Racial Disparities in Federal Employment, Lending, and Housing

Over the past several years, GAO has been asked to examine various racial inequalities in economic markets. In today’s WatchBlog, we explore our work on racial disparities in the federal workforce, lending, and housing.

Federal employment

As the nation’s largest employer, the federal government judges its own employment practices by whether they advance the American ideal of equal opportunity for all. We have often been tasked with examining equal opportunity employment issues in various federal agencies—including hiring, promotions, and discipline.

For example, while the State Department’s workforce has grown more diverse, racial or ethnic minorities are still underrepresented, particularly in the senior ranks. Racial or ethnic minorities in State’s Civil Service were 4% to 29% less likely to be promoted than their white coworkers with similar education, occupation, or years of federal service.

As another example, the U.S. Agency for International Development has worked toward increasing staff diversity. Over the period of 2002–2018, the proportion of racial or ethnic minorities in USAID’s full-time, permanent, career workforce rose from 33 to 37%, but proportions of some groups fell. Also, racial or ethnic minorities in the Civil Service were 31 to 41% less likely to be promoted than whites with similar jobs or years of service.

We’ve also looked at disparities in the military justice system and testified on this issue. Among other things, we found that Blacks, Hispanics, and males were more likely than Whites or females to be tried in general and special courts-martial, in all military services. We also noted that the services don’t record information on race and ethnicity the same way, making it more difficult to identify disparities.

In each of these cases, we recommended ways to improve upon existing efforts or to identify and address barriers to equal opportunity and fair treatment.

Business and farm lending

GAO experts have testified that discrimination may play a role in certain types of nonmortgage lending. For example, in 2008, we reported that available studies indicate that African-American owned small businesses are denied loans more often or pay higher interest rates than white-owned businesses with similar risk characteristics.

However, potential discriminatory patterns in nonmortgage lending are difficult to track. Race data is only collected on loans originated or guaranteed by the federal government—meaning that banks and other lenders do not collect this information.

In 2019, we looked at USDA data on farm loans. We found that women and minority farmers and ranchers received a disproportionately small share of farm loans. For example, while women and minority-owned farms represented 17% of primary agricultural producers, they comprised only 13% of farms loans and 8% of the total outstanding farm debt.

According to farm lending stakeholders, minority and women farmers can have difficulty obtaining agricultural credit from private-sector lenders because they operate smaller farms and in some cases do not meet standards for farm revenue, applicant credit history, and collateral. However, farm advocates we interviewed also noted that minority farmers face additional challenges related to historical discrimination and ongoing unfair treatment by lenders when trying to obtain private agricultural credit.

Congress has recognized some of the challenges these groups face by requiring USDA to target “socially disadvantaged farmers and ranchers” in programs that make direct loans or that guarantee loans made. Additionally, an ongoing rulemaking pursuant to a provision in the Dodd-Frank Wall Street Reform and Consumer Protection Act would modify the prohibition on collecting data on the personal characteristics of loan applicants.

Homeownership vs. Rentership

Homeownership is a big part of the American Dream—but disparities in mortgage lending have been well documented.

Since the 2007–2009 financial crisis, the national homeownership rate has stabilized; however, not all Americans have benefitted from the recovery. Even in housing markets that appear to be thriving, many still find themselves locked out of homeownership.

Understanding the factors that explain disparities in homeownership has been difficult. In July 2010, Congress acted on a recommendation we made, which amended Home Mortgage Disclosure Act to require lenders to gather data on the credit scores of mortgage loan applicants as a way to identify potential discrimination in mortgage lending.

In the rental housing market, Black households were more likely to rent than buy compared to other groups (Whites, Hispanics, and Asians). This was a growing trend, according to our June 2020 report. Rentership among Black households increased from 54 percent in 2001 to 58 percent in 2017. In contrast, rentership among White households was lowest among the race/ethnicity groups, and about half the rate of Black households (ranging from 26 to 29 percent from 2001 through 2017).

Similarly, Black households were more likely to face higher rent burdens (rent as a percentage of income). Rent burden was about 10 percentage points more common among Black and Hispanic households than White households in 2017. This disparity was due to sizable differences in median income. In 2017, estimated median income was $63,704 for White households, $49,793 for Hispanic households, and $40,232 for Black households.

Want to learn more about our work on affordable housing and federal employment trends? Check out our key issue pages on Affordable Rental Housing and Leading Practices in Human Capital Management.


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