15291

Whitman, Steven, Jennifer Orsi, and Marc Hurlbert. "The racial disparity in breast cancer mortality in the 25 largest cities in the United States." Cancer epidemiology 36, no. 2 (2012).

“The Widening Wealth Gap: Bringing Income Inequality Into Focus.” Narrated by Audie Cornish. NPR, January 2, 2014. http://www.npr.org/2014/01/02/259222613/the-widening-wealth-gap-bringing-income-inequality-into-focus.