Monday, October 8, 2012

Since the recession and slow recovery, the black middle class has suffered massive decreases in wealth and high rates of home foreclosures

The Pew Charitable Trusts' Economic Mobility Project recently released a report projecting that 68% of African-Americans reared in the middle of the wealth ladder will not do as well as the previous generation. In August 2012, the National Urban League's State of Black America 2012 report found that nearly all the economic gains that the black middle class made during the last 30 years have been wiped out by the economic downturn. "This is a very dire situation," said Valerie Rawlston Wilson, an economist with the National Urban League Policy Institute. "Even for blacks who have college degrees, we've seen a doubling of their unemployment (rate) between 2007 and 2010." From 2005 to 2009, the average black household's wealth fell by more than half, to $5,677, while white household wealth fell 16% to $113,149, according to the Pew Research Center. In 2009, 24% of black households had no major assets other than a vehicle, compared with 6% of their white counterparts. "For every $20 whites have in wealth, blacks have just $1," said Paul Taylor, director of Pew's Social and Demographic Trends project. Mary Pattillo, a Northwestern University professor and expert on the black middle class, said that this segment of the population is so fragile because it's disproportionately lower middle class. "It includes workers, such as the administrative assistant and the lower-level salesperson, who make about $30,000 a year and whose job doesn't require a college degree," Pattillo said. The median annual household income for blacks declined by 11.1% (from $36,567 to $32,498) from June 2009 to June 2012, according to an analysis of Census Bureau data by Sentier Research. The decline for whites was 5.2% and for Hispanics 4.1%. Both groups started with higher incomes than blacks. Historically, many blacks have made it into the middle class via public-sector and union jobs. But since 2008, the public sector has shed about 600,000 positions. The 2009 recovery is the first in nearly 40 years that has not been accompanied by an expansion in the public sector. "In every recovery since the 1970s - in 1975, 1982, 1991 and 2001 - we've seen the government sector grow," said Adriana Kugler, chief economist for the U.S. Labor Department. "The reason there hasn't been growth is, unlike the federal government, city and state budgets can't operate on deficits." But the other reason is the property tax base of many local governments is being whittled away by the home foreclosure crisis. After the housing bubble burst in 2006, everyone was affected, but blacks were hit particularly hard. About one-quarter of blacks have lost their homes or are seriously delinquent and at risk of losing them, according to the North Carolina-based Center for Responsible Lending. The Woodstock Institute, a Chicago-based nonprofit research group focused on fair lending issues, has found that although 25% of homes in the Chicago area were underwater, about 40% of homes in predominantly black neighborhoods were. The average equity for mortgaged properties in communities that are more than 90% white is about $108,000. In communities that are 80% or more black, the average is $6,800. Home values and equity are a huge deal because homes account for about 60% of black wealth.


Anonymous said...

Not to worry the blacks are taking over my subdivision where I have owned my home for 20 years with their Section 8 rentals thoroughly fucking up my area.

Anonymous said...

Historically, many blacks have made it into the middle class via public-sector and union jobs. But since 2008, the public sector has shed about 600,000 positions.

The economic downturn shows that the black pseudo-middle class was largely an invention of our bloated government.