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Economic Challenges Facing Blacks

POSTED: April 21, 2015, 8:00 am

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The Democratic staff of the Joint Economic Committee in Congress has issued a report that paints a very disturbing picture of the economic status of Blacks in America. The data reveals startling disparities that suggest African-Americans are facing a future of economic distress unless the federal government acts to implement specific policy remedies to address inequality.

Among the general findings the report, issued on April 14, reveals:

The unemployment rate for Blacks (10.1 percent) is more than twice that of whites (4.7 percent).

The unemployment rate of Blacks is almost a full percentage point higher than the highest rate experienced by whites during the recent recession.

The median household income of Blacks - $34,600 – is almost $24,000 less than white households.

The median net worth of white households is 13 times that of Black households.

Blacks are almost three times more likely to live in poverty than whites.

The report details the degree to which Blacks are economically disadvantaged. It notes that these disadvantages have accumulated over time, pointing out that over the past four decades the jobless rate for Blacks has averaged more than twice the rate of whites. In addition, more than one-in-ten Blacks are unemployed and in the immediate aftermath of the recent recession one-in-six Blacks were unemployed. Blacks are also more likely to be underemployed and working part-time to supplement their income. The report also notes that Blacks are 2.5 times more likely than whites to experience long-term unemployment, with two out of every five unemployed Blacks engaged in a job search for more than six months. Making matters worse is the degree to which Blacks are consumed by the criminal justice system. Black men are over six times as likely as white men to be incarcerated and Black women almost three times as likely to be incarcerated as white women. The possession of a criminal record makes it infinitely more difficult to obtain employment so many in the African-American community face permanent exclusion from the labor market.

These challenges extend from the individual to the household. More than one-in-four Blacks (27.2 percent) live in poverty, almost triple the rate (9.6 percent) of whites. More than half (51.4 percent) of Black families with children under 18 are headed by a single mother and nearly 47 percent of Black families headed by a single mother are in poverty. Also, children in Black households are nearly twice as likely to be raised in the bottom 20 percent of the income distribution as children in white households. One of the most stunning statistics in the report is that white households have 13 times more wealth than Black households. The median net worth of African-American households in 2013 was just $11,000 compared to $142,000 for white households.

Blacks have also been devastated by the housing crisis. Among the customers of mortgage companies that went bust in 2007, Black borrowers were three times more likely than white borrowers to have had a subprime mortgage, the high interest loan instrument that precipitated the housing crisis. One in ten Blacks who took out mortgages at the height of the housing boom eventually lost their home to foreclosure. This is evident in Prince Georges County Maryland, once a symbol of middle class Black prosperity, but now a symbol of the foreclosure crisis among African-Americans. Black homeowners across the country who took out mortgages between 2004 and 2008 were almost twice as likely to have lost their homes to foreclosure in 2011 according to data provided by the Center for Responsible Lending.

“One of the most stunning statistics in the report is that white households have 13 times more wealth than Black households. The median net worth of African-American households in 2013 was just $11,000 compared to $142,000 for white households.”

Complicating the economic plight of African-Americans is the degree to which Blacks lag in educational attainment compared to whites. One-in-five (21 percent) Blacks between the ages of 25 to 29 years, compared to two-in-five (41 percent) whites have completed at least four years of college. Prospects are not that much better for Blacks who do possess a college degree; as the unemployment rate for Blacks with at least an undergraduate degree is 5.2 percent compared to just 2.9 percent for white workers. The median weekly earnings for Blacks with bachelor’s degrees are $900 compared to $1,100 for whites; a difference that comes to about $12,000 over the course of a year.

The report comes as candidates are beginning to emerge for the 2016 presidential campaign and the Obama administration inches closer to true lame duck status. Given the downward trend of Blacks’ economic profile, Black voters might be well served to qualify their support at the ballot box on the basis of a candidate’s commitment to address economic inequality. Absent such an emphasis, and an organized advocacy for government intervention, these disparities will not only persist but are likely to worsen as poverty widens, young Blacks move into adulthood with little opportunity to gain meaningful employment and Black families are crushed under the weight of single parenthood and generational poverty.

An earlier version of this article posted with formatting errors due to a technical issue with our publishing system. We apologize for the inconvenience.

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