Metro area unemployment hits communities of color hardest, puts state’s long-term growth at risk

October 27, 2011

Racial disparities in employment are widespread and systemic. It’s true across the country, but it is particularly true for the Twin Cities, where black unemployment hit 21 percent in 2010, more than triple the rate for whites, according to a recent report from the Economic Policy Institute (EPI). The Twin Cities ranked second worst among 29 large metropolitan areas in black-white unemployment disparities in 2010, according to the EPI report. And although Twin Cities Hispanic unemployment was relatively low compared to the rate in other major metropolitan areas, it was still nearly double the white unemployment rate, a separate EPI study found.

People of color are a growing part of the state’s population, and failure to address underlying causes of these significant disparities puts Minnesota’s prosperity at risk.

The problem is in part an educational issue. The achievement gap between white students and students of color is well documented in Minnesota – and research finds that individuals with less education are more likely to be unemployed. However, employment disparities exist even when accounting for educational attainment. For example, for Minnesotans under age 35, blacks without a high school diploma had an unemployment rate of 59 percent in 2009, nearly triple the 22 percent rate for whites without a diploma.

We were glad to see a panel at the recent 27th Annual Conference on Policy Analysis shine a spotlight on racial disparities in unemployment. It’s everyone’s problem.

Panelist Carolyn Roby, vice president for Wells Fargo Foundation Minnesota, said racial disparities exist at every educational level. “It’s not enough to say that education is the answer,” she said. “We are leaving talent and potential on the table, untapped.”

Roby urged people to address the impact of “unexamined internal bias.” People need to  become more aware of their own biases, and then examine their impact on hiring and promotion decisions, she said.

Panelist Luz Maria Frias, St. Paul’s director of human rights and equal opportunity, raised several issues concerning racial disparities in employment. One was the issue of long-term unemployment. Communities of color are not only disproportionately unemployed, they tend to be unemployed for a longer period of time, Frias said. One way of helping overcome unemployment disparities would be to make it illegal for employers to screen out applicants with a history of long-term unemployment. Excluding them from the applicant pool adds to a vicious unemployment cycle.

Frias also supported policies making it illegal for employers to screen out candidates with criminal records. The legislation, called “Ban the Box,” refers to the part of employment applications that applicants check off if they have criminal histories.

Minnesota was the first state to pass Ban the Box legislation that applies to hiring public employees. The Second Chance Coalition is working to expand it to private sector employers, too.

Criminal history screening perpetuates racial employment disparities. People of color are involved disproportionately with the criminal justice system. As the Organizing Apprenticeship Project explains in its Legislative Report Card on Racial Inequity, those criminal justice disparities are rooted in unequal disciplinary action between white youth and youth of color for similar crimes.

Business, political and community leaders can pursue multiple avenues to address employment disparities. Reducing educational disparities is one step. But eliminating employment barriers that put communities of color at a disadvantage and being vigilant and courageous in addressing internal biases are also important. Such approaches will help ensure equal opportunities for all and help build stronger communities.

-Scott Russell


New studies tell a familiar story: Racial disparities in assets

October 19, 2011

Two new reports from a national think tank look at financial security and opportunity in Minnesota, and find that Minnesota as a whole does better than the national averages, but worse than national averages when it comes to communities of color. Unfortunately, the story of Minnesota’s deep racial disparities is a familiar one – one you’ve heard from us most recently in our blog on census data on incomes and poverty.

CFED, the Corporation for Enterprise Development, is a leading national think tank on asset development and economic opportunity. Its work is built on the idea that income is necessary for families to get by, but assets are crucial for families to get ahead. CFED finds that 25.9 percent of households nationwide are in “asset poverty,” meaning they do not have enough savings or wealth to meet their basic needs in the event of job loss or other emergency.

CFED’s new Assets & Opportunity Profiles for Minneapolis and Hennepin County and St. Paul and Ramsey County find that Minnesota does better than the national average, but the figures for Minnesota’s communities of color are shocking, and are worse than the national figures. While 20.7 percent of all Minnesota households are asset poor, 58.5 percent of black Minnesotans, 42.0 percent of Latino Minnesotans, 21.7 percent of Asian Minnesotans and 43.3 percent of Native Americans in Minnesota are asset poor. Minnesota’s communities of color are also less likely to access higher education and own their homes.

While low-income households are more likely to be asset poor, the issue goes well up the income scale. Nearly one-quarter of households with incomes of $37,741 to $59,604 live in asset poverty. When families are asset poor, they have fewer opportunities to move up financially through education, home ownership, or entrepreneurship, and are less able to provide the stable environment that supports their children’s education. Lack of family economic security is a threat to the economic vitality of our communities and state.

I had the opportunity to learn more about these reports at a forum held Tuesday by CFED in partnership with Northwest Area Foundation, Legal Services Advocacy Project and the Greater Twin Cities United Way. In addition to providing analysis of assets and opportunity in our area, CFED and other participants talked about policies that can support Minnesota families to learn, earn, save, invest and protect. Minnesota has done well in some of these policies, including a strong state Earned Income Tax Credit and partnerships that promote its use and connections to free tax preparation, financial education and access to mainstream banking services.

Public policies play a role in determining who has the opportunity to build assets, as do employers, financial products, incentives and education. However, CFED finds that our nation’s approach to asset building is “upside down” because it provides the greatest support for asset building to those with the highest incomes, primarily through the tax code. In FY 2009, the federal government provided an average of $95,820 to support asset building by households with incomes over $1 million, yet only provided an average of $4 for asset building to households with incomes of $10,000 to $15,000.

As we’ve seen in our analysis of this year’s budget outcomes, this is an area where the state has reduced its investment. For example, state funding was eliminated for Family Assets for Independence in Minnesota (FAIM). Low-income participants in FAIM get their own savings matched with state and federal funds to help obtain post-secondary education, purchase a home, or start a new business. The loss of nearly $500,000 in state funds in FY 2012-13 will likely mean the loss of a matching grant from the federal government.

The participation in Tuesday’s forum of elected officials at the city, county and state levels, and other community partners, is a good sign. But we can – and must – do better. In order for our region and our state to be economically competitive in the future, all Minnesotans must have the opportunity to gain the education and economic stability that enables them to thrive and make their greatest contribution in the workforce.

-Nan Madden

Racial disparities grow in Minnesota as poverty increases, household income declines

September 22, 2011

Earlier this month, we learned the distressing (but not surprising) news that poverty is increasing and median household income is declining in Minnesota. The U.S. Census is out with another report showing even worse news. Minnesota has an unfortunate history of racial disparities, with communities of color experiencing worse economic outcomes than their white counterparts. Thursday’s release of the American Community Survey (ACS) reveals that racial disparities in the state continue to grow.

In 2010, 11.6 percent of Minnesotans were living in poverty, up significantly from 9.5 percent in 2007 (just before the last recession). This overall number hides the much deeper levels of poverty within Minnesota’s communities of color. In 2010, 17.8 percent of Asians were living in poverty, as were 24.4 percent of Latinos and 37.2 percent of blacks. Although poverty among white non-Hispanic Minnesotans increased from 7.1 percent in 2007 to 8.4 percent in 2010, poverty among American Indians increased from 30.7 percent to 39.5 percent.

Income disparities also continue to persist in the state. In 2010, the median household income for the Latino, black and American Indian communities fell significantly below the statewide median household income for whites. And those gaps are growing. Among white non-Hispanic households in Minnesota, median income fell by five percent between 2007 and 2010. However, black households experienced a 16 percent drop in median income and American Indian households a 22 percent drop. In 2010, the median household income for both of these communities stood near $27,000, less than half the statewide median of $55,459.

Minnesota tends to come out ahead when we examine national averages, but it is shocking to see how our communities of color are faring compared to other states. The poverty rate among white Minnesotans remains significantly below the national average for whites, while the poverty rate among blacks, Asians and American Indians is significantly higher than the national average for these communities. For example, among blacks and American Indians, Minnesota’s poverty rate is at least ten percentage points higher than the national average.

The persistent disparities between whites and people of color in Minnesota contradict our most deeply held values. Minnesotans believe that hard work should pay off, that people who work full time should be able to support their families, and that everyone who is willing to work should have the opportunity to succeed. The levels of economic inequality we are facing is not simply the inevitable result of a bad economy. The problem has been compounded by poor policy choices that have increased the challenges facing already-struggling families. The new data again put the pressure on state and national leaders to address racial disparities.

-Christina Wessel

Minneapolis unemployment rates show highest racial disparity in the nation

June 10, 2010

A new study released by the Economic Policy Institute (EPI) finds that blacks in Minneapolis are 3.1 times as likely to be unemployed as whites – the worst level of disparity among the 50 largest metropolitan areas in the nation. These findings are consistent with data from the U.S. Bureau of Labor Statistics that show that last year, “Minnesota had the nation’s second largest gap between unemployment rates for whites and African-Americans and between whites and Latinos” (MPR, May 24, 2010).

In a state that prides itself on being above average, the reality of significant disparities among Minnesotans is too often overlooked. It is already widely known that Minnesota has one of the largest educational achievement gaps in the nation. But the gaps in educational attainment don’t explain the wide disparities in unemployment. EPI found that among blacks and whites with similar levels of education, blacks were still much more likely to be unemployed in Minneapolis.

It is more than just educational differences that is making it difficult for African-Americans to find employment in our state. According to U.S. Census data, Minnesota remains a very white state. Couple a largely homogenous population with significant cutbacks in public services for vulnerable populations, and experts say minority communities face signficant challenges. It’s likely the unemployed are finding it difficult to get adequate and appropriate job training, lack the social connections that are so important in job hunting during a recession, and are coming up against prejudice during the hiring process.

This isn’t just a moral problem, it’s also an economic problem. Remember, Minnesota’s demographics are changing. In the coming years a large segment of our workforce will be retiring, and the future workforce will be far more diverse. Ensuring that all Minnesotans succeed in school and succeed in work is vital for the future economic success of the state. Business leaders agree. The Itasca Project, an alliance of private sector CEOs and public officials, has been examining strategies to ensure Minnesota’s future economic competitiveness. One of their priorities is addressing disparities in the state. 

If we are going to build a state that will thrive in the coming decades, we need to take a look around to make sure everyone in the state is ready to contribute.

-Christina Wessel

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