Why the US government underreports the economic gaps between white and black Americans

Image: Reuters/Stephen Lam
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Nationwide protests over the death of George Floyd, a black man killed by a white police officer, have brought increased attention to the continuing gaps in economic status between white and black Americans. Data show that blacks in the US have ten times less wealth, are 20% more likely to be unemployed, and make 78% as much in weekly wages as whites.

Due to a decision by government statistical agencies, these numbers actually underestimate the difference.

Most official US economic statistics come from the US Census Bureau and Bureau of Labor Statistics (BLS). The major surveys conducted by these agencies all exclude the over two million Americans who are incarcerated. Since black Americans are six times more likely to be incarcerated than whites and twice as likely as Hispanics, this has the effect of making it appear that African Americans are better off financially than in reality. Over 90% of inmates are men.

“Whenever you see an employment rate for black men you know it’s BS,” said University of Chicago economist Derek Neal. “On any given day 7-8% of young black men are incarcerated and those people are not counted.”

Neal told Quartz that because black incarceration rates rose so dramatically from 1970 to 2000, excluding those in prisons and jails from economic surveys has corrupted our understanding of trends in black-white economic gaps. Many economic statistics suggest that disparities between black and whites in the US are narrowing. For example, government statistics show that the gap in incomes between black and white middle career men narrowed to 25% in 2014 compared to 35% in 1970. But that difference entirely disappears after accounting for the increase in incarceration, according to research by research by Neal and Dartmouth economist Armin Rick.

In her 2012 book Invisible Men: Mass Incarceration and the Myth of Black Progress, the sociologist Becky Pettit also examines how ignoring the prison population distorts a variety of commonly cited statistics, including those about employment, education, and earnings. She finds that while conventional government statistics show that the employment rate for young, low-skilled black men fell from 62% in 1980 to 42% in 2008, the reality is much worse. If incarcerated men are included, the rate is closer to 30%. For education, government statistics suggest that the high school graduation rates of black men are getting closer to those of white men. Pettit shows that most of the convergence is due to excluding the incarcerated.

Why would a government agency choose not to survey those in prison? It’s partly for convenience. It’s difficult to get a random sample of incarcerated people on the phone. BLS surveys also excludes the one million active duty military members for the same reason—which also skews the data. It also may be due to what the survey is trying to measure. “We’re trying to get at people who are actively seeking and available for work, and a prisoner’s situation is very different from that,” a BLS economist told The Outline in 2017.

Still, many Americans look to government data to understand racial inequality, and this data is giving them a more optimistic story than it should.