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Mind the (income) gap: What’s behind widening economic disparities among Minnesota minorities?

ST. PAUL — Minnesota has some of the worst racial disparities in the nation — gaps that have widened over the past five decades and that soon may create a statewide economic crisis.

U.S. census data show most Minnesota families of color now have median incomes about half those of their white neighbors. It wasn’t always that way. In 1960, family earnings for the state’s small nonwhite population were about 74 percent of what white families made.

The income gap is just one part of the story. But as Gov. Mark Dayton and the Legislature look for ways to close the gaps, community leader Jeffry Martin of the St. Paul NAACP says the economic piece is key.

“It is hugely disheartening. You almost feel like a snake-oil salesman when you tell young people to keep trying,” Martin said.

A Pioneer Press analysis of decades of census data found families of color have long trailed white families by several measures of success. What’s evident is that as the state has become more diverse, many gaps have gotten worse, not better.

Here’s how it stacks up over the past 40 years, in today’s dollars:

  • Black, Hispanic and Native American families all make less today than they did in the 1970s.
  • Black families are hardest hit, now earning median annual incomes of about $33,900, compared with about $81,500 for white families.
  • Today, more than 20 percent of Hispanic and 30 percent of black and Native American families are poor. Those numbers have grown, in some cases significantly.
  • White poverty has declined, with just 5 percent of white Minnesota families now living in poverty.
  • Asians are the only minority families who have seen their median incomes grow. With a 2014 median family income of about $71,500, Asian families earn about $10,000 a year less than whites. Hmong families are an exception, however, with many living at or near poverty after coming to Minnesota as refugees.
  • Minnesota is an outlier nationally. White Minnesota families have higher median incomes, while Minnesotans of color earn less than their peers nationwide.

Family income is the most consistent historical measure of how Minnesotans are doing, but household income is now used more often because it includes people living together who are not related by marriage or blood. Income gaps for black, Native American and Hispanic households remain regardless of the measure, but Asian households out-earn whites (although income by family is lower).

The stark economic disparities are not because of a lack of effort.

Black and white Minnesotans try to participate in the workforce at similar rates. An even larger percentage of Hispanic and Asian residents are working or looking for jobs, census data show.

But unemployment for Minnesotans of color is as much as four times higher than that of white residents. In February, 2.9 percent of white workers were unemployed, compared with 13.6 percent of black workers.

Addressing racial inequity is important, not just for moral reasons but because Minnesota’s economic future depends on it. Workers of color are the only part of the workforce that’s growing.

Shawntera Hardy, the recently appointed commissioner of the Department of Employment and Economic Development, said workers of color are essential to addressing Minnesota’s growing labor crunch as older employees retire. Without them, Minnesota will fail to meet its workforce needs.

“Our communities of color are not liabilities to be managed but assets to be realized,” Hardy said. “If Minnesota wishes to remain competitive, it must invest in an economy that works for all Minnesotans.”

Why the gap?

Experts and elected leaders continue to debate why economic and academic racial disparities exist and persist.

Leaders from communities of color say a few basic factors play a large role, including misunderstanding what immigrants need, failing to invest in diverse communities and disproportionately imprisoning men with black and brown skin.

Racial prejudice also continues to be an important factor. A recent study from the Metropolitan Council found skin color and ethnic background played a key role in disparities even after accounting for age, education and language skills.

The makeup of Minnesota families has also changed as the state’s population grew and diversified. Today, more than 20 percent of families with children are led by single parents, roughly double the rate in 1980, census data show.

Families of color are more likely to have a household led by one parent, which often leads to lower household incomes and higher rates of poverty.

Minnesota’s minority population has grown rapidly since 1990 and now makes up nearly 20 percent of the state’s residents, or 1 million people. Much of that growth was driven by waves of immigrants and refugees from Asia and Africa.

This means Minnesotans of color tend to be younger or recent immigrants or just learning English. Research shows these challenges often result in lower wages, academic struggles and higher rates of poverty.

Problem: What immigrants need

The difficulties new immigrants face are not insurmountable. Vietnamese, Filipino, Chinese and Indian families in Minnesota now have higher median household incomes than white families, recent Census data show.

In contrast, Hmong households earn 17 percent less than white households, with the majority of Hmong living in or near poverty.

Bao Vang, executive director of the Hmong American Partnership community organization, says Hmong immigrants’ challenges differ from others because they came to Minnesota as refugees.

When they arrived in the U.S., many Hmong refugees had limited academic skills and struggled to understand how to make the best use of social systems to improve their lives. They also struggled to articulate the needs of their communities to the state’s power brokers.

“When you are thrown into a country or place and have to make sense out of it, it’s very challenging,” Vang said. “Our voices are often not heard because we are not yet at the level of sophistication where we can easily navigate the political community.”

Interestingly, some Minnesota newcomers fare better than those born here. With the exception of Somali refugees, census data show black Minnesotans born in other states or countries have lower rates of poverty than those born here.

Problem: Communities ignored

Today’s struggling minority communities can look to the past to see a different model.

NAACP leader Martin points to St. Paul’s Rondo neighborhood as an example of a community of color that thrived thanks to a tight-knit neighborhood where black workers frequented black businesses. During the 1960s, the median income gap between white and nonwhite families in Minnesota was less than $12,000 a year in today’s dollars, census data show.

Rondo’s success, however, was relatively short-lived.

“They tore that community apart,” Martin said, referring to highway construction in the 1960s. “They put (Interstate) 94 right through it intentionally.”

Martin said he wouldn’t want to return to the segregated era when Rondo thrived, but the neighborhood’s success could be replicated with better schools, more employers and more resources for the community organizations that help neighborhoods succeed.

Many of those groups have problems. Two of them, the St. Paul Urban League and Community Action of Minneapolis, have been accused of misspending in recent years.

Many others subsist on “life support” due to underfunding, Martin says.

“You have to do more than generate money. You have to generate hope,” Martin said. “If you tell people they are going to have a marginal existence, kids are not going to dream.”

Problem: Too many in prison

Minnesota’s criminal justice system has devastated opportunities for minority residents, particularly those of black men, community leaders argue. State data show that while blacks make up just

5 percent of Minnesota’s population, they make up 36 percent of the prison population.

Jonathan Rose, who immigrated to the U.S. in 1975 from Sierra Leone, examined the state’s racial disparities for the Council on Black Minnesotans in 2013. His research found that disparities in the criminal justice system were seen by the black community as the most difficult to change.

Citing data from the Council on Crime and Justice, Rose argues that black residents were more likely than whites to be stopped by police and arrested, even though whites were more likely to be carrying contraband.

Minnesota’s prison population has grown over the past three decades thanks to more drug-related convictions and stiffer sentences, Rose found. The state has one of the nation’s worst imprisonment disparities between whites and blacks.

After felons serve their time, they return to society with few opportunities to be successful because of the stigma that comes with their past conviction, Rose says.

“It becomes a vicious cycle, and they can’t get out of the trap,” Rose said. “It doesn’t start with prison, but prison is an anchor.”

Changing families

Minnesota’s families look a lot different than they did 50 years ago. Roughly a quarter of families with children are now headed by one parent, census data show.

Whites make up more than half of Minnesota’s single-parent families with children, but families of color are more often headed by one parent. More than 50 percent of black and 40 percent of Hispanic families with children have single parents, compared with about 22 percent of white families.

Single-parent families are much more likely to live in poverty, and families of color led by one parent are poor at a rate greater than white single-parent families.

Susan Brower, Minnesota state demographer, said households with one person working are more likely to struggle after a job loss or unexpected expense.

“I think the household composition is more important than we think,” Brower said. “We continue to see poverty rise for young children even when the economy is picking up. That is closely related to households with one earner.”

Why color gaps need to close

From 2010 to 2014, census data show, Minnesota lost 35,000 white residents of working age. During that same time, the number of working-age people of color increased by 72,000.

Brower, the state demographer, says those statistics are a key reason that long-standing racial disparities need to be reduced.

“In the past, when populations of people of color were smaller relative to the whole, economic disparities were an issue for moral reasons, for issues of equity,” Brower said.

But now, she notes, as racial and ethnic minorities approach 20 percent of the state’s population, all Minnesotans’ economic futures will be influenced by how well those residents succeed.

“All of our well-being is wrapped up, more and more, in how populations of color are faring in Minnesota,” Brower said.

Yet, meaningful and long-lasting changes to improve economic achievement for Minnesotans of color will likely require new and creative approaches, said Vang of the Hmong American Partnership. Continuing to focus on existing systems that have failed for decades is misguided, she said.

“You see the same people making the same decisions. The same decisions produce the same results. Why are we not doing something else?” Vang asked, adding that she hopes for new ideas.

“It may make people uncomfortable, but we need to be ready to be uncomfortable.”

The Pioneer Press is a Forum News Service media partner.