Scholars argue that persistent racial inequality in Cape Town is caused by deindustrialization, which has led to high unemployment among blacks (Africans, coloreds and Indians) and the polarization of the occupational structure into a class of mostly white, highly paid managers and professionals and a class of mostly black, low-paid service-sector workers. This study shows that deindustrialization has not produced a large class of black lowwage service-sector workers. Instead, it has produced a professionalizing occupational structure alongside high unemployment. Although whites benefited from the growth of the professional and managerial jobs, these occupations have been substantially deracialized. The consequence for the racial geography of Cape Town is that the city is becoming divided into racially mixed middle-class neighborhoods and black working-class neighborhoods characterized by high unemployment.