The United States is presently faced with a critical workforce challenge that has important implications for the future well-being of our nation’s families, communities, and businesses: The share of U.S. workers who are African American, Latino, or Native American is rapidly growing, yet disparities persist between the average education and employment outcomes of these populations and those of their White peers. On average, people of color – who comprise the majority of our future workforce – are less likely to be advancing their educations and careers as young adults; earning fewer post-secondary credentials; more likely to experience unemployment; and earning less.
Addressing these disparities is urgent and imperative if the U.S. aspires to sustain its historical economic competitiveness and quality of life. If educators, community leaders, policymakers, and business leaders do not come together to strengthen our education, training, and employment system to produce more equitable outcomes for non-Whites – particularly African American, Latino, and Native American citizens – the U.S. could face widening inequality, a shortage of critical skills, and financial pressures on programs like Social Security and Medicare as fewer workers earn the middle-income wages needed to sustain those programs.
Consider the following:
Education and Career Advancement Among Young Adults
From 2011 to 2013, the percentage of Black (48 percent) and Latino (44 percent) young adults aged 18-24 who were enrolled in school lagged behind that of Whites (54 percent) and Asians (73 percent). More strikingly, the percentage of youth who are engaged in neither school nor work varies significantly by race, with the Social Science Research Council’s 2017 analysis finding that the share of Native American youth who are disengaged is 25.4 percent, compared with 18.9 percent for African Americans, 14.3 percent for Latinos, 10.1 percent for Whites, and 7.2 percent for Asians.
Post-secondary Credential Attainment
Research continues to document significant educational disparities along racial and ethnic lines. For example:
- While an estimated 53.9 percent of Asians and 36.2 percent of non-Hispanic Whites have a Bachelor’s degree or higher, the rates are lower for African Americans (22.5 percent) and Latinos (15.5 percent).
- The percentage of African Americans (27 percent), Latinos (28 percent), and Native Americans (24 percent) with an Associate’s degree or higher is also lower than the percentage of their White (44 percent) and Asian/Pacific Islander (63 percent) peers.
- Analysis by Georgetown University found that the completion rate for Latinos enrolled in post-secondary certificate programs (60 percent) is now higher than that for Whites (47 percent), but that African Americans have a lower, 37 percent completion rate.
Importantly, there are significant variations in credential attainment based on gender and ethnic subgroups as well. Analysis by the Journal of Blacks in Higher Education found that African American women are attaining more degrees than their male counterparts, earning about two thirds of all African-American bachelor’s degree awards, 70 percent of all master’s degrees, and more than 60 percent of all doctorates. Among Asians, Pew found that the shares of Cambodian (18 percent), Hmong (17 percent), Laotian (16 percent) and Bhutanese (9 percent) Americans with a Bachelor’s degree are below the national average.
Likelihood of Unemployment
Analysis of data from the last four decades (1976-2016) shows that people of color are persistently more likely to become unemployed. In 2016, there was an unexplained 4 percent gap in male unemployment rates and 3 percent gap in female unemployment rates between African Americans and Whites. The gap for Latinos was smaller (about 1 percent) and largely explained by education differences. African Americans and Latinos are also more likely than Whites to work part-time even when wanting to work additional hours.
Disparities in incarceration rates further exacerbate employment inequities: Studies of returning citizen populations have found that roughly half remain jobless up to a year after their release. Recent analysis by the Sentencing Project found that Latinos are imprisoned at a rate that is 1.4 times the rate of Whites and African Americans are incarcerated at 5.1 times the rate of Whites.
Disparate Earnings and Wealth
According to analysis by the National Equity Atlas, full-time workers of color currently earn 23 percent less than white workers. This gap is larger than it was in 1979, and growing rather than shrinking. As a result of this income gap and other factors, the median net worth of White households is estimated to be 13 times higher than that of Black households and 10 times higher than that of Latino households.
To put the magnitude of the threat posed by these disparities in context, consider that:
- The majority of the U.S. workforce will soon be comprised of groups faced with disparities. According to the U.S. Census Bureau, the overall U.S. population will have a non-White majority in 2043. Yet, importantly, the working-age population will become majority non-White in 2039, and the 25 to 34-year-old workforce will be majority non-White by 2021, less than five years from today.
- Businesses are demanding higher skills and more education, amplifying the lifelong repercussions of educational disparities.1 percent of all jobs will require an Associate’s degree or higher by the year 2020.
- The effects of unemployment extend beyond families’ immediate financial concerns. At the individual level, unemployment is associated with increased rates of mental and physical health problems, increases in mortality, detrimental changes in family relationships, and negative effects on the psychological well-being of spouses and children. More broadly, unemployment decreases consumer spending and demand for products, affecting the overall economy: The Bureau of Labor Statistics (BLS) has estimated that the number of jobs tied to consumer demand declined by 3.2 million during the Great Recession from 2007 to 2010.
- Income levels influence children’s wellbeing, extending the effects of today’s disparities well into the future. In many regions of the country, the majority of children are already in non-white, and the overall population of the nation is rapidly moving in the same direction. Recent population statistics from the U.S. Census Bureau show that among residents under 18, the United States is already nearly a majority non-White nation and that, for U.S. children younger than 1 year, 50.2 percent are already non-White. Given that research has shown that parent income levels affect cognitive development, health, academic achievement and, later, adult work hours and earnings, today’s income disparities have troubling implications for the well-being and outcomes of the U.S. children who comprise our future workforce.
To avoid these and other looming challenges, the United States must work to narrow or eliminate race-based disparities in education, employment, and income. Research suggests that, in doing so, our nation could not only mitigate negative economic consequences, but also potentially realize positive financial returns that would benefit both people of color and the broader US economy, e.g.:
- Racial equity in income in 2014 would have lifted average annual income $15,608 higher for the African American population and $17,168 higher for the Latino population.
- If the average incomes of people of color were raised to the average incomes of Whites, total U.S. earnings would increase by 12 percent, or nearly $1 trillion.
- Ethnically diverse companies are 35 percent more likely to financially outperform their peers.
- Nationally, Gross Domestic Product (GDP) would have been $2.4 trillion higher in 2014 if people of color had earned the same their white counterparts.
Click here to read the Partnering for Equity report and learn more about how sector partnerships are tackling these issues.