New Report: The State of Communities of Color in the U.S. Economy

WASHINGTON, D.C.–(ENEWSPF)–January 21, 2011. The Center for American Progress released a report today entitled “The State of Communities of Color in the U.S. Economy” outlining how U.S. households in general, but communities of color in particular, were severely hurt by the recession. According to the authors, communities of color experienced larger losses than whites and will have to climb out of a deeper hole to regain the level of economic security they had before the crisis as the economic recovery deepens and the labor market recovers.

The authors analyzed data from the last business cycle and found that:

  • Substantial differences in economic security exist by race and ethnicity. The unemployment rate for African Americans, for instance, was 15.8 percent in the fourth quarter of 2010, compared to 12.9 percent for Latinos, 7.3 percent for Asian Americans, and 8.7 percent for whites.
  • Homeownership rates tell a similar story. In the third quarter of 2010, the homeownership rate for African Americans was 45.0 percent. The homeownership rate for Latinos was 47.0 percent, and the homeownership rate for whites was 74.7 percent.
  • Racial and ethnic differences have worsened or stayed the same during the recession and recovery. Unemployment rates rose faster for African Americans and Latinos than for whites while homeownership rates fell faster. Trends for poverty rates, health insurance coverage, and retirement savings also show widening gaps by race and ethnicity throughout the recession and recovery after 2007.
  • Economic security losses during the recession and recovery exacerbated the already weak situation for African Americans. They experienced declining employment rates, rising poverty rates, falling homeownership rates, and decreasing health insurance and retirement coverage during the last business cycle from 2001 to 2007. The recession that followed made a bad situation much worse.
  • The recession and recovery quickly eliminated the modest gains that Latinos had seen during the last business cycle. Latino homeownership rates in 2010, for instance, were again close to their levels in 2001 even though Latino homeownership rates had risen from 2000 to 2007.

The main lessons from the data are threefold. First, all families struggled with the prolonged economic and labor market slumps, regardless of race or ethnicity. Second, economic differences by race and ethnicity remained intact during the crisis, meaning that communities of color went into a deeper economic hole than whites. Third, the most recent economic downturn quickly translated into a lot of economic pain for communities of color since they had seen few gains, either with respect to jobs, earnings, or both, during the preceding business cycle. The data suggest that communities of color face continued structural obstacles to gain the same economic opportunities as white families, even during good economic times.

This implies three policy lessons. First, policymakers need to pay continued attention to the weak labor market to ensure there is a rising tide that can lift all boats. Second, policies intended to create more jobs need to include provisions that particularly target communities of color. Third, policymakers need to put in place policies that go beyond the immediate need for job creation for everybody to help erase differences in economic security and opportunity by race and ethnicity.

This policy brief on the state of communities of color as we enter 2011 includes a specific list of policy recommendations from our colleagues at the Progress 2050 project to address these policy lessons.

Read the full report here.