Until last week, Minneapolis was known as one of the country's most livable cities, lauded for its multiculturalism and vibrant neighborhoods. But the nationwide protests that have followed George Floyd's death at the hands of a Minneapolis police officer are also drawing attention to the stark socioeconomic differences between black and white Americans.
Despite its progressive image, Minneapolis struggles with some of the nation's greatest racial inequities, including wide gaps in wealth and income that effectively exclude many of its black residents from the city's prosperity.
Although the average Minneapolis household earns almost $64,000, for example, blacks on average earn less than half what white households do. By that measure alone, Minneapolis is one of the most unequal cities in America. But black residents are also one-third as likely to own their homes as whites, and the jobless rate for blacks in the Twin Cities has long hovered well above that for white workers.
"All that systemic racism that people of color have experienced in that city is coming forth," said Jeremie Greer, a native of neighboring St. Paul and co-executive director of Liberation in a Generation, an organization advocating for economic policies to reduce racial disparities.
Minneapolis and other U.S. cities suffer from racial inequities that "can be suffocating for black and brown people," he added. "If we don't fix the systems of systemic racism, we will see bursts of anger like this over and over and over again. It'll be justifiable anger."
Indeed, the protests that have spread across the U.S. underscore the precarious financial lives of people and communities of color in Minneapolis and beyond. Many of the rosy economic figures routinely touted by both Republican and Democratic presidential administrations in recent decades don't reflect the harsher economic reality facing millions of black Americans.
Case in point: Homeownership among black families has fallen to a 50-year low, as many struggled to regain their footing during the tepid and uneven recovery that followed the Great Recession.
That troubling backdrop has been worsened by the devastating economic fallout from the coronavirus. Already, there's evidence that black and Hispanic workers are and losses to of income than white workers, which threatens to further undermine their toehold in the economy.
"Race and place"
To be sure, economic growth in recent years has bolstered the fortunes of millions of Americans — including people of color — lifting the standard of living for many middle-class households. But those gains haven't overcome the obstacles for the 24 million Americans who live in high-poverty neighborhoods (defined as areas where more than 3 in 10 residents live below the official poverty line).
As a result, the number of high-poverty neighborhoods has almost doubled since 1980, according to a new study from the Economic Innovation Group, a Washington think tank focused on boosting economic growth. These neighborhoods often lack access to good jobs and other markers of opportunity, making it harder for residents to climb the socioeconomic ladder. About 7 in 10 residents in these neighborhoods are either black or Hispanic, the study found.
"The simple reality is you can't disentangle place and race because of the nature of how communities evolved over time," said John Lettieri, CEO of the Economic Innovation Group.
That evolution stems from practices such as "redlining," a form of lending discrimination. Once supported by the U.S. government, redlining effectively, mostly in integrated urban neighborhoods, preventing them from buying a home in certain areas. (The practice is named after the red ink used on maps to outline city neighborhoods considered at high risk of default.)
Redlining was barred by federal law in the 1960s and 1970s, but such racism continues to weigh on black families today. For instance, the segregation created in neighborhoods once subjected to redlining still persists, the National Community Reinvestment Commission found in a 2018 study.
At the same time, America's wealthy communities are pulling ahead, with residents in those areas enjoying the bounty of the past several decades of economic growth, Lettieri said. But it's rare for poor neighborhoods to reverse course and become prosperous.
"High-poverty areas present the most obstacles to the American dream," Lettieri said. "The impact of your surroundings is profound."
Clobbered by downturns
The upshot is this: Whether poor or middle class, college-educated or not, black Americans have far less wealth than whites. Black households were particularly trampled by the recession that followed the 2008 financial crisis. While Americans of all races suffered an overall decline in their median net worth of about 30% during that downturn, black households saw their net worth slump by an additional 20% from 2010-2013, the Federal Reserve has found. White families' worth was unchanged during that time period.
The wealth gap between whites and blacks in the U.S. grew wider between 2013 to 2016, the Fed also found. The gap between white and black median net worth expanded from $132,800 in 2013 to $153,500 in 2016. Although the jobless rate for blacks declined after the recession, it remained higher than for white workers. In the first quarter of 2020, before the virus-induced business shutdowns sent unemployment soaring, the black jobless rate stood at 6.6%, compared with 3.6% for whites.
"We should not be so surprised that we're seeing a repeat of the 2008 recession," said Solana Rice, co-executive director of Liberation in a Generation. "People of color are hit the first and worst — the last in, first out of the economy."
Changing the trajectory of black families will take a concerted effort from stakeholders at local and national levels, experts said. For instance, local laws to encourage new low- and mixed-income housing could provide more choices for families now living in high-poverty neighborhoods. A "liberation economy" would include jobs with livable wages and benefits, according to Liberation in a Generation's platform.
"We're at a moment of needing to reimagine the foundations of this economy," Rice said. "We have had an economy that has been broken for a long time, and broken for communities of color, especially."
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