Beyond Direct Discrimination

This study probes whether perceived racial discrimination among Black Americans predicts worse labor-market outcomes, and whether “financial trauma” (severe financial shocks and setbacks) mediates that relationship. Using Panel Study of Income Dynamics (PSID) data from 2005–2015 and structural modeling, the analysis finds that financial trauma substantially lowers earnings and employment probability, while self-reported discrimination does not systematically predict greater financial trauma within the Black community. Variation in discrimination perceptions appears less tied to economic outcomes than shared structural constraints. Intersectional analyses show Black women face higher financial trauma and lower family incomes than Black men, though labor-market outcomes are similar. The findings point toward structural policy remedies rather than individual perception–focused interventions.