In what was characterized by Business Week as a jump off for his "last chance to get something done," President Obama gave a sweeping State of the Union address last night in which the issues of income inequality and economic opportunity took center stage. For more than an hour Obama urged action on the minimum wage, education, manufacturing, small business help, infrastructure and job training which together he said would reverse the trends that have made the United States the most unequal developed country on the planet. Unfortunately, there was a fundamental element missing from the president’s diagnosis of inequality and his prescription for it: race.
To be fair the president did give some nods in the economic portion of his talk to race. Obama stated that he is "reaching out to some of America’s leading foundations and corporations" as part of unnamed effort "to help more men of color…reach their full potential." What this meant exactly was unspecified. He singled out Michelle Obama’s College Opportunity Summit whose goal is to "reduce inequality in access to higher education." Additionally his push for a $10.10 minimum wage if fully implemented by Congress will lift three million people of color out of poverty.
Yet Obama’s announcement that he will unilaterally raise the minimum wage for all low-wage workers currently employed by companies with government contracts, as The Wall Street Journal points out, will only affect several thousand employees. That’s because it only covers those in new federal contracts, not the 200,000 minimum-wage workers in existing ones.
But the key issue with Obama’s speech is that it inaccurately attributed growing income inequality and declining economic opportunity to "massive shifts in technology and global competition." But the truth of the matter is that Washington has changed the economic rules of the road over past 30 years in a way that’s amped up racial inequity and fueled economic disparities. And until we acknowledge the pivotal role that race plays in driving economic inequality, the gap is likely to widen.
That’s why last night was a missed opportunity. The unspoken problem of racial inequity at the very heart of income inequality can’t find a solution unless it’s acknowledged. And we need solutions right now. Without urgent action, communities of color stand to end the Obama presidency–by some key measures–in worse economic shape than at any point in almost 40 years.
Here are some eye-popping facts which underscore the point:
The wealth gap between whites and blacks is twice as large now as in 1980, and black and Latino wealth is the lowest on record. Blacks are three times more likely to be poor than whites and Latinos twice as likely. Four out of 10 minimum wage jobs is held by a person of color, and half of all unemployed youth in America are black or Latino. These numbers just go to show that whether uttered or not, the fact that people of color are falling further behind in some key ways is arguably America’s top economic issue.
Given current demographic trends, the consequences of these disparities will only grow. And given racial inequity, the United States could be on a path to a place where a majority of its citizens are economically marginalized. That’s frankly unacceptable and doesn’t have to happen.
It’s easy to imagine that an America short on opportunity and long on inequality is something to not even fathom seriously until 2050 when non-whites will become a majority. But the data right now underscore how quickly the nation needs to come to grips with the racial aspects of income inequality and economic opportunity.
As the book "All-In Nation" points out, in just six years one out of four states will be majority people of color. These include America’s two largest states by population, California and Texas, which are already non-white majority (PDF). Additionally, over the past 10 years 92 percent of the population growth in the United States has come from people of color. These facts show why the racial components of inequality will begin to have even greater repercussions sooner than many imagine. And it’s why we don’t have a second to waste in addressing them.
The good news is that by owning up to the link between race and inequality we could turn our economy around this year. An "All-In" estimate shows that if in 2011 "racial and ethnic differences were eliminated…our gross domestic product would have been $1.2 trillion higher" and "13 million people would have been lifted out of poverty." The solution to getting America back on track economically is to face race.
But in order to mobilize the country to do what’s necessary on the racial drivers of economic inequality and falling opportunity it’s important for our nation’s chief executive to clearly proclaim the problem. After last night, the president will only have two more State of the Unions in which to do so.