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Communities of Color Hardest Hit, Slowest to Recover from Recession

Targeted Jobs Policies Are Needed to Close Economic Gaps

SOURCE: AP/Cliff Owen

Rep. James Clyburn (D-SC) says that communities of color have yet to see any real benefits from the economic recovery, adding that the gains within the financial and investment sectors have failed to trickle down.

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The Great Recession had dire consequences for Americans’ economic well-being. Communities of color in particular ended up with much larger losses during the recession than whites and they were more vulnerable as the economy moved through the second year of its recovery. “The State of Communities of Color in the U.S. Economy,” a new report by the Center for American Progress, explores the racial and ethnic economic gaps in the U.S. economy during and after the recession.

According to the report, communities of color were hit harder by the economic downturn and have been slower to recover than whites. Unemployment rates rose and homeownership rates fell faster for African Americans and Latinos than any other group. According to the report, the unemployment rate for African Americans was 15.8 percent in the last quarter of 2010. It was 12.9 percent for Latinos. The homeownership rate was 45 percent for African Americans and 47 percent for Hispanics, compared to 74.7 percent for whites.

Data for other population groups tell a similar tale. An estimated 41.7 percent of Native Americans live in poverty, said Peter Morris, director of strategy and partnerships at the National Congress of American Indians, in a recent press call.

“Native Americans have the worst employment statistics among communities of color and reservation poverty rates are three times the national average, with estimates around 41.7 percent living in poverty,” said Morris.

The data for Asian Americans suggest widespread economic vulnerabilities as well. The employment levels and unemployment rates of Asian Americans and whites are comparable but the poverty rate and the share of households without health insurance are much higher for Asian Americans than whites. The poverty rate for Asian Americans increased by 2.3 percent from 2007 to 2009 to its current level of 12.5 percent.

Certain segments of the Asian population have fared much worse than others. For instance, according to Lisa Hasegawa, executive director at the National Coalition for Asian Pacific American Community Development, around 40 percent of the Cambodian community in California lives in poverty. The bottom line is that large shares of the Asian-American community toil in jobs that pay little and offer few benefits, as is also the case for many other communities of color.

A focus on average job growth is not enough to solve these problems. Policymakers need to target job growth in communities of color and help to improve job quality. Otherwise communities of color will continue to lag economically behind whites even as the economy and the labor market grow.

In the press call, Christian E. Weller, Senior Fellow at the Center for American Progress and the report’s main author, discussed the long-term and short-term policy strategies that could improve the economic state of communities of color. These policies are targeted toward raising incomes and wealth among these communities.

According to Weller, short-term policies should focus on easing the eligibility requirements and increasing the benefits for unemployment insurance, which provides critical assistance to unemployed individuals and their families while they find a new job. This is important for communities of color, particularly Hispanics and African Americans, because they face higher levels of unemployment and significantly lack wealth.

Long-term policies should center on stimulating job growth, particularly in industries and regions where communities of color are disproportionately represented. Policies should improve the quality of jobs and make it easier for workers to join unions. Predatory financial practices should also be eliminated.

The need for targeted and effective policies for communities of color has only increased. In the press call, Assistant Democratic Leader James E. Clyburn (D-SC) indicated that communities of color have yet to see any real benefits from the economic recovery, adding that the gains within the financial and investment sectors have failed to trickle down. Rep. Clyburn called on President Obama and Congress to broadly incorporate a "10-20-30" policy, in which at least 10 percent of any recovery efforts are directed into communities with 20 percent poverty rates for 30 years.

“The president needs to seriously consider this policy in order to spur not only job growth, but full economic recovery in communities of color,” he said.

A full recovery that begins to close the economic gap between communities of color and whites will not happen without targeted policies. Leaving the economy to its own devices will maintain the economic divisions that have persisted for too long.

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Philippe Nassif is an Intern for Ethnic Media at the Center for American Progress.

To speak with our experts on this topic, please contact:

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