Study: Louisiana economy 7th worst for racial equality
21st June 2022 · 0 Comments
By Fritz Esker
Contributing Writer
Louisiana’s economy is the seventh worst for racial equality in the United States (including the District of Columbia), according to a new WalletHub study.
The WalletHub study based its overall economic racial equity rankings based on a number of categories. Louisiana placed 49th in median annual income, 39th in labor-force participation rate, 34th in unemployment rate, 45th in poverty rate, 46th in homeless rate, and 36th in share of executives.
“Unfortunately, these findings do not surprise us,” said Judy Reese Morse, president and CEO for the Urban League of Louisiana. “Decades of racial and systemic oppression have prevented many Black and Hispanic/Latino people from accumulating wealth at the same rate as their white counterparts, resulting in significant racial disparities across key economic outcomes.”
Alaska’s economy ranked the best in the study for racial equality, and the District of Columbia ranked the worst.
A 2020 study from the Brookings Institute (www.brookings.edu/blog/up-front/2020/02/27/ex-amining-the-black-white-wealth-gap) stated a typical white family’s net worth is nearly ten times greater than a typical Black family. A recent study in Coqual said Black Americans hold only 3.2 percent of executive or senior-level positions despite making up 13 percent of the U.S. population.
Experts quoted in the WalletHub study gave different opinions as to why the United States has a problem with racial gaps in economic equality.
“Two of the most proximate factors include substantially higher rates of homeownership among whites than Blacks and Hispanics and substantially lower levels of student debt among whites than Blacks and Hispanics,” said John L. Campbell, a professor emeritus in the Department of Sociology at Dartmouth College.
Campbell also said generational wealth plays a part. People accumulate wealth by owning homes, but young people who come from a more affluent household are likelier to receive some financial assistance in buying their first home from their parents (e.g. parents covering the downpayment).
The United States’ history of systemic racism exacerbates these issues.
“The racial wealth gap has historical roots, but grew larger over time as de facto segregation and discrimination, along with racist attitudes and de facto racist practices undermined the ability of African Americans to build wealth,” said Kent Jones, a professor of economics at Babson College.
The study’s experts also had different ideas on how to close the racial economic equality gap. David Skidmore, professor of political science at Drake University, said a first step would be to sharply raise inheritance taxes. This step “…would curb the growing concentration of wealth in the hands of a few, while also raising revenue to fund broad social programs that enhance the opportunity for those at the bottom.”
Herman Mark Schwartz, a professor of politics at the University of Virginia, echoed Skidmore’s calls for tax reform. He said the tax system should stop favoring wealth-income over wage-income.
Schwartz said policies that would help close the economic racial equality gap could also reduce income inequality among the white population. He noted the gap between the top 20 percent of white households and the bottom 50 percent is almost as large as the racial wealth gap.
“The kinds of policies that would help first and foremost are policies that stabilize incomes and employment across the economic cycle,” said Schwartz. “The Federal Reserve Bank should thus try harder than it has in the past to prioritize full employment over keeping inflation at what have been historically low levels until the transient COVID/Ukraine war inflation shock.”
Antonio Saravia, associate professor of economics at Mercer University, agreed policies that increase economic equality for all will benefit people of color.
“States or countries that have made important and sustainable progress toward closing racial gaps would be those that advance economic freedom and protection of civil and property rights for all without targeting specific groups. On the other hand, states or countries that use aggressive policies of affirmative action may reduce gaps in the short run but that progress will not be sustainable in the long run,” said Saravia.
Locally, the Urban League of Louisiana launched the SEE CHANGE initiative in early 2021. It began with an 18-month planning phase designed to establish a coordinated regional implementation strategy for addressing racial disparities in homeownership, business ownership, and income/wages.
“Data shows that focusing on these three levers is the most impactful way to close the wealth gap,” said Morse. “We believe that this initiative can become a model for other places in Louisiana as we strive to close the racial wealth gap throughout the state.”
This article originally published in the June 20, 2022 print edition of The Louisiana Weekly newspaper.
