How closing economic disparities for racial/ethnic minorities will benefit all

by Savanna Shay Duran
May 19, 2015

Since the start of the Great Recession, the economic disparities between racial/ethnic minority families and white families have increased. More and more racial/ethnic minority families are falling behind in an economy that simply does not work for them. Their children—too many of whom are held back by the detrimental effects of poverty—are less likely to do any better when they grow up. This situation affects society as a whole because the population growth rate of racial/ethnic minorities is higher than that of whites, meaning minorities will soon make up a higher percentage of our children and, eventually, our nation’s workforce. Without equal opportunities to the support systems that help us all succeed in school, this growing sector of the workforce will be less able to gain the skills needed for a high-functioning, productive economy. With racial/ethnic minorities making up 60 percent of New Mexico’s adults and 74 percent of our children, the state is well ahead of the nation in terms of this demographic change. What we do as a high-poverty state to decrease these economic disparities may form a road map of sorts for the nation to follow.

A recent report by the Working Poor Families Project (WPFP) reveals the severity of these economic gaps:

  • While racial minorities make up just 40 percent of all working families in the United States, they represent 58 percent of low-income families;
  • While 24 million children live in low-income families, more than half—or 14 million—of them are racial minorities; and
  • The economic disparities between white families and African American families is at its highest since 1989.

There are several reasons for the income disparities between racial/ethnic minorities and white families, according to the report. One of the main causes is that racial minorities are more likely to have low-paying jobs, such as those in retail, food services, health care, and housekeeping, than are whites. Besides low wages, jobs such as these have little opportunity for career advancement and provide few if any benefits, such as health insurance, paid leave, and pensions. According to the WPFP, nearly 60 percent of job growth since 2010 has been in low-wage jobs and the number of low-income families increased from 10.1 million to 10.6 million between 2009 and 2013.

Disparities in education also contribute to major differences in income. For example, in 2013, 52 percent of low-income working Hispanic families had at least one parent without a high school diploma. Lower levels of education limit a person’s access to jobs with family-sustaining wages. The lifetime earnings of a college graduate are nearly double the earnings for someone who did not get any education beyond high school. Low-paying jobs are also less likely to include benefits, which can make a big difference for working families. For example, without guaranteed sick leave, parents may risk losing their jobs simply by staying home from work to take care of their sick children. If they are allowed to stay home with a sick child, they will lose that day’s wages.

How policies can make a difference

One solution is to provide racial minorities with more opportunities to earn the necessary education and job training needed for jobs with opportunities for advancement. The cost of attending a four-year university creates a significant financial barrier. States should increase the amount of need-based financial aid for minority and non-traditional students to reduce the financial burden of paying for education. States should also increase their minimum wages and index them so they automatically adjust to inflation. This would especially benefit African American and Hispanic workers, who are more likely to have lower-paying jobs. In addition, states must also enact policies that enforce equal pay to eliminate the income disparities that racial minorities and women experience. Hispanic women earn 56 cents for every dollar that men earn, for example.

Low-income working families also need affordable child care and assistance programs to help them provide for their basic living needs. Low-income families can spend as much as 30 percent of their income on child care expenses. Simplifying the application process for programs like child care assistance, Medicaid and SNAP, and expanding these services to underrepresented communities, would make these benefits more accessible to those who qualify.

Ultimately, closing the income gap between racial minorities and white families will not only benefit working parents, but it will help children who are living in poverty as well. Our economy will also benefit when racial minorities have equal opportunities to succeed, particularly as minorities continue to represent a larger share of our nation’s workforce.

Savanna Shay Duran is a senior at the University of New Mexico and an intern at New Mexico Voices for Children.