Despite the economic gloom, living standards for BAME groups are finally catching up

Published on Incomes and Inequality

Good news is undervalued. Partly because it doesn’t make as good headlines and partly because there hasn’t been much of it around after a fairly grim decade since the financial crisis. So here’s some: since the turn of the millennium living standards gaps between different ethnic groups have been narrowing in Britain.

Since 2002 White British families, who have relatively high living standards, have seen their incomes rise by 13 per cent. But Bangladeshi families, traditionally the poorest in Britain, have been catching up, with the fastest income growth at 38 per cent, followed by Pakistani households at 28 per cent.

Now obviously the less good news is that huge income gaps existed at the turn of the century and still remain between ethnic groups. Yes typical Indian and Chinese household incomes aren’t far off White British levels – but typical Bangladeshi household income is still a staggering £8,900 (35 per cent) lower while typical Black African households have £5,600 less (22 per cent).

These income gaps become even bigger when we take housing costs into account, with the disposable income gap between White British households and Bangladeshi households increases to £9,800 (44%) when housing costs are considered. This is partly because almost 60 per cent of White British families own their home, compared to just a quarter of Black and Bangladeshi families.

But big gaps remain, but in thinking about how to further narrow them it’s worth dwelling on what’s driven the catch-up we’ve already seen for some groups. Part of the reason both for the big income gaps in the first place and fast growth for Bangladeshi and Pakistani families is low but fast increasing female employment. Pakistani and Bangladeshi female employment is very low relative to White female employment (37 and 35 per cent compared to 72 per cent), but the former two groups have seen their employment rate soar by ten and 18 percentage points respectively between 2001-03 and 2015-17, partially closing the gap.

We’re also seeing a big narrowing of male employment gaps – with recent employment surges amongst Black, Pakistani and Bangladeshi men of 10, 17 and 6 percentage points respectively since 2001-03, while the rate among white men has been flat.

This uptick in employment means that male unemployment for all groups has returned to pre-crisis levels. This is good news overall, but we shouldn’t get complacent – the rate is still too high for Black, Pakistani and Bangladeshi men at 8-12 per cent, well above the 5 per cent for White men and indeed higher than White men saw at any point during the financial crisis.

Demographics also make a difference here, too. Having smaller families is boosting measured living standards for Bangladeshi and Pakistani households, which now typically have less than 1.5 children per household compared to over two in 1990s. This is about both there being more such households with no children, and less kids in those households that do have them – so more older households and smaller families.

Our research leaves many questions unanswered, not least the extent to which discrimination is to blame for the remaining substantial gaps or how big an impact the £9 billion of welfare cuts being rolled out over the next few years will have. But it is worth celebrating what we do know – our labour market has done a good job of bringing in more workers from ethnic minority households, closing the still far too high gaps in living standards. That’s good for those workers and households, but its good news too for all of us as it strengthens our society and economy. Enjoy the good news.

This blog originally appeared on the New Statesman Staggers blog