The protests sparked by the killing of George Floyd by Minneapolis police have opened a broader discussion about racial inequality in the United States.
The U.S. civil rights movement in the 1960s was a watershed when it came to formal de-segregation in housing, education, the workplace and public spaces. But more than a half century later, stark divisions remain in how the benefits of a $20 trillion economy are distributed among the largest racial and ethnic minorities and the country’s white majority.
An array of government programs has attempted to address the issue, including anti-poverty efforts, affirmative action to boost college enrollment, and preferences in contracting for minority-owned businesses.
But black and Latino families on average continue to earn less, have higher unemployment, and are harder hit when economic shocks like the coronavirus hit.
“The downturn has not fallen equally on all Americans, and those least able to shoulder the burden have been the most affected,” Federal Reserve chair Jerome Powell said this week.
That gap is most apparent in family net worth estimates. Black and Hispanic families accumulate proportionately less in real estate, stocks, business assets and other forms of wealth than white families.
Graphic – After decades, wealth gap remains: https://fingfx.thomsonreuters.com/gfx/editorcharts/jbyvrlaxave/eikon.png
Over time, that creates lower inheritances for children and more constraints when it comes to funding education or training – a dynamic that can help perpetuate the problem.
Some Fed officials have pointed to deep-seated racism as drag on the U.S. economy.
“By limiting economic and educational opportunities for a large number of Americans, institutionalized racism constrains this country’s economic potential,” Atlanta Fed President Raphael Bostic said on Friday, calling for an end to racism as both a moral and economic imperative.
“The economic contributions of these Americans, in the form of work product and innovation, will be less than they otherwise could have been. Systemic racism is a yoke that drags on the American economy.”
The lack of progress after so many decades has led some to argue that a massive generational transfer, sometimes referred to as reparations, is needed to undo a legacy that has roots in slavery, but continued to compound through the era of formal segregation and beyond.