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Racial inequality remains after MLK

Data on gaps in unemployment and homeownership

Next Monday we celebrate Dr. Martin Luther King Jr. Day, which honors the man who rose to national recognition beginning with the 1955 Montgomery bus boycotts. Dr. King was a prolific orator and arguably the most prominent and persuasive leader of the U.S. civil rights movement. Less than a week after Dr. King’s assassination, the U.S. House of Representatives voted in favor of the Fair Housing Act of 1968—a law that prohibited discrimination in the renting and purchasing of houses.

How have disparities between White and Black Americans changed since then? To answer part of the question, we look at the gaps in unemployment and homeownership rates between the groups. We define both the unemployment and homeownership gaps as the difference between the Black rate and the White rate. Ideally, both gaps would be equal to zero, indicating no disparity between the two races’ unemployment and homeownership rates.

The difference in unemployment between White and Black Americans is consistently positive, meaning that a higher percentage of Black Americans are unemployed. The gap has fluctuated substantially since the 1970s. The graph (solid black line) doesn’t show any persistent long-run trend, and the unemployment gap is about the same today as it was 50 years ago. The gap peaked in 1983 with a staggering 11.2% higher unemployment rate for Black Americans, and the gap reached its lowest point of 2.8% in 2019. For the past two years, the gap has been 3.9%.

An even larger gap, however, is the one between Black and White homeownership rates (solid blue line). A negative gap in homeownership rates can be interpreted as a lower percentage of Black Americans, compared with White Americans, owning homes. In 2020, Black homeownership was about 30% lower than White homeownership. Unlike the unemployment gap, the homeownership gap does display a long-run trend. Unfortunately, this trend is in the wrong direction—the gap in homeownership rates has increased over time.

Since the early 2000s, the difference in homeownership has gotten progressively starker, with an increase from –26.1% to –30.4% between 2003 and 2020. Because homeownership is an important mechanism for maintaining and growing wealth, these disparities are worrisome.

There has been progress since Dr. King’s passing in the late 1960s, but racial inequalities still exist and leave plenty of room for improvement. Data in FRED can provide one way to measure that progress.

How this graph was created: Search for and select “Unemployment Rate – Black or African American.” From the “Edit Graph” panel, use the “Customize data” search box to select “Unemployment Rate – White” and add and apply the formula (a) – (b). Modify the frequency to quarterly. Next, use the “Add Line” feature to search for and select “Homeownership Rates by Race and Ethnicity: Black Alone in the United-States.” Once again, use the “Customize data” to search for and select the next series, “Homeownership Rates by Race and Ethnicity: Non-Hispanic White Alone in the United States.” Add and apply the formula (a) – (b). Then go to “Format” and under line 2 change “Y-Axis position” to “Right.”

Suggested by Julian Kozlowski and Sam Jordan-Wood.

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