How do I deal with the racism and bigotry that is in my family?

You may not be able to. Understand that people believe what they do for many different reasons, some you may never understand. There are many people like your step father that you come in contact with everyday. They may be a teacher, a doctor, your next door neighbor, someone you respect. This behavior is not in your face, society will not allow it. Accept him for who he is and do what you can to help your friend find a job elsewhere.