The US has a startling race pay gap problem. They are not the only ones | Mary O’Hara

Pay gaps are part and parcel of what drives inequality – and exposing them serves as a crucial reminder of just how entrenched and harmful they can be. This was certainly the case when the latest data reported by the National Women’s Law Center in the US highlighted that the gap between male and female workers has remained stubbornly devoid of progress.

Women working full time in the US can still expect just 80 cents for every dollar paid to their male counterparts. Black and Hispanic women fare even worse – the former earning on average a paltry 63 cents in the dollar and Hispanic women a mere 54 cents compared to their male, white equivalents.

However, pay injustices are only one part of a much more disturbing picture.

A new report, The Road to Zero Wealth: How the Racial Wealth Divide is Hollowing out America’s Middle Class, published this month by the Institute for Policy Studies (IPS) and Prosperity Now, places a firm focus on gaps in household wealth, and in particular as it relates to race. As the report methodically details, the gaping and growing wealth divide in the US between white households and black and Latino ones is not only shocking, but a clarion call for immediate action.

The authors conclude that not only has black and Latino wealth been declining, but that it is falling at an accelerating rate. “Between 1983 and 2013, median black household wealth decreased by 75% to $1,700 (£1,250) and Latino household wealth fell 50% to $2,000. At the same time, median white household wealth rose 14% to $116,800,” the report notes. Worrying enough, you might think, except that it also estimates that over the next three years the situation will worsen. By 2020, the report projects, median white households stand to have 86 times more wealth than equivalent black households and 68 times more than Latino households.

As the report points out, people who possess a degree of wealth (perhaps an inheritance or property) tend to be able to weather serious financial shocks and avoid problematic debt in a way that people with few assets cannot. Overall, roughly 70% of black and Latino households fall below the $68,000 wealth threshold needed for middle-class status, compared to only 40% of white households, the report calculates.

One of the main reasons why wealth is so dramatically skewed towards white households is that “past discriminatory housing policies” have cemented a racial gap in home ownership that excludes people from some ethnic minority backgrounds from accumulating property wealth on anywhere near the scale of their white counterparts. Another factor is what the authors call the “upside down” US tax system, which turbo-charges the wealth of the already wealthy (for example mortgage tax relief for home owners) while “providing the lowest income families with almost nothing”.

With households of colour growing as a proportion of the US population (they are expected to reach majority status by 2043), if moves aren’t made to reverse current trends, the wealth gap will widen – and the chances of black or Latino people getting into, and staying in, the middle class will deteriorate further.

Of course, the US is not the only country with this problem. Last year, an Equality and Human Rights Commission (EHRC) report, Healing a Divided Britain, found glaring gaps in income and wealth between white and non-white Britons and entrenched discrimination experienced by black and minority ethnic (BAME) people in the UK. The overall pay gap, for example, between white and black workers is now 12.8%. And just this week a new analysis revealed that a negligible 3.4% of Britain’s most powerful elite were from black and minority ethnic (BAME) backgrounds.

When reports like these are published, everyone should be paying close attention. Inequality affects a broad spread of groups and can have widespread destructive fallout across any society in which it is permitted to run rampant. But the impact on BAME communities is not only among the most egregious, it reinforces avoidable and extreme inequality and it stunts opportunity for generations.