On Thursday, Dedrick Muhammad, co-author of the new report "State of the Dream 2009: The Silent Depression", from United for a Fair Economy, appeared on Democracy Now. Right off the top, he said:
I think one of the most important findings is that-the idea that the African American community never emerged out of the 2001 recession. As the country was talking about things were going well in 2005, 2006, we saw that African Americans were actually having a decline in the employment rate, a decline in per capita income.
Prompted by Juan Gonzales on the issue of the wealth gap, Muhammad continued:
The overwhelming majority of African Americans and Latinos do not even have a savings enough that would keep them going for three months. And as you see growing unemployment and, what's not talked enough about, underemployment, there is not that safety cushion to help you get through hard times. African Americans only have about 15 percent of the wealth of white Americans. And so, again, African American community, Latino communities, and also just working-class communities as a whole, are in a much more dire situation than I think is truly recognized. And we need some political courage to deal with these issues adequately.
In covering this report, I want to do two things. First, present an overview of the scope of the main findings of the report. That's what I'm going to so in this diary. Second, in a follow-up diary, I want focus in on the confluence of several driving dynamics: (1) The pre-existing racial disparities in wealth and income dating back to the pre-Civil Rights Era. (2) The sharp break between pre-1975 liberal economics and post-1975 conservative economics, after which economic advancement was sharply concentrated amongst the more affluent, and particularly the super-rich. (3) The concentration of wealth-promoting policies on those who need it least-those who are already among the most affluent of all Americans. What this combination of factors shows is that there is a very real, hard-core economic explanation for why blacks (as well as Latinos) have been mired in struggle economically, despite the fact of tremendous efforts over the last four decades. Those explanations also tie back into conservative ideology, which is directly responsible for closing off opportunities for a poor people in general, and blacks and Latinos in particular.
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| Topline Info
As explained above, my purpose in this diary is to present a run-down of the topline info from the executive summary (page numbers refer to expanded discussion in the report itself). I'm also including some charts that vividly present the dramatic gaps that remain between whites and people of color. The purpose here is simply to bring these often-ignored differences squarely into public attention. The follow-up diary will focus more specifically on what's behind these persistent differences.
Income and the State of the Economy- Although the National Bureau of Economic Research did not announce until December 1, 2008 that the U.S. has been in a recession, it has been apparent to many that this country has been in a growing recession for more than a year. People of color have been in a recession for nearly five years and have entered a depression during the current economic crisis. (pp. 10, 21, 24)
- The Black unemployment rate is currently 11.9%. Among young Black males age 16-19,unemployment is 32.8%. (pp. 10, 11)
- The median household incomes of Blacks and Latinos are $38,269 and $40,000, respectively, while the median household income of whites is $61,280. (pp. 18, 19)
- People of color are disproportionately poor in the United States. Blacks and Latinos have poverty rates of 24% and 21% respectively, compared to a 10% poverty rate for whites. (p. 18)
- A deep recession would see median U.S. family income decline by 4% and Black income decrease by 6%. Thirty-three percent of Blacks and 41% of Latinos would be in danger of falling out of the middle class into poverty compared to 25% nationally. (pp. 6, 14)
As the above chart makes abundantly clear, there is no prospect of black and white incomes reaching parity anytime soon. Indeed, if income equality is to be our measure, progress towards equality is virtually non-existent in America today. No wonder "equality of opportunity, not equality of results" has become a mantra of America's racial politics. But, of course, there isn't equality of opportunity, either. It's just not so incredibly easy to demonstrate this in one fell swoop.
Housing- Since United for a Fair Economy published State of the Dream 2008: Foreclosed in January 2008, estimates of foreclosures from late 2008 to the end of 2009 have increased from 1.1 million to 2.2 million and the estimated total loss of housing wealth for homeowners has increased from $2.2 trillion to $2.7 trillion. (p. 48)
- In 2006, 18 million households spent more than 50% of their income on housing. That number has since surged by almost 4 million. (p. 22)
- In nearly half of low-income households, after housing costs are paid, families have only $257 a month left for food, $29 for clothing, and $9 for medical care. (p. 22)
The above chart tips my hand a bit for the follow-up diary. It shows how little government support goes to poor people for asset-building in housing, as opposed to how much goes to more affluent people. Because blacks are substantially poorer than whites, as a whole, this means that blacks get far less help in buidling wealth when it comes to housing. Is it any wonder, then, that most of them never seem to make any progress? It has nothing to do with them as individuals, and everything to do with how federal money is diverted toward some people, and away from others.
Mobility- Children born in the bottom 20% only have a 1% chance of reaching the top 5% of income earners. (p. 6)
- In 2006, more than 68.6% of funds in government programs designed to increase economic mobility were directed toward the top 10% of income earners. We recommend more federal asset-building funds be directed toward Individual Development Accounts and financial education for people in the bottom 40%. (p. 28)
- People of color are more likely to be poor (24.5%), remain poor (54%), and move back into poverty from any income class status than their white counterparts. (pp. 6, 7, 8, 9)
Not only are more white children born into higher-income quintiles than black children, more white children in each qunitile rise to a higher quintile than their parents in their adult lives. This would appear to reflect the fact that the wealth gap between the races is larger than the income gap (see next chart below), and that greater wealth reflects a greater capacity to increase income over time.
Wealth- Nearly 30% of Blacks have zero or negative worth, versus 15% of whites. (p. 24)
- Only 18% of people of color have retirement accounts, compared to 43.4% of their white counterparts. (p. 23)
- On the median, for every dollar of white wealth, people of color have 15 cents. On average, people of color have 8 cents for every dollar of white wealth. (p. 28)
While the black/white income gap will be closed in "just" 347 ytears, it will take more than another 200 years--247 years more, to be exact--to close the black/white wealth gap. This is surely a contributing factor to why black children in every quintile are less upwardly mobile than white children in the same income quintile: on average, those with equal incomes do not have equal wealth, and wealth reflects a greater capacity to increase income over time.
Structural Racism and Policy- Concentrated poverty creates barriers to economic and educational mobility. Blacks and Latinos are twice as likely to live in these areas as whites. (pp. 33, 34, 35)
- U.S Census Bureau should change its measurement of poverty in time for the 2010 census. The current method underestimates the numbers of the most marginalized. These gaps give policymakers an inaccurate view of the scope of the problems of poverty. (p. 33)
- We urge the National Bureau of Economic Research (NBER) to integrate into indicators of recession measures for wealth inequality, asset accumulation, income inequality, employerbased benefits versus employee-based benefits, and the various types of unemployment. This will help bring economic problems to the forefront and help end the crisis of silence about the true state of the dream. (p. 52)
One key factor in overcoming poverty is having social and institutional connections to those who do not live in povert--people who can provide mentorship, training, job opportunities, etc. In contrast, those who live in high-poverty neighborhoods have relatively few contacts with people and institutions who can provide opportunities to work themselves out of poverty.
In light of the extreme concentration of poverty that blacks and Latino's live with, it is hardly surprising that overall poverty rates remain so high.
Conclusion
All the above economic information has to do with mass data, and shows clear patterns of causation that are completely unsurprising. None of any of it is primarily related to personal characteristics, such as work effort. This is not to say that personal characteristics play no part, of course. If one lives in a high poverty neighborhood, and there are few ways out, it's only natural that over time one is far more likely to give up on trying to get ahead via sustained hard work. But this is not due to anything innate. Anyone who grew up in such circumstances would be more likely to respond in the same way. In the followup diary, we will focus more systematically on how the changing economy, and conservative policies that encouraged as well as exacerbated it have made things even tougher for minorities. |
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