Hard Economic Times Ahead

A New Lecture: “Anti-Black Discrimination in the Age of Obama” by Dr. Algernon Austin

The simplistic idea that impoverished African Americans have only themselves to blame for their poverty, due to their poor cultural values—a notion advanced by many, including black public figures such as Bill Cosby—is believable only if a blind eye is turned to those inconvenient things social scientists like to call “facts.” Algernon Austin soundly refutes the “culture of poverty” argument by paying careful attention to marco-economic data about long-term poverty trends and sociological case studies about persistent discrimination. In other words, unlike the glib punditry, Austin actually looks at the “facts.”
--Dr. Andrew Hartman, professor and audience member, Illinois State University

Contact Dr. Austin to arrange a speaking engagement.

Even before the current Great Recession, the economic state of black America was not good. Blacks made significant economic progress during the strong economy of the 1990s, but the “jobless recovery” after the 2001 recession put black economic progress in reverse [PDF]. Black incomes declined and black poverty rose from 2000 to 2007.

Now things have gone from bad to worse. We have been in a recession for 17 months and have seen historic job losses. Not surprisingly, blacks have been overrepresented among those losing jobs. The black unemployment rate in May was 14.9 percent, the highest for the major racial groups. For black men, nearly one-in-five is unemployed, up from about one-in-ten two years ago. One-in-ten unemployed is very bad, one-in-five is a disaster.

As bad as these black unemployment numbers are, in a “normal” recession they would be even higher. The black unemployment rate is usually at least twice the white rate, but during this recession it has been a little less than twice the white rate. In May, it was “only” 1.7 times the white rate.

It seems that blacks are, ironically, benefiting some from anti-black racial discrimination. Yes, that’s right—benefiting from anti-black discrimination. During the housing boom many construction jobs were created. Now, during the housing bust, construction has seen massive job losses. Historically, blacks have been underrepresented in the construction industry, likely due to anti-black discrimination. Relatively few blacks were able to ride the construction-job rollercoaster up and now relatively few are riding it down with the construction-job losses.

It is important to understand that blacks have had significant job losses in construction. Even for the relatively small number of blacks in construction, it appears that they are more likely than whites to lose their jobs. Had blacks been better represented in construction, their construction-job losses would likely have been greater.

Even if, relative to whites, the recession is less bad than “normal,” overall this recession is much worse than “normal.” The signs are that the Great Recession will set blacks back substantially in income and wealth. Already, the inflation-adjusted black median weekly wage is down $23 from the first quarter of 2007 to the first quarter of 2009. None of the other major racial groups have seen weekly wage declines over this period. In fact, they have all seen wage growth during this period.
The Federal Reserve reports that blacks are also alone in showing a loss of wealth from 2004 to 2007. During this period, the net worth of white households increased 10 percent, but the net worth of blacks declined by 24 percent. It is likely that the decline in the black homeownership rate from 2004 to 2007 is driving this finding.
In 2007, the impact of the foreclosure crisis was only beginning to be felt. The AARP Policy Institute estimates that the black foreclosure rate is about three times that of the white rate [PDF]. This higher black foreclosure rate will likely mean that the black-white wealth gap will continue to increase because of the proportionally greater loss of homes among blacks.

Fewer jobs, declining wages, and less wealth all spell increases in black poverty and economic hardship. Unfortunately, it will probably take at least four years before blacks recover from the economic impact of the Great Recession. We should not be surprised if it takes even longer.

More jobs, fewer foreclosures and greater investments in black communities will lessen the economic pain blacks will experience and quicken the black economic recovery. The National Community Reinvestment Coalition (NCRC) is one organization that appears to be focused on helping the communities that are hardest hit by the Great Recession. On June 11th, NCRC is planning a national day of action for Jobs and Homes Now! More needs to be done, but this action seems like a good start.

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--Algernon Austin, Ph.D.