To Achieve Racial Equity, We Must Address Economic Segregation

As Black Lives Matter protests and the backlash against them continue in multiple cities across the country months after the murder of George Floyd, it’s clear that our national reckoning on race needs to extend beyond the police. While videos of police violence are horrifyingly visceral, as a successful white businessman, I know the racism inherent in our economic system is no less real or destructive.

a group of people standing on a sidewalk: A restaurant server wears a face mask and rubber gloves while taking an order on August 16 in New York City.

© Noam Galai/Getty
A restaurant server wears a face mask and rubber gloves while taking an order on August 16 in New York City.

The gaping financial divide between Black Americans and their white counterparts is most obvious in the vast and shameful racial wealth gap, which is now as wide as it was in 1968, before the impact of civil rights legislation. Economic segregation is not accidental but rather the natural result of decades of racist policies that have protected the privileged while denying Black Americans equal opportunity, and the ongoing protests reflect that hard truth.

If we intend to achieve real racial equity and opportunity, American business and government can seize this moment and start to eliminate the institutional barriers that economic segregation depends on. To start, we need to acknowledge how our country’s painful history of economic racism continues to shape our present.

Many well-intentioned people tout “more jobs” as the solution, conveniently ignoring the fact that many of the jobs that are available to Black Americans pay poverty level wages. Black people, and Black women especially, are disproportionately concentrated in low-income sectors, like the service industry and domestic care, where even full-time work does not pay enough to allow workers enough to sustain themselves and their families. Persistent racial discrimination limits Black job-seekers access to higher-paying jobs. Even when Black workers land those jobs, they are paid less than their white counterparts in similar positions. Rather than “more jobs,” we need better jobs with higher wages for the work that exists.

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The path to better opportunity for people of color is not paved exclusively with colorblind policies, but also with changes that specifically address the unique barriers to employment and financial access that Black Americans face. That may make some white Americans uncomfortable, but it’s absolutely crucial to closing the gap.

Consider the case of the tipped minimum wage, the sub-minimum baseline that employers must pay their workers with tips from customers comprising the rest. That wage has remained a measly $2.13 per hour since 1991. The tipped minimum wage is a direct legacy of slavery, popularized in the Reconstruction era as a legal way of ensuring employers could pay newly free Black workers a starvation wage that reinforced “their inferiority” and “servility.”

The tipped minimum wage was initially a way to enforce the racial caste system throughout the Jim Crow era, and over time morphed into common practice. Gig economy companies, like Uber, DoorDash and Instacart, have utilized this structure as a way to cut costs by not paying their workers a fair wage, arguing that their nearly full-time employees do not work for them but are “contractors.” Adding insult to injury, contractor’s tips often go toward paying fees to the company for “using their technology,” rather than directly to them. While this type of wage reduction looks less overtly racist than what happened during Reconstruction, it shifts profits away from the hard-working underclass of Americans who—given the long tradition of policies (racial bias) blocking them from creating intergenerational wealth—are disproportionately people of color.

House Democrats recognized the importance of this history when they voted for the 2019 Raise the Wage Act, abolishing the tipped minimum wage. As the Democratic Party pulls together its platform for the November election, Vice President Biden should reaffirm his commitment to seeing this reform through. But the tipped minimum wage is not the only vestige of racism inherent in the laws that govern our economy, and that’s what makes the task of rebuilding so critical.

As the coronavirus crisis has forced the country to rely on “essential” workers in low-income industries like delivery services, nursing and grocery stores (who are disproportionately people of color), it has become painfully obvious how economic segregation endangers us all. Essential workers earn an average of 18 percent less than workers in other industries, and many are forced daily to choose between their health and their paycheck. The result has been spikes of COVID-19 infections in places like warehouses and meatpacking plants that expose entire communities to the disease, making it harder for our country to contain the virus and driving us deeper into economic recession.

The murder of George Floyd and the protests that followed focused attention on racism in policing—but to achieve sustainable, long-term racial equity, we have to address economic segregation. It’s time for us to wake up to the ugly and uncomfortable reality of the policies and practices that sustain racial disparity.

John Driscoll is a member of the Patriotic Millionaires and CEO of CareCentrix.

The views expressed in this article are the author’s own.

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