Executive Summary & Key Findings – State of the Dream 2012

Executive Summary


A major demographic shift is underway in the United States. According to the 2010 Census, White babies now make up a little less than 50 percent of all babies in the country. By 2030, the majority of U.S. residents under 18 will be youth of color. And by 2042, Blacks, Latinos, Asians, Native Americans, Pacific Islanders, and other non-Whites will collectively comprise the majority of the U.S. population.1 For the first time since Colonial days, the United States will be a majority-minority country.

How will the nation adjust to the massive demographic changes set to take place over the next 30 years? And what will be the state of the racial economic divide? If we do not change course, we will continue on a path toward becoming a country in which the overwhelming share of the emerging non-White majority is economically insecure. While Whites will make up a dwindling percentage of the population through 2042 and beyond, the overwhelming share of the nation’s income and wealth will remain solidly in White hands.

Communities of color have borne the brunt of our nation’s history of racism and White supremacy. Although there have been many social and economic gains made for all races, people of color continue to be left behind. Vast racial disparities still exist in wealth and income, education, employment, poverty, incarceration, and health. Extreme inequality continues to entrench racial disparities and further shrink the broad middle class that has been the foundation of a strong American economy and a cohesive society.

Closing the racial economic divide is first and foremost a moral issue. Our commitment to closing this divide should not depend on whether people of color make up 5 percent or 75 percent of the population. Nonetheless, as people of color become the new majority, the persistent racial disparities of the past threaten to jeopardize the social fabric of our nation and our economic stability.

If the trends in racial economic inequality of the last thirty years continue for the next thirty years, the racial economic divide in 2042 will be vast and devastating for communities of color and the nation as a whole. Economic inequality between Whites and people of color will persist unless bold and intentional steps are taken to make meaningful progress towards racial equity, to sever the connection between race and poverty, and ultimately to eliminate the racial economic divide altogether.

Key Findings – Looking Back, Looking Forward

Disparities in income perpetuate poverty in communities of color and will continue to do so unless change is made. In 2010, the median family income of Black and Latino families was a mere 57 cents to every dollar of White median family income. By 2042, the median Black family will still only earn about 61 cents for every dollar of income earned by the median White family. Latino income will decline relative to White income. Latinos will earn 45 cents for every dollar of White median family income. Meanwhile, the Black poverty rate will still be close to double that of Whites, and the Latino poverty rate will be more than two and a half times that of Whites. The potential for racial and ethnic strife will increase as larger and larger numbers of people of color will be in poverty.

Increasing wealth inequality entrenches the racial economic divide. In 2007, near the height of the housing bubble, average White net worth was five times greater than average Black net worth, and more than three and a half times that of average Latino net worth. White families who have more wealth are able to tap it in times of hardship to avoid falling to the bottom of the economic ladder or to make investments in their future. If the trend from 1989 to 2007 continues, Black families will by 2042 have on average just 19 cents for each dollar of net wealth held by White families; Latinos would have 25 cents for each dollar of White net wealth on average. The racial disparities in median net wealth will be even larger.

Education is one of the most important tools we have for increasing social mobility, yet dramatic disparities in education perpetuate inequality. In addition to new restrictions on the use of race-based affirmative action in higher education, spiraling college costs, the persistence of legacy preferences, and underfunding of education in the United States threatens to reverse the gains made since the civil rights era in closing the educational attainment gap. In 2010, Black adults were 60 percent as likely to have a college degree as White adults while Latino adults were only 42 percent as likely to have a college degree. By 2042, if current trends continue, some progress in closing the education gap will be realized for Blacks, but for Latinos, the gap will be even wider.

The mass incarceration of people of color is historically unprecedented. Blacks are six times more likely to be in prison than Whites, and people of color make up over 65 percent of the prison population. This disparity has serious economic consequences. The economic effects of incarceration follow former inmates after they have served their sentence. Finding a job or a home and pursuing an education are much more difficult for people with a criminal record. An astounding 68 percent of Black men born since the mid-1970s have prison records. These startling incarceration numbers stem primarily from the war on drugs. If current trends continue to 2042, the percentage of people of color who have experienced jail time will dwarf even that number.

Building Power to Close the Racial Economic Divide

Even once people of color become a majority of the population, their numeric strength alone will not be enough to shift the political and economic landscape. In the age of mass media and Citizens United, money buys influence, and the national income and wealth will remain overwhelmingly in the hands of Whites – a small group of Whites at that. Current voter suppression laws and proposals at the state level, including voter ID laws, and the laws that disenfranchise former convicts, are rolling back the voting rights advances achieved by the civil rights movement and reducing what little political power communities of color do have.

Demographic changes are already fueling political decisions about public investments—deci- sions that disproportionately affect people of color, especially youth. Currently, almost half of U.S. residents under the age of 18 are youth of color, while 80 percent of American retirees are White. Increasingly, older Americans do not identify with young Americans who are far more racially and ethnically diverse, leading to reductions in future-oriented public investments in education, social programs and transportation that helped to build the wealth of the country in the previous century.

To gain the political power necessary to make significant progress toward racial economic equality, the influence of money in politics must be reduced and voting rights for all Americans must be restored and protected. Eliminating racial inequality will require a powerful and sustained political movement, aligned not just along the lines of race, but also by economic interests. The renewed national debate about who benefits from the economic system, who doesn’t, and why–a debate inspired in large part by Occupy Wall Street–presents an opportunity to build such a movement. The perverse concentration of wealth and power in the U.S. is central to both Occupy Wall Street and efforts to close the racial economic divide.

We need nothing less than a diverse, powerful social movement dedicated to advancing meaningful policy solutions on many fronts to reduce the racial divide. Foreclosure relief, federal aid to states and targeted job creation programs are needed to both combat the current economic slump and to reduce racial economic disparities. Longer-term strategies including wealth-building programs, increasing taxes on the rich, strengthening safety net programs, ending the war on drugs, and humane immigration reform are needed in order to substantially reduce racial inequality.

It is a moral and economic imperative that we address the racial economic divide now. If we are to chart a path to a more promising future, one in which the racial economic divide is significantly narrowed and prosperity is more broadly shared, then we must take immediate action to ensure that the coming majority is not further burdened by the legacy of racism and White supremacy in the United States.

Download the full report (PDF 3.1 MB)