RACE AND POVERTY, FIFTY YEARS AFTER THE MARCH. What Has Changed?
POSTED BY Vauhini Vara. AUGUST 27, 2013
The trend is unsettling—hard to believe, even—particularly given the progress black Americans have seen on some fronts. In a 1961 poll, forty-one per cent of respondents said they wouldn’t vote for a “generally well-qualified man” from their party if he happened to be black; five years ago, Americans elected a black President. In 1964, white students graduated high school at almost double the rate of their black peers; today, graduation rates for blacks are only a couple of percentage points lower than for whites. Yet black Americans have moved ahead little—and by some measures have fallen behind—with regard to the one standard that matters most to Americans: making money. How did this happen? How do we fix it?
Back in 1963, the Washington marchers made these four economic demands: a higher federal minimum wage, a law barring discrimination by employers, a massive job-training program, and an increase in the areas of employment covered by the Fair Labor Standards Act of 1938—the law that established standards such as overtime pay. The policy changes brought about by the protesters’ demands, and the civil-rights movement at large, were significant, if not as numerous as King and his allies sought. In January of 1964, President Lyndon B. Johnson launched the policies that became known as the War on Poverty; that July, Congress enacted the Civil Rights Act of 1964. Through the sixties and into the seventies, the government started job-training programs and deliberately hired more black people into government jobs, among other measures.
African-Americans increasingly found white-collar and skilled blue-collar work that provided decent wages—not only in northern cities like Baltimore and Detroit, which had drawn black workers earlier in the century, but also in the South. Black Americans seemed to be getting a foothold in the economy; by 1978, the black median income rose to fifty-eight per cent of the white median income, according to Pew.
Then came the early nineteen-eighties, when corporations began going abroad for lower-cost labor and cutting domestic manufacturing jobs. That coincided, roughly, with a Reagan-era backlash against public spending that led to cuts in many of the earlier government programs. The gap between black and white incomes widened again. (The black-to-white income ratio would not surpass its 1978 high until the nineties.)
“The people who went to Baltimore, who went to Detroit, were the go-getters of the African-American community,” Dedrick Muhammad, the senior director of the economic department of the N.A.A.C.P., told me. “They were willing to work hard. These people, who have become demonized as the permanent underclass, became the permanent underclass when the jobs died.”
Because of the dearth of pre-1984 wealth information, researchers have had a hard time studying the racial wealth gap in the years immediately after the civil-rights movement. They have, however, come to better understand what has happened over the past twenty-five years.
When researchers compare today’s situation with that of 1984, they find that a greater share of blacks than whites have ended up in low-paying service positions—for instance, assisting in nursing homes—that don’t offer benefits that help compound people’s wealth, such as retirement plans. Black families are less likely to receive inheritances; black students both graduate college at lower rates and are more likely to be saddled with college debt; and blacks are incarcerated at disproportionate rates, reducing their ability to earn good wages even when those who are imprisoned become free.
But the wealth gap mostly comes down to home ownership. Researchers at Brandeis Universityrecently tracked the same group of black and white families from 1984 to 2009. During that period, a smaller proportion of black families bought homes, and those who did bought them later in life than their white peers—and that meant they benefited less as home values rose, according to Thomas Shapiro, a professor at Brandeis University. When one compares white families whose wealth grew over the years to black families whose wealth grew, Shapiro said, twenty-seven per cent of the disparity between the two groups is related to home ownership.
Which brings us back to the March on Washington. The marchers of 1963 sought policies that would help poor people generate wealth; back then, the government did that by helping people find good work and make decent wages, along with introducing anti-poverty programs that helped people pay for food and other essentials. Today, now that the wealth gap mostly has to do with investments—especially in housing—it would seem that the best policy solution would be to help people buy homes that they can afford and acquire other wealth-generating assets.
Instead, the government’s policies for poor people have emphasized consumption without also focussing on savings and investments, as the Urban Institute, a research organization, pointed out in an April report. For instance, the government helps people pay for food with the Supplemental Nutrition Assistance Program. Families can even lose certain benefits if they save too much.
The United States does have policies aimed at building wealth—but those policies happen to disproportionately help people who are already pretty rich. For instance, homeowners claim the mortgage-interest tax deduction only if they itemize their deductions, which higher-income taxpayers are likelier to do, and the deduction gets bigger when you have a larger mortgage or are in a higher tax bracket.
There are solutions. The government could, for instance, turn the deduction for homeowners into a flat amount—and one, Shapiro said, that could apply only to a first home and wouldn’t require taxpayers to fill out an extra form. EARN, a San Francisco nonprofit, offers savings accounts in which the nonprofit adds two dollars or more for every dollar a person deposits. The government could emulate that approach to encourage people to save.
Four years after the March on Washington, King became frustrated with the government’s focus on the Vietnam War at the expense of the War on Poverty. He organized a kind of sequel to the 1963 march—this time called the Poor People’s Campaign. “We ought to come in mule carts, in old trucks, any kind of transportation people can get their hands on,” he said. “People ought to come to Washington, sit down if necessary in the middle of the street and say, ‘We are here; we are poor; we don’t have any money; you have made us this way … and we’ve come to stay until you do something about it.’ ” In April of 1968, King was assassinated. Given his concerns about the stagnation of the civil-rights movement soon after the March on Washington, it’s hard to imagine that King would have been satisfied, had he lived, to discover that on the fiftieth anniversary of his speech, black Americans are still calling out from an island of poverty and going unheard.
Back in 1963, the Washington marchers made these four economic demands: a higher federal minimum wage, a law barring discrimination by employers, a massive job-training program, and an increase in the areas of employment covered by the Fair Labor Standards Act of 1938—the law that established standards such as overtime pay. The policy changes brought about by the protesters’ demands, and the civil-rights movement at large, were significant, if not as numerous as King and his allies sought. In January of 1964, President Lyndon B. Johnson launched the policies that became known as the War on Poverty; that July, Congress enacted the Civil Rights Act of 1964. Through the sixties and into the seventies, the government started job-training programs and deliberately hired more black people into government jobs, among other measures.
African-Americans increasingly found white-collar and skilled blue-collar work that provided decent wages—not only in northern cities like Baltimore and Detroit, which had drawn black workers earlier in the century, but also in the South. Black Americans seemed to be getting a foothold in the economy; by 1978, the black median income rose to fifty-eight per cent of the white median income, according to Pew.
Then came the early nineteen-eighties, when corporations began going abroad for lower-cost labor and cutting domestic manufacturing jobs. That coincided, roughly, with a Reagan-era backlash against public spending that led to cuts in many of the earlier government programs. The gap between black and white incomes widened again. (The black-to-white income ratio would not surpass its 1978 high until the nineties.)
“The people who went to Baltimore, who went to Detroit, were the go-getters of the African-American community,” Dedrick Muhammad, the senior director of the economic department of the N.A.A.C.P., told me. “They were willing to work hard. These people, who have become demonized as the permanent underclass, became the permanent underclass when the jobs died.”
Because of the dearth of pre-1984 wealth information, researchers have had a hard time studying the racial wealth gap in the years immediately after the civil-rights movement. They have, however, come to better understand what has happened over the past twenty-five years.
When researchers compare today’s situation with that of 1984, they find that a greater share of blacks than whites have ended up in low-paying service positions—for instance, assisting in nursing homes—that don’t offer benefits that help compound people’s wealth, such as retirement plans. Black families are less likely to receive inheritances; black students both graduate college at lower rates and are more likely to be saddled with college debt; and blacks are incarcerated at disproportionate rates, reducing their ability to earn good wages even when those who are imprisoned become free.
But the wealth gap mostly comes down to home ownership. Researchers at Brandeis Universityrecently tracked the same group of black and white families from 1984 to 2009. During that period, a smaller proportion of black families bought homes, and those who did bought them later in life than their white peers—and that meant they benefited less as home values rose, according to Thomas Shapiro, a professor at Brandeis University. When one compares white families whose wealth grew over the years to black families whose wealth grew, Shapiro said, twenty-seven per cent of the disparity between the two groups is related to home ownership.
Which brings us back to the March on Washington. The marchers of 1963 sought policies that would help poor people generate wealth; back then, the government did that by helping people find good work and make decent wages, along with introducing anti-poverty programs that helped people pay for food and other essentials. Today, now that the wealth gap mostly has to do with investments—especially in housing—it would seem that the best policy solution would be to help people buy homes that they can afford and acquire other wealth-generating assets.
Instead, the government’s policies for poor people have emphasized consumption without also focussing on savings and investments, as the Urban Institute, a research organization, pointed out in an April report. For instance, the government helps people pay for food with the Supplemental Nutrition Assistance Program. Families can even lose certain benefits if they save too much.
The United States does have policies aimed at building wealth—but those policies happen to disproportionately help people who are already pretty rich. For instance, homeowners claim the mortgage-interest tax deduction only if they itemize their deductions, which higher-income taxpayers are likelier to do, and the deduction gets bigger when you have a larger mortgage or are in a higher tax bracket.
There are solutions. The government could, for instance, turn the deduction for homeowners into a flat amount—and one, Shapiro said, that could apply only to a first home and wouldn’t require taxpayers to fill out an extra form. EARN, a San Francisco nonprofit, offers savings accounts in which the nonprofit adds two dollars or more for every dollar a person deposits. The government could emulate that approach to encourage people to save.
Four years after the March on Washington, King became frustrated with the government’s focus on the Vietnam War at the expense of the War on Poverty. He organized a kind of sequel to the 1963 march—this time called the Poor People’s Campaign. “We ought to come in mule carts, in old trucks, any kind of transportation people can get their hands on,” he said. “People ought to come to Washington, sit down if necessary in the middle of the street and say, ‘We are here; we are poor; we don’t have any money; you have made us this way … and we’ve come to stay until you do something about it.’ ” In April of 1968, King was assassinated. Given his concerns about the stagnation of the civil-rights movement soon after the March on Washington, it’s hard to imagine that King would have been satisfied, had he lived, to discover that on the fiftieth anniversary of his speech, black Americans are still calling out from an island of poverty and going unheard.
