This paper examines racism and discrimination against rural blacks, especially as these factors relate to poverty caused by unemployment and underemployment. While overt racism in the rural South and Appalachia was sharply reduced during the 1970s, statistical evidence indicates that related differences, such as the black-white "income gap," were not greatly affected. Historical, cultural, and non-market factors can be conceptualized as racism and discrimination and seen as contributing to unemployment. Differences in income comes not by chance but from racism in the South and, more specifically, in Appalachia. Institutional discrimination by complete or partial restriction from job opportunities systematically keeps blacks in a low status and affirms continuing discriminatory images held by the larger Appalachian community. Different forms of institutional racism are described, notably the perception and separation of "black jobs" from higher-paying "white jobs." Census figures from 1983 indicated that hourly wages were lowest in the three regions of the South; in these regions of the country blacks were most heavily concentrated in low-income divisions. Although their educational backgrounds are similar to those of whites, black youth are excluded from some service-industry jobs. A study of hourly wages reported by a regional hotel and conference center shows that 70% of the black employees held the lowest-paid positions. The paper concludes by recommending more complete research, better training programs and employment standards among employers, and outreach programs that better define employer commitments to hiring and retaining blacks. (TES)