Prosperity Watch Issue 48, No. 4: Racial Disparities Rooted in History, Hold Back North Carolina's Economy

From the mountains to the coast, poverty-level incomes are a harsh reality for more than 1.7 million North Carolinians who find affording the basics such as rent, food, and utilities to be a daily challenge. The depth of economic hardship in the state is closely tied to race—it always has been in North Carolina where the state’s economy was built on free labor through slavery and sharecropping followed by decades of low-cost labor and policies rooted in discrimination. The legacy and ongoing pattern of economic exclusion keeps us from achieving a better future.

North Carolina is grappling with stark racial disparities. The total number of non-Hispanic whites living in poverty is greater than any other group in North Carolina, but this group makes up a relatively small share of the state’s white population. And while the number of poor people may be smaller in communities of color, they make up a bigger share of those communities. For example, in 2013, 32.5 percent of Latinos, 28.9 percent of American Indians, and 28 percent of African Americans lived in poverty in 2013 compared to 14.4 percent for Asian Americans and 12.3 percent of whites.

Racial disparities in income not only harm people of color but have consequences for all of us because inequities keep the economy from reaching its full potential. North Carolina’s Gross Domestic Product—a measure of all goods and services produced in the state—would have been $63.53 billion higher in 2012 if there had been no gaps in income or employment by race. So clearly, bringing down poverty among people of color is an economic imperative.

To match the state’s white poverty rate of 12.3 percent, approximately 464,000 North Carolinians of color would have to be lifted above the poverty line, as illustrated in the chart below. That’s more people than the total population of Raleigh, the state’s capitol. However, to truly build an inclusive economy requires entirely eliminating poverty among all communities.

While struggle and hardship has grown for all racial groups since 2007, the Great Recession and its aftermath made worse the vast racial disparities in economic conditions and opportunities that have persisted throughout the nation’s history. Since 2007, poverty rates in North Carolina have increased by 6.7 percentage points for Latinos, by 4.8 percentage points for American Indians, and by 3.3 percentage points for African Americans, compared to 2.8 percentage points for Asian Americans and 2.7 percentage points for whites.

Communities of color have historically lacked equal access to jobs and been paid lower wages than whites. They have also lived disproportionately in areas that often had less access to high-quality public and private investments, like schools and businesses. Other previous policy decisions—such as government-sanctioned exclusion from buying homes in certain neighborhoods and the initial exclusion of people of color from the GI bill—also resulted in fewer pathways to middle-class earnings for people of color.

America’s timeline of institutionalized and systemic racism is both haunting and ongoing, as summarized by Ta-Nehisi Coates in his groundbreaking piece, The Case for Reparations.

“Two hundred fifty years of slavery. Ninety years of Jim Crow. Sixty years of separate but equal. Thirty-five years of racist housing policy. Until we reckon with our compounding moral debts, America will never be whole.”

North Carolina needs policies that create equal opportunity, rebuild entryways to expand the ranks of the middle class, and ensure that prosperity is broadly shared so that all North Carolinians can reach their potential. Until local, state, and federal lawmakers fix the state’s and the nation’s broken economic model, large numbers of people from Murphy to Manteo will wake up to poverty, struggle to put food on the table, and be unable to afford the basics like rent and child care.

Lawmakers must also address other socioeconomic issues to improve broader economic security and reduce racial disparities, such as fixing the affordable housing crisis, ending predatory lending, eliminating the school-to-prison pipeline, reversing unfair sentencing laws and the rise in state prison populations, and halting the attacks on voting rights.


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