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The State of Communities of Color in the U.S. Economy

Report looks at how well communities of color are faring in 2011

WASHINGTON - 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
  • 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.

Listen to today’s press call here. (mp3)

Watch the Ask the Expert video featuring Christian E. Weller here.


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