Racial equity in income: Eliminating racial inequities in income would strengthen families, communities, and local economies. 

Insights & Analyses

  • The average annual income for all people of color would increase by $14,696 or 53 percent with racial equity in income while the average annual income for Native Americans would increase by $18,979 or 76 percent.

  • The majority of income gains created by eliminating racial gaps in income for all people of color would come from growth in wages but for Mixed/other workers, the majority of income gains would come from growth in employment. 

  • GDP in 2017 would have increased by $2.8 trillion if we eliminated racial gaps in income.

  • The percent gain in GDP with racial equity in income is highest in the District of Columbia at 55 percent, the next highest is California at 35 percent.

Drivers of Inequity

Historically, people of color were barred from educational opportunities that would allow them to obtain higher-paid employment, while occupations dominated by people of color (e.g., domestic and agricultural work), were excluded from minimum wage and overtime protections. Deindustrialization and cuts to the public sector in the late 20th century decimated unions and disproportionately hurt people of color who were first to be laid-off and pushed into a growing service sector. Today, hiring and pay discrimination against people of color is widespread even among candidates with equal education and the loss of worker protections has created wealth for top earners as wages have declined for the bottom half. Opportunities for racial inclusion exist in industries driving economic growth (e.g., tech), but to date, these industries have lacked the racial diversity reflective of the nation’s population.

Strategies

Grow an equitable economy: Policies to invest in people and strengthen the economy

Strategy in Action

Tulsa proves universal pre-K brings major economic and social returns. Investments in early childhood education have strong, proven economic and social benefits. In 1998, Oklahoma passed legislation offering free high-quality pre-K to every four-year-old in the state. Its enrollment rate is 74 percent, while only 33 percent of all four-year-olds nationally are enrolled in a state-funded pre-K program. An in-depth study of Tulsa’s program found that children who enrolled in pre-K would increase their future earnings by tens of thousands of dollars. Low-income students, in particular, would see an earnings increase. For students of all income levels, the benefits of pre-K far outweigh the state’s investment. Learn more.

Photo: Woodleywonderworks on Flickr

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