Black Lives Matter – Welcome to the Economics blog

Black Lives Matter Head of Economics, Professor Sarah Smith explores racial inequality in the UK, reflecting on recent events.

The past few weeks have seen protests around the world, triggered by the death of George Floyd at the hands of the Minneapolis police. Protestors in many US and UK cities have demonstrated against police brutality and against systemic racism.

Responding to the protests, some UK government ministers suggested that the protests were a specific response to the situation in the US rather a response to problems in the UK. Secretary of State for Health Matt Hancock said that he thought that the UK is not racist. It is important to set the record straight and highlight some economic facts about racial inequalities in the UK.

The reality is that there is a long-lasting legacy from slavery in the UK. In Bristol, the statue of 17^th century slave trader, Edward Colston, was toppled during the recent protests and rolled into the river. When slavery was abolished in the UK, slave owners (not slaves) were paid compensation for the loss of their “property”. The government borrowed an enormous sum of money (equivalent to 40 per cent of its entire national budget) to make the payments under the slave-compensation package – using taxes to pay off the loan with payments only ending in 2015. For nearly two hundred years UK taxpayers have been required to pay off slaveowners. The records of the payments show the extent of slavery in the UK – from widows in York to clergymen in the Midlands, attorneys in Durham to glass manufacturers in Bristol. But most of the payments went to a few very rich slaveowners – more than 50 per cent of all the money went to 6 per cent of claimants.

Today, there remains a damning record of racial inequalities which no government can deny. Only last week, Public Health England published a review into disparities in COVID19 deaths, highlighting that BAME groups have been hit much harder by the virus, and experienced higher death rates, than whites. Looking at the excess, all-cause mortality rate (ie how many deaths there are this year compared to previous years), which is the most reliable way to pick up deaths due to COVID19, black men and women have died at twice the rate of whites. Age is the single, biggest risk factor for COVID19 mortality and the black population in the UK is younger on average than the white population. Adjusting for age, the mortality risk for black men and women is four times that it is for whites.

Among the possible factors that might explain the higher death rates, it has been highlighted that BAME people are more likely to live in deprived areas (18.1 per cent of black people live in the most deprived 10 per cent of neighbourhoods) and in urban areas which may have higher pollution (also identified as an important risk factor for COVID mortality). They are also more likely to work in jobs that expose them to higher risk. An Institute for Fiscal Studies report found that one-third of all working-age black Africans are employed in key worker roles, 50% more than the share of the white British population. BAME people are also more likely to suffer have other health conditions that put them at risk of dying from COVD19. For example, people of black Caribbean and black African ethnicity have higher rates of hypertension compared with other ethnic groups.

These factors “explain” the higher mortality rate only to the extent that they highlight economic disparities by race. Here are three striking inequalities:

There is a substantial and persistent black-white pay gap – i.e. a difference between the median hourly wage among black workers and the median hourly wage among white workers. In 2018, the pay-gap was 9.2 per cent in 2018 (up from 5.8 per cent in 2012). This compares with a gender pay gap of 17.3 per cent (8.9 per cent among full-time workers). Since 2018, firms with more than 250 employees have been required to report on their gender pay gap and there are calls for a similar requirement for ethnicity pay gaps.

BAME people are economically more vulnerable, typically experiencing higher rates of unemployment. Recent evidence confirms that BAME people have been harder hit, economically, by COVID19. BAME individuals are 14 percentage points less likely to be furloughed and 13 percentage points more likely to be unemployed than non-BAME individuals. They are also more likely to be experiencing financial difficulties in the current crisis – more likely to have cut back on spending, be behind on bills and more than twice as likely to have resorted to borrowing than non-BAME individuals.

There is also a substantial and persistent racial gap in educational attainment at all levels:

At primary school level – 55 per cent of black African students achieve the expected standards in reading, writing and maths compared to 65 per cent of white students.
At GCSE level – 26.9 per cent of black African students achieve the Grade 5+ in English and Maths, compared to 42.7 per cent of white students.
At A-level – 3.5 per cent of black African students achieve Grade A or above in three subjects, compared to 10.9 per cent of White students.
At university – 77.1 per cent of white students get a First or an Upper Second class degree compared to 57.5 per cent of black students.

Looking at these statistics, it is clear that this is not a “US problem” and that the UK faces its own problems with racial inequalities. In Bristol, the statue of Edward Colston that memorialised slave trader, was toppled and will eventually be put in its rightful place in a museum. Likewise, it is time to address the persistent economic disadvantages experienced by black people in the UK and similarly consign those to history.