How Inequality in the US Follows Racial Lines

“There is not a Black America and a White America and Latino America and Asian America—there’s the United States of America.” – Barack Obama, 2004 Democratic National Convention keynote address

The 2004 Democratic National Convention keynote address, which helped launch then Illinois State Senator Barack Obama into the spotlight, was a clarion call for a post-racial America. The election of the nation’s first black president strengthened the notion that race is decreasingly important in politics and economics. In recent years, this idea has expanded to the study of economic inequality. The dramatic rise in inequality over the past decade has been cast primarily in terms of class, not race.

Rodney Hero and Morris Levy, of the University of California at Berkeley and the University of Southern California respectively, have recently pushed back against this view in a recent study that deconstructs inequality and uncovers its structural components. They looked for what they call the “racial structure of inequality”; that is, how much of total inequality is composed of economic inequality between racial groups, or between-race inequality.

Hero and Levy posed two potential structures of inequality with two hypothetical societies, each having equal levels of total inequality and equal proportions of two racial groups. In the first society, one racial group had only low-income earners, while the other group had a mix of low- and high-income earners. Hero and Levy argued that this society would have a high degree of between-group inequality. In the second society, high- and low-income earners were equally dispersed within both racial groups. This society would have a high degree of within-group inequality.

To measure these two components of inequality, Hero and Levy used the Theil Index. This index measures total inequality, but it can be separated into a measure of between-group inequality, which captures a group’s income weighted against its share of the population, and a measure of within-group inequality, which measures income-weighted inequality within the racial group. The researchers examined these component measures to ascertain how much of the rise in inequality was explained by differences between racial groups and how much was explained by differences within racial groups.

Hero and Levy calculated the Theil Index across households at the national and state level between 1980 and 2010. At the national level, they found that as total inequality grew dramatically, the between-race share of inequality rose slightly. That is, overall, the rise in inequality left racial inequities intact. While the class-based measure—within-group inequality—grew faster than the race-based measure, the data suggest that the post-racial narrative is incorrect. A rise in class inequality has not diminished the effects of racial group inequality. On the contrary, race-based inequality may even be rising. These trends are identical at both the federal and state levels.

Understanding the racial structures that underlie economic inequality has profound implications for politics and policy. The persistence of between-racial-group inequality in the United States is a crucial fact when understanding how racial tensions can influence politics. Furthermore, it challenges the perception that economic inequality and racial inequities are distinct and easily separable. These findings provide context for researchers and policymakers dealing with inequality to direct their work appropriately.

Article source: Hero, Rodney E., and Morris E. Levy. “The Racial Structure of Economic Inequality in the United States: Understanding Change and Continuity in an Era of ‘Great Divergence”, Social Science Quarterly, Vol 97, no 3, (2016): pp. 491–505.

Featured photo: cc/(Cyril Hehir, photo ID: 941230262, from iStock by Getty Images)