Race and Economics
Economics - a social science concerned with the production, distribution, and consumption of goods and services. It studies how individuals, businesses, governments, and nations make choices about how to allocate resources.
When it comes to talking about Economics in America, Racism has put a strain on Black economic progress for decades. Examples like the World War II G.I Bill, which helped fuel the growth of the American Middle Class, was largely denied to Blacks at the time at the insistence of White Congress Members. George Stigler, a 1982 Nobel laureate, argued in 1965 that Black people were inferior as workers and that the solution was in fostering “the willingness to work hard.” This statement reflects the thoughts of economist and economic institutions at the time. According to a 2019 McKinsey report, median Black families have 10 times less wealth than median white families.
Gary Becker, a 1992 Nobel laureate, demonstrated in his 1971 Economics of Discrimination that discrimination from several factors, including race, reduces the real income of both its target and the perpetrator. More recently, Harvard economist Raj Chetty and coauthors found that it is much harder for Black children in low-income US households to reach higher income brackets than for white children, and that environmental conditions, such as racial bias, account for this finding.
Despite progress being made, Racism in Economics is scantly talked about subject that needs to be addressed. 4 percent of economics PhDs awarded in the United States in 2018 went to Black economists, and Black representation in economics decreased from 6 percent in 1995 to 3 percent in 2019, while their representation in the US population remained about 13 percent. Black representation in economics was lower than in science, technology, engineering, and math (and the same was true for minority populations other than Black).
Demanding an End to Racism is not only morally correct, it is also economically correct. Ending Racism will be a boost to Economic Progress. While we continue to deal with Racism in all fields, such as medicine, where we see that Black Women are a third more likely to die of heart disease than White Women due to prejudices of Doctors and Nurses in the medical fields, as 29 percent of white first year medical students believe Black People's Blood Coagulates more quickly and are never taught different.
Tactics such as "Redlining", which the Federal Housing Administration used as a policy, refused to insure mortgages in Black neighborhoods, shut Black Americans out of one of the most common avenues for accumulating wealth, home ownership. Between American Whites and American Blacks, the wealth gap is projected to cost America between 1 trillion to 1.5 trillion in lost consumption and investment between 2019-2028. This translates to a projected GDP penalty of 4 to 6 percent. Even at the historically low rates of unemployment reached in 2019, this was the case overall and at nearly every level of education. In practical terms, this means that Black workers are not just twice as likely to be unemployed as similarly educated white workers but are often more likely to be unemployed than less-educated white workers.
The Black and White wage gap has grown significantly over the past 40 years. In 2019, the average hourly wage of Black workers was 26.5% less than that of white workers. Black workers with the same-level education as White Workers, of the same age and gender, and living in the same geographic division, the gap was 14.9%, meaning less than half the observed Black–white difference in average hourly wage is explained by the main factors presumed to determine pay.
In 2019, Black Women were paid 33.7% less than their white male counterparts, which was a much larger gap than that faced by either white women (25.7%) or Black Men (22.2%). This is after the sharp downward trend in the gender wage gap that occurred throughout the 1980s and essentially stopped in the mid-1990s. There has been insufficient vigilance in fighting unemployment since the late 1970s—the same period of time that we have observed growing wage inequality overall and widening wage gaps between Black and white workers. Persistent Disparities in Race we see in unemployment and wages arguably provide the most compelling evidence of structural racism in the this Country's Labor Market.
This disparity is well documented in decades of official estimates from the Bureau of Labor Statistics, dating back to 1972 when the agency first began reporting rates of unemployment by race. More than 45 years’ worth of data can be summed up in one simple ratio: 2-to-1. It means Black job seekers are about half as likely to secure employment during a consecutive four-week period as are white job seekers. This has been true across multiple periods of economic expansion and recession, and is observed for all age cohorts, at every level of education, and for men and women alike.
Another defining feature of racial inequality in the labor market are the large disparities in pay between Black and white workers. I remind you that racial pay gaps persist even after accounting for factors commonly associated with individual productivity (education or skills) and have in fact gotten worse over the last 40 years. One of the most troubling aspects of growing Black–white wage gaps is the fact that they have grown most among college-educated workers; those presumed to have done all the “right” things,. In 1979, Black bachelor’s-degree holders were paid an average hourly wage that was 86.4% of what white bachelor’s-degree holders were paid.
In 2019, the average for Black Workers with bachelor's degrees was down 8.9 percentage points to 77.5%; the average for Black Workers with advanced degrees was down 7.5 percentage points to 82.4 percent. These patterns are consistent with the fact that relative to their white counterparts, college-educated Black workers are less likely to be employed in positions and industries that have seen the most wage growth in recent decades. Also, in 2019, Black workers with a college or advanced degree were more likely than their white workers to be underemployed based on their skill level—almost 40% were in a job that typically does not require a college degree, compared with 31% of white college graduates.
Since the 1980s, there has only been one very brief period of when the gap narrowed, and that occurred during the last five years of the 1990s economic boom. Since 2000, the Black–white wage gap has widened amid sluggish economic growth, two jobless recoveries, the Great Recession, and subsequent recovery that was needlessly hampered by premature fiscal austerity.
Austerity, a word that characterizes severity or sternness, is used in economics to refer to austerity measures. These are economic policies implemented by a government to reduce public-sector debt, by significantly curtailing government spending, particularly when a nation is in jeopardy of defaulting on its bonds.
Fiscal austerity has been especially harmful to Black workers who are a disproportionate share of those employed in the public sector where they have historically been drawn by better job opportunities and greater pay equity.
Valerie Wilson remarked "While losing a job comes nowhere close to losing a life, both are symptoms of the kind of racial injustice that sparked national and international protests this past summer."
White supremacy is so deeply embedded in the fabric of American life that it influences unconscious behavior. If race is taken out of the mix, economic interests reflected in the distribution of income would dominate voting behavior and public policy.
It has been a long struggle in the fight against Racial Oppression in this country. The structure of Systemic Racism has not only hurt this Country Emotionally, not only Physically, but also Economically. How much longer will we allow this System of Racism, this System of Oppression dominate our lives. We must continue to use our Voices and Our Power to come together and bring about a System of Equality for the betterment of all.