New Report Findings Link Racial Discrimination to Economic Recession

For Immediate Release: May 18, 2009

Media Contact: Yana Walton - 347.296.8921 or [email protected]


Applied Research Center Says Solving Structural Inequities will Alleviate Recession


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New York: A report released today by the Applied Research Center (ARC), a racial justice think-tank, finds that an inclusive and equitable national economic recovery will require that the country address deep patterns of racial discrimination and disparities. The report, titled “Race & Recession,” found that numerous policies and institutional practices that create racial inequity are among the root causes of the subprime mortgage crisis and economic downturn.  While several economists and analysts have focused on the “what” and “how” questions behind the current recession, an in-depth analysis of income, unemployment, foreclosures, and public benefits brings the largely overlooked “who” into the analysis: Who were predatory loans targeted towards? Which Americans are losing jobs?

The current crisis has brought soaring national unemployment rates, record foreclosure filings, and record lows in the stock market, with global repercussions.  However, the most bruising effects have been unevenly distributed - overwhelmingly to people of color.  

The report examines systemic patterns of racial inequality, including unemployment levels for people of color, which are consistently higher than those of whites and considerably higher during recessionary times. In March of this year, when unemployment reached 8.5% nationally, 13.3% of Black workers and 11.4% of Latinos were out of work, compared to only 7.9% of whites.  In contrast, Black unemployment has dipped below 8% only once since 1973.

Sizeable income gaps between people of color and whites also still persist. Seth Wessler, the report’s author, explains, “Racial disparities in income leave communities of color making about 60 cents for every dollar earned by whites.  This huge difference a direct result of institutional policies and practices that collectively block people of color from opportunity.”

ARC’s analysis of the housing crisis also demonstrates that communities of color were disproportionately saddled with subprime loans at very high rates. Wessler says “The cumulative effects of historic and current housing discrimination – including restrictive racial covenants, redlining and neighborhood segregation – have left people of color with less equity and access to credit, making them prime targets for largely unregulated predatory lending practices.” High-cost loans were aggressively marketed in communities of color.” Yet, Wessler says, most troubling is that “many who could have qualified for prime loans were sold high-cost loans instead – 35 % of subprime loans were sold to people who could have qualified for a traditional, fixed rate, prime loans.  And clearly, subprime loans were responsible for the crash.”

ARC’s Executive Director, Rinku Sen, says “This study reveals that a healthy economy requires explicit attention to ensuring racial equity in our public and private institutions. Thankfully, there are many clear solutions to move us toward fair policies and shared prosperity.”  

The report recommends the use of Racial Equity Impact Assessments, modernization of the Community Reinvestment Act, a moratorium on foreclosures, a lifting of time limits in Temporary Aid for Needy Families, expunging past criminal records, protections for immigrants, passing the Employee Free Choice Act, raising the minimum wage, establishing universal healthcare and the full enforcement of anti-discrimination laws.


The Applied Research Center (ARC) is a racial justice think tank built on rigorous research. Founded in 1981, ARC investigates the hidden racial consequences of public policy initiatives and develops new frameworks to resolve racially charged debates.