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According to the Federal Reserve Bank, the average black family holds less than 15% of the wealth of the average white family. While white families have median and mean net worths of $171,000 and $933,700, a black families median and mean wealth is $17,600 and $138,200. Hispanic families also earn substantially less, with a median and mean net worth of $20,700 and $191,200, respectively. A clear racial wage gap exists in the United States. This paper explores the extent to which it affects American society. The studies discussed in this paper show that racial income inequality has a mainly negative effect, as it relates to increased crime rates, poor health among minority groups, and discrimination.
Crime
Income inequality has an effect on crime rates in United States. A study conducted by Judith Blau, The Cost of Inequality: Metropolitan Structure and Violent Crime, analyzes factors related to high crime rates in US cities (1982). These factors include southern location, percentage of blacks, poverty, and racial income inequality. The study found that once the variable of racial income inequality was controlled for, the other factors lost their influence on crime (Blau, 1982). Cities are a good sample for this investigation, as the diversity of a city is unique to that environment. Inhabitants of cities are forced to live in proximity with people of different incomes. Therefore, property crimes and crimes motivated by racial injustice are likely more common in these areas. This correlation does not prove that racial income inequality causes higher crime rates, but it does identify it as a contributor. Thus, indicating that the unbalanced economic system of the U.S. is linked to violence in its society. However, the injured parties in violent crimes are not the only victims of racial income inequality. The perpetrators also suffer the effects of this issue, as evidenced by the racial imbalance in prisons. The data described by Bruce Westerns study Beyond Crime and Punishment, Prisons and Inequality states: White high school dropouts are about 1.5 times more likely to have a job than those who were black , and that 59% of black dropouts in their early thirties have a prison record, while only 14% of white dropouts do (Western, 2007, pg 38-41). Due to their lower employability, it is reasonable that black dropouts are more likely to be sent to prison for committing a crime out of economic necessity. Once released, their employability decreases further due to their prison record, and they are once again motivated to obtain money illegally. This self-reinforcing cycle only strengthens the relationship between income and crime. However, other experts argue that this relationship is ambiguous. A paper titled Does income inequality really increase crime? by Alejandro Corvalana, conducts an analysis of data collected in 37 studies on income inequality and crime around the world (2018. pg 24-25). The study had inconclusive results, but mentioned some cases in which wealth inequality reduced crime. The authors argue that as inequality increases, private protection by the rich increases, which then reduces crime. Although the study did not identify any correlation, most sources that only cover the United States do. This is not surprising, as Americas cultural melting pot is unique to its society. Furthermore, it indicates that the correlation between racial income inequality and crime may not be applicable to every society, but likely is to Americas.
Health
Racial income inequality has detrimental effects on the health of minority groups. In a survey conducted by the study, Racial Differences in Physical and Mental Health: Socioeconomic Status, Stress, and Discrimination, blacks reported lower levels of psychological well-being, higher rates of ill health, and more bed-days than whites. Williams also found that stress caused by the discrimination in the workplace accounted for these racial differences in health. Once race-related stress was controlled for, the mental health of blacks surpassed that of whites. Income discrimination motivates stress and insecurity, further limiting the potential success of minorities. In addition to damaging mental health, income inequality may also be harming physical health. A study titled Racial Segregation, Income Inequality, and Mortality in US Metropolitan Areas’ uses the The 1990 Gino Coefficient and the Dissimilarity Index to assess income inequalitys association with poor health and mortality rates in segregated areas. The study discovered a strong correlation, suggesting that the racial wage gap or its accompanying factors, are harming the health of minorities. A possible explanation is that minorities living in poorer neighborhoods have limited access to medical resources. Furthermore, the mental health problems described in the earlier study, may also take a toll on their physical health. However, not all experts agree. A third study, Income Inequality and Population Health measures the effects of income inequality on other aspects of health (infant mortality rates and life expectancy) and found no effect on these factors. The study does not contradict the findings of the ones mentioned previously, as it does not investigate mental health and mortality rates. However, it does limit the extent to which income inequality is affecting the health of America. Although it may not affect all aspects of health, a correlation between income inequality and poorer health has been identified.
Discrimination
Racial income inequality is a huge part of discrimination in America. This manifests itself through the unequal educational opportunity among races. A study titled Opportunity at the Crossroads: Racial Inequality, School Segregation, and Higher Education in California found that that differences in educational quality begin in high school, as Black and Latino majority schools were found to have lower teacher retention rates, less qualified teachers, and a weaker academic program. Furthermore, the acceptance rate of all ethnic groups for a UC school was higher if they attended a White or Asian majority high school. The study indicates that colleges in California may have a racial bias in their admissions process. This unbalanced educational opportunity only widens the gap over generations. Minorities, who receive poorer incomes than whites, usually cannot afford an equal education. As a result, the employability of minorities diminishes, increasing poverty and leading to crime, as discussed previously. However, even when minorities are as qualified as whites, they do not receive equal job opportunities. Similarly to the racial bias found in UC admissions, a selective bias may also exist for employment. A field experiment conducted by Bertrand and Mullainathan, mailed job applications to Boston and Chicago employers. These applications had equal credentials, but were assigned different names associated with Black or White Americans. The study found that resumes with white sounding names received 50% more callbacks (2004). The results prove that racial discrimination still exists in the US workplace. Minorities are constantly burdened by the negative effects of racial income inequality, and discrimination prevents them from improving their socioeconomic status.
Solution
Although some studies may argue its effects are ambiguous, most studies show that income inequality negatively affects the U.S. If measures to end racial income inequality are not executed, the gap will widen over generations and continue to harm American society. The first step toward income equality is ensuring educational equality by redistributing each states education budget. Currently, the funding of public schools relies on the taxes paid by its surrounding neighborhood; wealthy neighborhoods can pay for better schools. Instead, state taxes should be distributed equally throughout the state, enabling each public school to receive an equal budget regardless of where it is located. Once education in poor neighborhoods is improved, dropout will become less common and crime will be reduced. The health of minorities will also improve, as students will have access to healthier cafeteria food. The next step involves reducing discrimination. Eliminating names from college and job applications would limit the racial bias in admissions or employers. Monetary punishments can also be delivered to workplaces found guilty of discrimination. This would reduce the stress of minorities and improve their health. Furthermore, it would enforce true equality in America.
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