The voices of Urban Institute's researchers and staff
March 20, 2017

Structural racism places the burden of proposed budget cuts on people of color

President Trump’s budget proposal released last week seeks to pay for an increase in defense spending by dramatically reducing discretionary domestic expenditures, a category that includes most of the social support and workforce development programs that help low-income people support their families and provide them the resources to get ahead in life. 

In this “skinny” budget, the Trump administration proposes to reduce funding for Job Corps and state and local job training efforts and seeks to eliminate several programs assisting community-based organizations that assist low-income people. The budget is silent on several public assistance programs, but more cuts are likely to come later.

On its surface, these policy changes would appear to be race neutral, because they don’t seem to target particular communities or demographic groups. Instead, these policies seek to help people based on income, job status, or assets. But due to the circumstances in which many people of color find themselves because of structural racism, these budgetary shifts will disproportionately affect communities of color.

Who receives public benefits, and why?

While the skinny budget does not talk about several public benefit programs that help individuals, figures on receipt of these programs is indicative of the differing situation of people of color versus others in the United States. While African Americans are 13 percent and Hispanics are 17 percent of the US population, respectively, among 2015 recipients of benefits from Temporary Assistance to Needy Families, 29 percent were African American, and 37 percent were Hispanic. Twenty-six percent of 2015 Supplemental Nutrition Assistance Program recipients were African American, and 11 percent were Hispanic. That people of color are more likely to be in these programs stems from them being less likely to have jobs that pay enough to support their families, but it is not for lack of trying.

The proportion of people of color looking for or holding jobs, by gender, shows that eagerness to work is similar across racial groups in today’s economy. But the compensation and stability of employment varies significantly, with African American and Hispanic men who work full-time earning only 74 percent and 69 percent of their white counterparts, respectively.

People of color also tend to be more concentrated in service occupations subject to more variable hours and greater job turnover. When lower earnings are combined with more unemployment, the result is higher poverty rates and more need for assistance to provide for family well-being.

What drives economic inequity?

Discrimination in the labor market has resulted in the exclusion of African Americans and Latinos from many good job opportunities, even when they are as qualified as white applicants. Occupational segregation has also contributed to these groups being disproportionately concentrated in jobs that do not provide wealth-producing benefits, such as retirement savings, paid leave, health and disability insurance, and education benefits.

When work hours shrink or jobs disappear, families of color have fewer resources to fall back on. Research contradicts the premise that lower levels of economic gains for families of color compared with white families are because of individual deficits or a lack of personal responsibility. A long history of policies, regulations, court rulings, and institutional practices have used race to convey economic advantages to white Americans while undermining economic gains by people of color over US history.  

More recent policies such as redlining and racially restrictive covenants used by the Federal Housing Administration restricted loans to families in neighborhoods with predominantly people of color and prevented the sale of white-owned homes to African Americans. More recently, communities of color were targeted by predatory lenders to receive subprime loans even when they qualified for prime loans, leading to the loss of their homes or a substantial share of their net worth.

When people of color propel themselves along the path for achieving the American Dream, even in the face of such systemic barriers, the economic return is substantially less than that for white people. For instance, white adults who don’t graduate from high school, have children before marriage, and don’t work full time still enjoy much greater median wealth than comparable African American and Latino adults. These same white adults often have more wealth than African American and Latino families who have married and completed some college and about the same wealth as families of color with a full-time worker.

A common misperception is that people of color are not sufficiently knowledgeable or responsible with money, and therefore the racial disparity in homeownership and wealth is because of conspicuous consumption on their part. Research indicates that this, too, is a myth. African American households spend less money than white households with comparable incomes, yet white households still possess greater wealth.

Developing and modifying social support programs in an equitable way requires a willingness to confront a legacy of structural racism and the consequent inequity in access to economic and social mobility.  

Copies of U.S. President Donald Trump's overview of budget priorities for FY2018, titled "America First: A Budget Blueprint to Make America Great Again." are put on display at the Government Publishing Office (GPO) and the Office of Management and Budget, on March 16, 2017 in Washington, DC. Photo by Mark Wilson/Getty Images.

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