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GOP Austerity Plans Will Widen Racial Economic Divide, Report Says

Akito Yoshikane

Countries around the globe have gone from implementing stimulus packages to austerity measures as a model for economic recovery. The new Republican-led House of Representatives here in the United States is now mounting up a campaign of its own.

Eliminating social service programs, tax cuts for the rich, and rolling back public sector employees are all on the GOP agenda. But a new report argues that these policies will further widen economic inequalities for U.S. minorities and the public at-large.

The Boston-based nonprofit United For a Fair Economy published the findings last Friday to highlight Dr. Martin Luther’s King vision for economic justice. The analysis is not only a rebuke to the House majority’s policies, but also stands in stark contrast to a recent International Monetary Fund report that suggests countries should continue promoting fiscal austerity.

The United For a Fair Economy report paints an American landscape where minorities lag behind whites in net wealth and earnings, a disparity that could widen if austerity policies were implemented.

Closing this vast economic divide was a core objective of Dr. Martin Luther King, Jr. and his supporters in the final years of his life. But the agenda of the Congressional Republicans today and their Tea Party allies threatens to take the country in the opposite direction,” the report says.

The Great Recession caused the longest period of high unemployment since the postwar, and minority communities were hit especially hard. As of December, jobless figures for African Americans and Latinos are still in the double digits at 15.8 percent and 13 percent respectively, while white unemployment is 8.5 percent.

But those unemployment numbers could rise as the result of the increasing calls to reduce public sector workforce. African Americans are 30 percent more likely than the overall labor force to work as civil servants, and are 70 percent as likely to be a federal employee. Thus, the policy ramifications will disproportionately affect African Americans, the report says.

In fact, the public sector has been an area where minorities have been offered better wage and career prospects than the private sector. Public labor unions have been falsely maligned for straining budgets, but the report says it is exactly the high union representation that has helped to reduce income inequality.

Unlike the private sector, where minorities face a glass ceiling for promotions, the public sector also ensures protections to guarantee hiring is merit-based. The report lays out how public sector jobs have improved the standard of living for minorities and women:

The median hourly wage of Black and Latino workers in the public sector is closer to the median hourly wage of white males in the public sector than it is in the private sector. In the professional and business services sector, Black males earn 57 cents to each dollar of White male earnings. By comparison, Black males earn 80 cents to each dollar of White male earnings in the public administration sector.

This trend of greater parity in public administration jobs also is also true for Black females, Latinas, Latinos and White females.

The elimination of social safety nets like social security is another source of income that many African Americans and Latinos depend on. Older whites tend to have relatively more diverse sources of income and more net wealth.

In contrast, the lack of assets in minority communities will make any cuts to public assistance programs more sharp. Programs like social security has helped to reduce the poverty level down to 20 percent and would have hovered near 50 percent for the aforementioned communities if the program did not exist, the report says. Meanwhile, the report adds the recent tax initiatives have mostly benefited high income whites, who are more likely than minorities to earn at least $250,000 a year.

Cutting public programs reflects an ongoing global trend. Austerity plans have gained steam in places like Europe, but the policies have been criticized by unions and labor groups for hampering job growth. The International Labour Organization, a United Nations body, reported in September that it will take until 2015 for jobs to return to pre-crisis levels if austerity programs continue — two years later than previous estimates.

Protecting public employees; preserving social safety nets; creating jobs through infrastructure investment; and restoring the progressive tax system are just some of the recommendations the report makes to eliminate racial economic disparities. More than 40 years after Dr. King’s death, can policymakers live up to his dream of closing the great racial divide?

Akito Yoshikane is a freelance writer based in Chicago.
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