RESEARCH STARTER

Poverty and race

Poverty and race are intertwined issues that highlight significant disparities in economic well-being among different racial and ethnic groups. Many studies indicate that minority populations, particularly African Americans, Latinos, and Native Americans, experience higher poverty rates compared to non-Hispanic whites. For instance, recent statistics have shown that African Americans and Latinos are two to three times more likely to live in poverty than their white counterparts. This persistent inequality has roots in various factors, including systemic discrimination in the labor market, educational disparities, and historical socio-economic conditions.

Discrimination not only limits job opportunities for minorities but also fosters environments where low-paying jobs are prevalent, perpetuating cycles of poverty. Additionally, cultural and language barriers can further hinder minorities' access to quality education and better employment. Policy solutions to address these disparities have included educational desegregation, labor market reforms, the promotion of minority entrepreneurship, and debates surrounding the efficacy of government welfare programs. Understanding the complex relationship between poverty and race is essential for developing effective strategies to mitigate these challenges and promote social equity.

Full Article

SIGNIFICANCE: The poverty rate measures the fraction of families with insufficient income and, therefore, lack a decent standard of living. When a large proportion of a particular racial or ethnic group experiences poverty, society often devalues that group, reinforcing harmful stereotypes and social exclusion.

When a large proportion of a particular racial, ethnic, or other minority group lives in poverty, the group is generally looked down on by the majority of the population. This dynamic harms race relations and contributes to systemic inequality. Such reactions can perpetuate cycles of poverty and lead to feelings of resentment and hostility among marginalized groups. The ancient Greek philosopher Aristotle noted in his Politics that “poverty is the parent of revolution and crime.” The 1968 Kerner Commission Report pointed to inner-city poverty amid general affluence as a major cause of urban violence and rioting in the United States during the late 1960s. Its warnings about the consequences of racial segregation and economic inequality remain relevant in twenty-first-century discussions of racial justice.

In the early 1960s, Mollie Orshansky of the Social Security Administration developed the methodology that is used to measure poverty in the United States. Using Department of Agriculture nutritional studies, Orshansky found the minimum food requirements for households of different sizes and types. She then estimated the cost of purchasing this food. From surveys, Orshansky knew that households spent around one-third of their income on food. To derive a poverty line for a family of a particular size, Orshansky multiplied the cost of that size household’s minimum food requirements by three. The poverty thresholds are adjusted annually for inflation using the Consumer Price Index, though many economists argue that this method does not fully capture modern living costs. The poverty rate is defined as the percentage of families or individuals who fall below the poverty line. Poverty rates have been calculated for different racial groups as well as the general population.

Estimates of Minority Poverty

In the mid-2020s, less than 8 percent of non-Hispanic White Americans were considered to be living in poverty, compared to approximately 18 percent of African Americans and 17 percent of Latinos. While poverty rates have declined over the decades, racial disparities in poverty have remained relatively persistent. In 1980, 10.2 percent of White Americans were impoverished, compared with 32.5 percent of African Americans and 25.7 percent of Latinos. In 1970, 9.9 percent of White Americans were in low-income households, compared to 33.5 percent of African Americans; in 1959, 18.1 percent of White Americans were low income, compared to 55.1 percent of African Americans. This disparity highlights the enduring impact of segregation and systemic racism in America.

Historically, Native Americans and Alaska Natives (AIAN) have experienced some of the highest poverty rates in the United States. In the late 1960s, poverty among Native Americans reached approximately 74 percent. Federal anti-poverty programs helped reduce these rates significantly by the late 1970s, about the same as for Black and Hispanic Americans. In 2022, the Office of Minority Health reported that 19.7 percent of AIAN families experienced poverty, compared to 5.9 percent of non-Hispanic White families.

Causes of High Poverty among Minorities

Contemporary research emphasizes a mix of structural, historical, and socio-economic factors in understanding racial disparities in poverty. Their answers have included prejudice and discrimination in the job market, cultural or behavioral traits, single-parent families and illegitimate children, urban ghettos, a lack of adequate education or business skills, and language barriers.

Prejudice and discrimination in the labor market are prominent explanations. Due to systemic discrimination in hiring and promotion, African Americans and other racial minorities have historically faced barriers to obtaining stable, well-paying jobs. Moreover, these jobs provide little opportunity for advancement and for workers to develop skills. Many of these jobs are unstable, so the workers often lack a source of income for part of the year. Gunnar Myrdal’s groundbreaking work An American Dilemma: The Negro Problem and Modern Democracy (1944) attributed high rates of African American poverty to a cumulative process in which prejudice and discrimination reinforced each other. Sociologist William J. Wilson updated Myrdal’s cumulative analysis by arguing that discrimination also leads to feelings of inferiority and causes African Americans to adapt, which, according to Wilson, may contribute to disconnection from mainstream economic institutions.

A second explanation focuses primarily on cultural or behavioral traits. Early cultural theories of poverty, such as those found in Louis Wirth’s The Ghetto (1929), considered the urban mode of life too difficult for people with rural backgrounds. Therefore, when rural southern African Americans migrated to the urban North, crime and alienation led to increased social dislocation and economic hardship. A similar thesis appears in Nicholas Lehman’s The Promised Land (1991).

A common view in the early twentieth century was that high rates of African American poverty were caused by the numerous single-parent families and large numbers of illegitimate children, which were usually blamed on African American racial characteristics. Edward Frazier’s The Negro Family in the United States (1939) countered this view and argued that prevailing economic and social conditions shaped the overall status of the Black family. Slavery destroyed African cultural patterns, and emancipation maintained the matriarchal system that developed under slavery. The migration of African Americans to the North further undermined communal institutions and community pressure that helped keep African American families intact.

More recent work has focused on the problem of African Americans living in urban ghettos. Wilson blames this problem partly on historical discrimination. However, the real blame, according to Wilson, lies with economics and demographics. When the US economy shifted from manufacturing to services, it produced high unemployment rates in urban cities. This exacerbated the problems generated by the flow of African American migrants from the rural South and the rapid growth of young minorities in central cities. Sociologist John Kasarda, likewise, sees the decline of manufacturing and the rise of the service economy as causing the poverty of urban Black communities. However, he notes another aspect to the problem: African Americans may face greater barriers to relocating to regions with job growth due to housing discrimination, lack of resources, or limited access to employment information. In part, he says, this is caused by racial discrimination, which keeps African Americans from moving to the suburbs, and in part, it is because African Americans lack the skills and education required by the new service jobs.

Since the Coleman Report (1966) documented racial segregation in American schools and proclaimed that education in the United States was separate but unequal, differences in the quality of education have figured prominently in explanations of why racial minorities are more likely to grow up in low-income households. Persistent disparities in school funding, teacher quality, and resources contribute to unequal educational outcomes for minority children, limiting future economic mobility.

Another problem facing racial minorities is a lack of business experience and management skills resulting from the inequity observed in educational opportunities. Many also lack access to capital, which makes it hard to start their own businesses. Businesses in economically disadvantaged communities often face limited customer spending power, difficulty accessing capital, and fewer institutional supports.

Many newly immigrated and first-generation Americans face additional problems involving language and culture. For some, the inability to speak English well reduces their educational and career opportunities. Some may face cultural dissonance or institutional distrust due to past experiences with discrimination or exclusion. Their differences have led to discrimination against them in the job market.

In addition to historical and contemporary racial discrimination, Indigenous communities face unique challenges tied to land dispossession, underfunded education systems, and limited infrastructure in tribal areas. However, their particular history of land loss and disruptive government policies, as well as racial discrimination, may contribute to their ongoing poverty as well.

Policy Solutions

Many scholars have proposed a variety of policy-level changes that may help reduce the systemic racism evident in the correlation between race and poverty. Some initiatives address the longstanding educational inequities that contribute to generational poverty in minority communities. These include investing in early childhood education, reforming school funding, ensuring the equitable distribution of resources, and implementing inclusive curricula.

Other approaches include interventions to increase wages for workers, improve job access for minorities, and expand opportunities for job training before and after employment. Emphasizing economic empowerment through entrepreneurship and business development—including teaching entrepreneurial skills to minority communities, expanding access to capital, and supporting small business growth in underserved areas—has also shown promise. Some economists and policymakers advocate for broad-based economic growth strategies. They assume that increased job creation and rising incomes will help reduce poverty across racial and ethnic groups.

Debates over the effectiveness of government assistance programs continue to shape policy discussions. Some critics argue that certain forms of public aid create disincentives to work; others contend that most government benefits are insufficient to lift families above the poverty line. Still others advocate for well-designed, targeted programs—housing assistance, child tax credits, and food subsidies—to promote economic stability and upward mobility. Designing policies that effectively support low-income families while promoting long-term independence and opportunity remains challenging.


Bibliography

Bernstein, Jared. "What Racial Injustice Looks Like in America's Economy." The Washington Post, 11 July 2016, www.washingtonpost.com/posteverything/wp/2016/07/11/racial-economic-injustice-jobs-incomes-and-wealth. Accessed 27 Mar. 2025.

Coleman, James S., et al. Equality of Educational Opportunity. GPO, 1966.

Frazier, Edward. The Negro Family in the United States. 1939. U of Notre Dame, 2001.

Krogstad, Jens Manuel. "One-in-Four Native Americans and Alaska Natives Are Living in Poverty." Pew Research Center, 13 June 2014, www.pewresearch.org/short-reads/2014/06/13/1-in-4-native-americans-and-alaska-natives-are-living-in-poverty. Accessed 27 Mar. 2025.

"National Poverty in America Awareness Month: January 2025." US Census Bureau, Jan. 2025, www.census.gov/newsroom/stories/poverty-awareness-month.html. Accessed 27 Mar. 2025.

O'Flaherty, Brendan. The Economics of Race in the United States. Harvard UP, 2015.

Orshansky, Mollie. “Consumption, Work, and Poverty.” Poverty as a Public Issue, edited by Ben B. Seligman, Free, 1965.

Shrider, Emily A. "Poverty in the United States: 2023." US Census Bureau, 10 Sept. 2024, www.census.gov/library/publications/2024/demo/p60-283.html. Accessed 27 Mar. 2025.

Surowiecki, James. "The Widening Racial Wealth Divide." The New Yorker, 20 Oct. 2016, www.newyorker.com/magazine/2016/10/10/the-widening-racial-wealth-divide. Accessed 27 Mar. 2025.

Wilson, William J. The Declining Significance of Race: Blacks and Changing American Institutions. 3rd ed., U of Chicago P, 2012.

Full Article

SIGNIFICANCE: The poverty rate measures the fraction of families with insufficient income and, therefore, lack a decent standard of living. When a large proportion of a particular racial or ethnic group experiences poverty, society often devalues that group, reinforcing harmful stereotypes and social exclusion.

When a large proportion of a particular racial, ethnic, or other minority group lives in poverty, the group is generally looked down on by the majority of the population. This dynamic harms race relations and contributes to systemic inequality. Such reactions can perpetuate cycles of poverty and lead to feelings of resentment and hostility among marginalized groups. The ancient Greek philosopher Aristotle noted in his Politics that “poverty is the parent of revolution and crime.” The 1968 Kerner Commission Report pointed to inner-city poverty amid general affluence as a major cause of urban violence and rioting in the United States during the late 1960s. Its warnings about the consequences of racial segregation and economic inequality remain relevant in twenty-first-century discussions of racial justice.

In the early 1960s, Mollie Orshansky of the Social Security Administration developed the methodology that is used to measure poverty in the United States. Using Department of Agriculture nutritional studies, Orshansky found the minimum food requirements for households of different sizes and types. She then estimated the cost of purchasing this food. From surveys, Orshansky knew that households spent around one-third of their income on food. To derive a poverty line for a family of a particular size, Orshansky multiplied the cost of that size household’s minimum food requirements by three. The poverty thresholds are adjusted annually for inflation using the Consumer Price Index, though many economists argue that this method does not fully capture modern living costs. The poverty rate is defined as the percentage of families or individuals who fall below the poverty line. Poverty rates have been calculated for different racial groups as well as the general population.

Estimates of Minority Poverty

In the mid-2020s, less than 8 percent of non-Hispanic White Americans were considered to be living in poverty, compared to approximately 18 percent of African Americans and 17 percent of Latinos. While poverty rates have declined over the decades, racial disparities in poverty have remained relatively persistent. In 1980, 10.2 percent of White Americans were impoverished, compared with 32.5 percent of African Americans and 25.7 percent of Latinos. In 1970, 9.9 percent of White Americans were in low-income households, compared to 33.5 percent of African Americans; in 1959, 18.1 percent of White Americans were low income, compared to 55.1 percent of African Americans. This disparity highlights the enduring impact of segregation and systemic racism in America.

Historically, Native Americans and Alaska Natives (AIAN) have experienced some of the highest poverty rates in the United States. In the late 1960s, poverty among Native Americans reached approximately 74 percent. Federal anti-poverty programs helped reduce these rates significantly by the late 1970s, about the same as for Black and Hispanic Americans. In 2022, the Office of Minority Health reported that 19.7 percent of AIAN families experienced poverty, compared to 5.9 percent of non-Hispanic White families.

Causes of High Poverty among Minorities

Contemporary research emphasizes a mix of structural, historical, and socio-economic factors in understanding racial disparities in poverty. Their answers have included prejudice and discrimination in the job market, cultural or behavioral traits, single-parent families and illegitimate children, urban ghettos, a lack of adequate education or business skills, and language barriers.

Prejudice and discrimination in the labor market are prominent explanations. Due to systemic discrimination in hiring and promotion, African Americans and other racial minorities have historically faced barriers to obtaining stable, well-paying jobs. Moreover, these jobs provide little opportunity for advancement and for workers to develop skills. Many of these jobs are unstable, so the workers often lack a source of income for part of the year. Gunnar Myrdal’s groundbreaking work An American Dilemma: The Negro Problem and Modern Democracy (1944) attributed high rates of African American poverty to a cumulative process in which prejudice and discrimination reinforced each other. Sociologist William J. Wilson updated Myrdal’s cumulative analysis by arguing that discrimination also leads to feelings of inferiority and causes African Americans to adapt, which, according to Wilson, may contribute to disconnection from mainstream economic institutions.

A second explanation focuses primarily on cultural or behavioral traits. Early cultural theories of poverty, such as those found in Louis Wirth’s The Ghetto (1929), considered the urban mode of life too difficult for people with rural backgrounds. Therefore, when rural southern African Americans migrated to the urban North, crime and alienation led to increased social dislocation and economic hardship. A similar thesis appears in Nicholas Lehman’s The Promised Land (1991).

A common view in the early twentieth century was that high rates of African American poverty were caused by the numerous single-parent families and large numbers of illegitimate children, which were usually blamed on African American racial characteristics. Edward Frazier’s The Negro Family in the United States (1939) countered this view and argued that prevailing economic and social conditions shaped the overall status of the Black family. Slavery destroyed African cultural patterns, and emancipation maintained the matriarchal system that developed under slavery. The migration of African Americans to the North further undermined communal institutions and community pressure that helped keep African American families intact.

More recent work has focused on the problem of African Americans living in urban ghettos. Wilson blames this problem partly on historical discrimination. However, the real blame, according to Wilson, lies with economics and demographics. When the US economy shifted from manufacturing to services, it produced high unemployment rates in urban cities. This exacerbated the problems generated by the flow of African American migrants from the rural South and the rapid growth of young minorities in central cities. Sociologist John Kasarda, likewise, sees the decline of manufacturing and the rise of the service economy as causing the poverty of urban Black communities. However, he notes another aspect to the problem: African Americans may face greater barriers to relocating to regions with job growth due to housing discrimination, lack of resources, or limited access to employment information. In part, he says, this is caused by racial discrimination, which keeps African Americans from moving to the suburbs, and in part, it is because African Americans lack the skills and education required by the new service jobs.

Since the Coleman Report (1966) documented racial segregation in American schools and proclaimed that education in the United States was separate but unequal, differences in the quality of education have figured prominently in explanations of why racial minorities are more likely to grow up in low-income households. Persistent disparities in school funding, teacher quality, and resources contribute to unequal educational outcomes for minority children, limiting future economic mobility.

Another problem facing racial minorities is a lack of business experience and management skills resulting from the inequity observed in educational opportunities. Many also lack access to capital, which makes it hard to start their own businesses. Businesses in economically disadvantaged communities often face limited customer spending power, difficulty accessing capital, and fewer institutional supports.

Many newly immigrated and first-generation Americans face additional problems involving language and culture. For some, the inability to speak English well reduces their educational and career opportunities. Some may face cultural dissonance or institutional distrust due to past experiences with discrimination or exclusion. Their differences have led to discrimination against them in the job market.

In addition to historical and contemporary racial discrimination, Indigenous communities face unique challenges tied to land dispossession, underfunded education systems, and limited infrastructure in tribal areas. However, their particular history of land loss and disruptive government policies, as well as racial discrimination, may contribute to their ongoing poverty as well.

Policy Solutions

Many scholars have proposed a variety of policy-level changes that may help reduce the systemic racism evident in the correlation between race and poverty. Some initiatives address the longstanding educational inequities that contribute to generational poverty in minority communities. These include investing in early childhood education, reforming school funding, ensuring the equitable distribution of resources, and implementing inclusive curricula.

Other approaches include interventions to increase wages for workers, improve job access for minorities, and expand opportunities for job training before and after employment. Emphasizing economic empowerment through entrepreneurship and business development—including teaching entrepreneurial skills to minority communities, expanding access to capital, and supporting small business growth in underserved areas—has also shown promise. Some economists and policymakers advocate for broad-based economic growth strategies. They assume that increased job creation and rising incomes will help reduce poverty across racial and ethnic groups.

Debates over the effectiveness of government assistance programs continue to shape policy discussions. Some critics argue that certain forms of public aid create disincentives to work; others contend that most government benefits are insufficient to lift families above the poverty line. Still others advocate for well-designed, targeted programs—housing assistance, child tax credits, and food subsidies—to promote economic stability and upward mobility. Designing policies that effectively support low-income families while promoting long-term independence and opportunity remains challenging.


Bibliography

Bernstein, Jared. "What Racial Injustice Looks Like in America's Economy." The Washington Post, 11 July 2016, www.washingtonpost.com/posteverything/wp/2016/07/11/racial-economic-injustice-jobs-incomes-and-wealth. Accessed 27 Mar. 2025.

Coleman, James S., et al. Equality of Educational Opportunity. GPO, 1966.

Frazier, Edward. The Negro Family in the United States. 1939. U of Notre Dame, 2001.

Krogstad, Jens Manuel. "One-in-Four Native Americans and Alaska Natives Are Living in Poverty." Pew Research Center, 13 June 2014, www.pewresearch.org/short-reads/2014/06/13/1-in-4-native-americans-and-alaska-natives-are-living-in-poverty. Accessed 27 Mar. 2025.

"National Poverty in America Awareness Month: January 2025." US Census Bureau, Jan. 2025, www.census.gov/newsroom/stories/poverty-awareness-month.html. Accessed 27 Mar. 2025.

O'Flaherty, Brendan. The Economics of Race in the United States. Harvard UP, 2015.

Orshansky, Mollie. “Consumption, Work, and Poverty.” Poverty as a Public Issue, edited by Ben B. Seligman, Free, 1965.

Shrider, Emily A. "Poverty in the United States: 2023." US Census Bureau, 10 Sept. 2024, www.census.gov/library/publications/2024/demo/p60-283.html. Accessed 27 Mar. 2025.

Surowiecki, James. "The Widening Racial Wealth Divide." The New Yorker, 20 Oct. 2016, www.newyorker.com/magazine/2016/10/10/the-widening-racial-wealth-divide. Accessed 27 Mar. 2025.

Wilson, William J. The Declining Significance of Race: Blacks and Changing American Institutions. 3rd ed., U of Chicago P, 2012.

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