One of the main effects of racial inequality is to create divisions in the working class. Capitalists thereby benefit from racism, regardless of whether they are the direct agents of racial inequality. Greater racial inequality between black and white workers makes alliances between them more difficult and hinders the development of joint bargaining power against employers. The analysis of segmented labor markets suggests that a high-wage, primary labor market occupied disproportionately by white males coexists with a distinct low-wage, secondary labor market occupied disproportionately by racial minorities and women. As a result of maintaining the racist status quo and the failure to implement adequate welfare reform, U.S. workers in the postwar period have experienced higher unemployment rates and lower social welfare benefits than workers in any other advanced capitalist country. The most highly publicized aspect of postwar race relations concerns affirmative action and desegregation programs. The effectiveness and magnitude of these programs has been the subject of controversy, but the author believes that stagnation of the economy as a whole has more than offset any gains that blacks have obtained through these programs. By operating on labor market structure and in the political determinants of economic policy, racial inequality has continued to hurt a broad spectrum of white workers. 3 tables.