Just as with poverty overall, rates of deep poverty are higher for households headed by someone of black, Asian and minority ethnicity. Key drivers of higher poverty rates among minority ethnic households are differences in family composition, employment rates and the likelihood of working in low-paying sectors. There has been progress over recent years in reducing the proportion of certain ethnic groups in deep poverty, but there is a risk that the rapid increase in the cost of living will reverse this trend, and over half of the increase in deep poverty over the last two decades is made up of people from ethnic minorities. (See also this related JRF post on destitution and disability, and this recent Runnymede Trust report on poverty, inequality and ethnicity in the UK.)

Although second-generation ethnic minority groups in the UK are generally doing well at school and university (despite the fact that they are more likely than white children to have been disadvantaged as children), they still have lower employment rates than their white majority peers. This gap persists even when disadvantaged family origins are taken into account, suggesting that some disadvantages in the labour market are reduced but not completely eliminated by educational success.

Ethnic minority workers earn on average 2% less than similarly qualified white employees, although after controlling for differences like age and education, the gap is about 10%. The gap can’t simply be explained by ethnic minority workers being employed by firms that pay lower wages, because this pay gap also exists within organisations. The only apparent explanation for this gap is that ethnic minority workers are being treated and paid unfairly. [Another report found that the ethnicity pay gap has not changed much in 25 years, and that for black, Pakistani and Bangladeshi men and women, pay gaps with white men and women have widened. The government has recently backtracked on an earlier promise to require large companies to report on their ethnicity pay gap. There are also significant pay gaps for women and disabled people (statistics). Pay gaps are usually reported on in terms of hourly pay, which is a simpler way of assessing fairness in terms of reward for effort, but in structural terms it is more illuminating to compare weekly pay, which takes into account differences in individuals’ or groups’ ability to work and the availability of work; gaps in terms of weekly pay are generally much higher than gaps in terms of hourly pay.]

Institutional racism is common in all sectors and organisations. A majority of women of colour have been forced to change some aspect of their appearance or language to conform, and have experienced discrimination during the recruitment process. Large minorities have experienced lack of progression or promotion compared to colleagues, and have had their wellbeing impacted as a result. These issues affect women of colour at every stage in their careers.

ONS data shows that, overall, ethnic minorities have much lower levels of savings and assets than White Britons, with median household wealth of £34,000 for Black African households compared to £314,000 for White British households. Comparative analysis of ethnic inequalities that controls for other factors (like age and housing tenure) risks disguising the drivers of wealth inequality between ethnic groups, such as home ownership (which is very low among Black Caribbean households, for example). Separate research by the Runnymede Trust in 2020 found that Black African and Bangladeshi households have 10p for every £1 of wealth held by White British households.

The vast majority of wealth in the UK is very lightly taxed. Because Black households have the lowest levels of wealth (and families of Bangladeshi and Black African heritage have ten times less wealth than white British families), the failure of the tax system to tax wealth appropriately makes it complicit in the maintenance of the racial wealth gap (alongside other aspects of the financial system such as insurance, banking, loans, mortgages, savings and so on).

Three in four people think that Britain’s rich mix of backgrounds is part of British culture, up from less than one in two in 2011, and 84% would be happy with an ethnic minority Prime Minister. But on race, progress is more mixed; fewer than half think that relationships between ethnic groups have improved in recent years, and one in four ethnic minority Britons think that racism might get worse over the next decade.