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Examining U.S. Economic Racial Inequality by State

By

Ana Hernández Kent
Monday, August 17, 2020

Recent events have brought racial inequities to the forefront of many conversations. At the Center for Household Financial Stability, we have documented underlying racial economic disparities that may be contributing to heightened tensions.

As the dialogue continues, you may be wondering about the magnitude of economic racial gaps in your state.

In comparing state-level racial socioeconomic well-being trends—focusing on median household income, poverty status and health insurance—to national benchmarks, three key findings emerged:

  1. Median Black/white income gaps vary considerably, but in all states white median household income is greater than Black median household income.
  2. Racial poverty gaps and poverty rates fluctuated widely (e.g., Puerto Rico had a Black-white gap of 6 percentage points but high poverty, while Maryland had a gap of 7 percentage points but fairly low poverty).
  3. Across states, racial health insurance gaps were comparatively smaller; yet, Black people had lower health insurance rates than whites in all states.

Large Racial Income Gaps around the Country

Nationally, Black households earned 61 cents per $1 of white household median income in 2018.Using IPUMS USA and the 2018 American Community Survey. White median household income was about $67,900 and Black median household income was approximately $41,500. Black/white median household income gaps ranged from 32 cents per $1 (District of Columbia) to 87 cents per $1 (Hawaii and Maine).

The national median of the racial wealth (what families own less than what they owe or their net worth) gap was even larger, with a national ratio of 10 cents per $1—a gap largely unchanged in the past three decades.Using the 2016 Survey of Consumer Finances. This survey does not allow for geographic disaggregation.

Black Household Median Income Per $1 of White Household Income

Black Household Median Income Per $1 of White Household Income
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NOTE: Heavier shading indicates a smaller gap, or less inequality. States/areas too geographically small to show an estimate are as follows: Hawaii, $0.87; Vermont, $0.65; Massachusetts, $0.62; Connecticut, $0.57; Rhode Island, $0.69; New Jersey, $0.59; Delaware, $0.63; Maryland, $0.71; and District of Columbia, $0.32. State estimates with a margin of error larger than 30% are not provided: New Hampshire, South Dakota and Wyoming.

Racial Poverty Gaps and Actual Poverty Rates Vary Widely

The U.S. Census Bureau's poverty threshold for a family with two adults and one child was $20,212 in 2018. This is the official measurement of poverty used by the federal government. Poverty rates and racial poverty gaps also fluctuated enormously depending on the area of the country.

For example, Maryland’s racial poverty gap was the smallest of all states, at 7 percentage points. Both white and Black people in Maryland had low levels of poverty (6% and 13%, respectively) compared to the national rates.

A small gap is not necessarily indicative of lower poverty overall, however. For example, Puerto Rico, had a smaller racial poverty gap at 6 percentage points, but higher poverty rates for both white and Black people (39% and 45%, respectively). While not a state, Puerto Rico is the most populated U.S. territory, with over 3 million American residents.

Wisconsin’s racial poverty gap was the largest, at 23 percentage points. National data from 2018 indicates 9% of white people were in poverty, compared to 22% of Black people—a gap of 13 percentage points.

Racial Poverty Gap in Percentage Points (Black Minus White Poverty Share)

Racial Poverty Gap in Percentage Points (Black Minus White Poverty Share)
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NOTE: Heavier shading indicates greater inequality. States/areas too geographically small to show an estimate are as follows: Massachusetts, 11 percentage points; Rhode Island, 10; Delaware, 12; and District of Columbia, 19. State estimates with a margin of error larger than 30% are not provided: Alaska, Hawaii, Idaho, Maine, Montana, New Hampshire, North Dakota, Oregon, South Dakota, Utah, Vermont and Wyoming.

Racial Health Insurance Gaps Present in All States

Gaps were present in all states that had data available; 11 states and Puerto Rico did not have sufficient data on this topic. In general, racial health insurance gaps were smaller than poverty gaps, ranging from 0.4 percentage points (Delaware) to 14 percentage points (North Dakota). The gap in the majority of states was less than 4 percentage points. Notwithstanding, a larger share of Black people were uninsured than whites in every state.Using IPUMS USA and the 2018 American Community Survey.

Nationally, 6% of whites did not have health insurance in 2018 compared to 10.2% of Black people.

Racial Gap in Health Insurance (Black Minus White Uninsured Shares)

Racial Poverty Gap in Percentage Points (Black Minus White Poverty Share)
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NOTE: Heavier shading indicates greater inequality. States/areas too geographically small to show an estimate are as follows: Delaware, 0.4 percentage points; and District of Columbia, 3. State/area estimates with a margin of error larger than 30% are not provided: Alaska, Hawaii, Idaho, Maine, Montana, New Hampshire, Puerto Rico, Rhode Island, South Dakota, Utah, Vermont and Wyoming.

Disparities in health insurance can contribute to both racial health and wealth gaps. Untreated or undiagnosed health issues can lead to more expensive, larger problems later in life.Dunwoody, C. J., Krenzischek, D. A., Pasero, C., Rathmell, J. P., & Polomano, R. C. (2008). Assessment, physiological monitoring, and consequences of inadequately treated acute pain. Pain Management Nursing, 9(1), 11-21. In 2019, individuals without health insurance were more than twice as likely to forgo medical care as those with health insurance (48% versus 22%, respectively)Using the 2019 Survey of Household Economics and Decisionmaking., and Black people are less likely to have health insurance than white people.

In terms of the current pandemic, nearly equivalent shares of Black and white people (82% versus 83%, respectively) say they would contact a doctor if they had COVID-19 symptoms.Using the April 2020 supplement of the Survey of Household Economics and Decisionmaking. Thus, the heavy and disproportionate loss of human life due to COVID-19 in Black communities appears unrelated to the intent to seek medical care, and likely reflects other racial inequities, including: access to care, quality of care and underlying conditions such as cardiovascular disease, diabetes and respiratory illness.See Laurencin, C. T., & McClinton, A. (2020). The COVID-19 pandemic: a Call to Action to Identify and Address Racial and Ethnic Disparities. Journal of Racial and Ethnic Health Disparities, 1-5.

In noting the socioeconomic indicators of median income, poverty rates and health insurance rates, I found that white people had more favorable outcomes than Black people in every state.Using IPUMS USA and the 2018 American Community Survey. These economic indicators can shed light on individuals' access to social and economic resources. This research supports the work of the Community Development team at the Federal Reserve Bank of St. Louis, which continues to promote racial equity and a deeper understanding of economic racial disparities.

Endnotes

  1. Using IPUMS USA and the 2018 American Community Survey. White median household income was about $67,900 and Black median household income was approximately $41,500.
  2. Using the 2016 Survey of Consumer Finances. This survey does not allow for geographic disaggregation.
  3. Using IPUMS USA and the 2018 American Community Survey.
  4. Dunwoody, C. J., Krenzischek, D. A., Pasero, C., Rathmell, J. P., & Polomano, R. C. (2008). Assessment, physiological monitoring, and consequences of inadequately treated acute pain. Pain Management Nursing, 9(1), 11-21.
  5. Using the 2019 Survey of Household Economics and Decisionmaking.
  6. Using the April 2020 supplement of the Survey of Household Economics and Decisionmaking.
  7. See Laurencin, C. T., & McClinton, A. (2020). The COVID-19 pandemic: a Call to Action to Identify and Address Racial and Ethnic Disparities. Journal of Racial and Ethnic Health Disparities, 1-5.
  8. Using IPUMS USA and the 2018 American Community Survey.
ABOUT THE AUTHOR
Ana Hernández Kent 

Ana Hernández Kent is a policy analyst for the Center for Household Financial Stability at the Federal Reserve Bank of St. Louis. Her research interests include economic disparities and opportunity, class and racial biases, and the relationship between psychological factors and the household balance sheet. Read more about Ana’s research.