Study Shows Reversal of African American Economic Progress

by James Parks, Sep 22, 2008

All working Americans are struggling in today’s economy, but the economic downturn has hit African American workers particularly hard. In fact, a new study by the Economic Policy Institute (EPI) shows that nearly all the economic gains made by African Americans during the late 1990s have eroded, even as the economy grew. Since 2000, according to EPI, wages for the median black worker have stagnated, incomes and employment have declined and poverty has increased.

According to the study, African American median family income declined by $404, or 1 percent, between 2000 and 2007. This is the first decline in black median family income in a business cycle of this length since World War II.   

More tellingly, African American income relative to whites has dropped in the past eight years. For example, in 1995, the median black family earned 60.9 percent of the median white family. By 2000, the ratio had climbed to a record high of 63.5 percent. But by 2005, it had dropped to 60.2 percent of the median white household.

According to the report, Reversal Of Fortune: Economic Gains of 1990s Overturned for African Americans from 2000-07, here are some other examples of the erosion of black economic progress:

• The black unemployment rate continues to rise faster than the overall rate. Last month, when the number of jobless Americans reached a five-year high of 6.1 percent, the rate for blacks was 10.6 percent.
• From 2000 to 2007, the African American family poverty rate increased by 2.8 percent. In contrast, from 1989 to 2000, the black family poverty rate fell by 8.5 percentage points.
• The black home ownership rate, after increasing to 49.1 percent in 2004, dropped to 47.2 percent last year. EPI predicts that because foreclosures from the housing crisis have continued into 2008 and likely will continue into 2009, the African American home ownership rate is also likely to decline into 2009.

You can read the entire report here. 

The drop in income for African Americans can be linked to declining black union membership, experts say. The percentage of African Americans who either are members of or represented by unions fell by half from 31.7 percent of all black workers in 1983 to 15.7 percent last year, according to a report earlier this year by the Center for Economic Policy and Research. Still, several studies have shown that African Americans are more likely to join unions than other workers

The CEPR report, The Decline in African-American Representation in Unions and Manufacturing, 1979–2007, shows much of the decline is due to the loss of manufacturing jobs. Between 1979 and 2006, the share of all African Americans who worked in manufacturing declined from 23.9 percent to 9.8 percent, a drop of nearly 60 percent. Manufacturing jobs, especially family-supporting union jobs in the auto industry, played a big role in creating the black middle class. 

But the overwhelming loss of black union jobs is not limited to manufacturing. Several studies have shown that 55 percent of union jobs lost in 2004 were held by black workers. More stunningly, African American women accounted for 70 percent of the union jobs lost by women in 2004. 

The best way to rekindle black economic progress is for our government to focus on  creating new good jobs, says Algernon Austin, director of EPI’s Program on Race, Ethnicity and the Economy:

Black America needs a national strategy for black full employment. In other words, our national goal should be to have the black unemployment rate sustained below 5 percent. When the American economy experiences strong job growth and full employment like we saw in the late 1990s, average Americans of all races benefit with higher rates of employment, higher wages, and lower poverty rates. If we were to reduce the black unemployment rate to below 5 percent, there would be amazing progress for black America.

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