Sunday, September 13, 2009

Shearing off the Lower Middle Class
Before going into the hospital, I was working on another Huffington Post entry which is now online, again co-bylined with (and posted under the aegis of) my colleague Brandon Roberts of the Working Poor Families Project. We took as our jumping-off point the notion that, statistically at least, the recession is at or near an end, but noted that the same segment of the labor market that has suffered most in the downturn is least likely to benefit as recovery gradually takes hold. The least-skilled workers are already facing near depression-level jobless rates (15.6 percent for those who didn't complete high school), and those who are working get fewer hours and, of course, much lower pay. Direct federal stimulus can't really help these folks; as this insightful and troubling article notes, technological advances have meant that a task which three generations ago might have entailed giving 10,000 workers shovels now can be done by a few machines. Hence the American Reinvestment and Recovery Act, supposedly designed expressly to put Americans back to work, required education beyond high school for an estimated 54 percent of the jobs it created. What will the under-educated do in our emerging economy?

Overlaid with the disturbing specter of a deep and persistent skills mismatch is the disproportionate suffering of non-whites in the recession, detailed in a New York Times op-ed today.

Despite the sense of white grievance, though, blacks are the ones who are taking the brunt of the recession, with disproportionately high levels of foreclosures and unemployment. And they weren’t doing so well to begin with. At the start of the recession, 33 percent of the black middle class was already in danger of falling to a lower economic level, according to a study by the Institute on Assets and Social Policy at Brandeis University and Demos, a nonpartisan public policy research organization.

In fact, you could say that for African-Americans the recession is over. It occurred from 2000 to 2007, as black employment decreased by 2.4 percent and incomes declined by 2.9 percent. During those seven years, one-third of black children lived in poverty, and black unemployment — even among college graduates — consistently ran at about twice the level of white unemployment.

That was the black recession. What’s happening now is more like a depression.
In 2008, on the cusp of the recession, the typical African-American family had only a dime for every dollar of wealth possessed by the typical white family. Only 18 percent of blacks and Latinos had retirement accounts, compared with 43.4 percent of whites.

Racial asymmetry was stamped on this recession from the beginning. Wall Street’s reckless infatuation with subprime mortgages led to the global financial crash of 2007, which depleted home values and 401(k)’s across the racial spectrum. People of all races got sucked into subprime and adjustable-rate mortgages, but even high-income blacks were almost twice as likely to end up with subprime home-purchase loans as low-income whites — even when they qualified for prime mortgages, even when they offered down payments.

According to a 2008 report by United for a Fair Economy, a research and advocacy group, from 1998 to 2006 (before the subprime crisis), blacks lost $71 billion to $93 billion in home-value wealth from subprime loans. The researchers called this family net-worth catastrophe the “greatest loss of wealth in recent history for people of color.” And the worst was yet to come.

In a sense, I'm conflating two distinct sets of concerns here: low skills, a structural/long-term problem, and particular risks in this recession that seem to correlate to race, which hopefully have a shorter time frame. But I don't think it's a stretch to suggest a deep connection: though low skills don't necessarily have a racial/ethnic distinction, the fact of educational attainment disparities by race is I think well enough established that I don't feel the need to cite it here. (Or, to put it another way, I don't feel like looking for it right now. Trust me, it's real, in pretty much any geographical context you'd like it. The National Assessment of Education Progress, or NAEP, is the one that makes my blood run particularly cold when I look at the New York City outcomes.) And the exploitative elements that Ehrenreich and Muhammed note in the Times article are demonstrably correlated with low-information consumers--who are, of course, more likely to be poor.

This is a very difficult nexus of issues to get at. The problems cut across clear policy turf lines, and the constituency isn't very significant in political terms: the Democrats "have" these votes, and the Republicans don't particularly want them. But their travails, which will continue to worsen over time whatever the momentary state of the economy, create such a drag on our economy and represent, or should represent, such an affront to our national pride that continued inaction would be both shameful and impractical.

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