Race and class patterns of income inequality during postrecession periods

Abstract

AbstractRecent research on increasing income inequality focuses on recessions’ role on the income distribution and racial disparities in the United States.ObjectiveThis study expands this research by focusing on the evolution of racial income inequality during postrecession periods. We hypothesize that differential recovery trends by race and income rank during postrecession periods exacerbate between‐ and within‐race income inequality. Specifically, we examine postrecession trajectories of race‐specific weekly earnings for the bottom and top 10 percent in the U.S. weekly earnings distribution.MethodWe apply a break‐spline regression approach to quarterly weekly earnings data (2001–2018) collected from the Bureau of Labor Statistics and the Federal Reserve Bank of Saint Louis for the 2001 Recession, the Great Recession, and between‐recession periods.ResultsResults show an increase in income inequality between the bottom and top 10 percent in the weekly earnings distribution during recovery periods. For all races, the bottom 10 percent recovered from recessions slower and later than the top 10 percent. We also find that Asian Americans’ weekly earnings influence between‐ and within‐race income inequality during postrecession periods.ConclusionIncome inequality—overall and across races—is entrenched as racial/ethnic minorities and the poor are particularly vulnerable to recessions and are neither catching up nor recovering during upturns of the economy.