Two Economists Get Black Poverty Right

Note: White poverty estimates prior to 1980 include Hispanics. Data from 1980 to 2000 is of non-Hispanic whites. The 2006 estimate is of the "white alone, not Hispanic" population. Black poverty estimates include Hispanics. The 2006 black estimate is of the "black alone" population.
Source: U.S. Census Bureau.

Many people have been talking about black poverty, but few show that they have actually examined the poverty trends. The figure above shows the decade-by-decade change in poverty for blacks and for whites. Between 1959 and 1969, the black poverty rate declined by a tremendous 22.9 percentage points. The following decades showed relatively small declines until the 1990s. From 1990-1999, the black poverty rate declined by 8.3 percentage points. Since 2000, black poverty has increased slightly. Anyone really serious about reducing black poverty would try to understand these changes. Of particular interest should be the 1960s and the 1990s declines.

In recent years, Bill Cosby, John McWhorter, Juan Williams and others have argued that since the 1960s bad values have caused an increase in black poverty. The truth of the matter is that aside from some fluctuations, there has been no sustained increase in black poverty. In the 1990s, quite contrary to the popular claims, black America saw a sizable reduction in black poverty.

Further, it is clear that there are large economic forces affecting both black and white poverty rates. When black poverty declines, white poverty declines. When black poverty increases; white poverty increases. Any theory of black poverty has to explain why black and white poverty move in parallel. A theory of cultural problems that are unique to blacks does not explain the parallel trends for whites.

Most of the current crop of black public intellectuals have not examined the economic data with any care. They do not seem to understand that economic conditions and labor market practices affect black economic outcomes. It should not be a radical idea that economic factors have an important role to play in black poverty rates. The reason why black and white poverty rates move in parallel is because both blacks and whites are affected by the overall U.S. economy in similar ways. (There are differences for populations with large numbers of recent immigrants.)

Two black economists, Steven Pitts and William Spriggs, have issued a report, Beyond the Mountiantop: King’s Prescription for Poverty situating the discussion of black poverty in the dynamics of the America economy. The report pulls Martin Luther King Jr. into contemporary debates by presenting King’s views on the causes of poverty.

King does not side with the current generation of black public intellectuals. In 1967, King stated:
At that time [of the early 20th century] economic status was considered the measure of the individual’s abilities and talents. And in the thinking of that day, the absence of worldly goods indicated a want of industrious habits and moral fiber. We’ve come a long way in our understanding of human motivation and of the blind operation of our economic system. Now we realize that dislocations in the market operation of our economy and the prevalence of discrimination thrust people into idleness and bind then in constant or frequent unemployment against their will. The poor are less often dismissed, I hope, from our conscience today by being branded as inferior and incompetent. We also know that no matter how dynamically the economy develops and expands, it does not eliminate all poverty.
King understood black poverty, therefore, as a two-part problem: (1) a general failure of the economic system to distribute wealth, which would affect blacks and whites, and (2) the result of anti-black discrimination in the labor market. King explicitly rejects the culture-of-poverty-type ideas that are popular today, and sees those type of ideas as an out-of-date way of thinking not based on a good understanding of the economy.

Given these causes of black poverty, Pitts and Spriggs identify four policy goals:
  • generate full employment—everyone who wants a job should have one
  • fight discrimination
  • protect worker’s freedom and right to join a union
  • raise the minimum wage
  • .
Pitts and Spriggs point out that the reason there was a tremendous decline in black poverty over the 1960s was because all four of these goals were in place. The economy was at full employment. The U.S. government was still earnest about enforcing anti-discrimination policies. Unions were strong and growing. And the real value of the minimum wage was high.

During the 1970s and 1980s all of these policy goals were in decline or largely absent. During the 1990s, only one of the four policy items was really in place. The economy achieved full employment at the national level. But there was lax enforcement and weak support for anti-discrimination policy. Unionization rates were declining. And the real value of the federal minimum wage in 2006 was $2.33 less than it was in 1969. One is better than none, but it is clear that four is better than one.

In an era when so many people “get it wrong” about poverty in black America, it is refreshing to see some folks who get it right.

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--Algernon Austin, Ph.D.

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