Black Americans Have Suffered an Historic Wipeout of Their Wealth, With Few Signs It's Coming Back
The latest report from the Pew Mobility Project shows a particularly bleak picture for African-Americans. Not only are blacks more likely to come from the bottom income bracket (65 percent of blacks compared to 11 percent of whites) but blacks have a far harder time than whites when it comes to exceeding the economic success of their parents. Only 77 percent of African-Americans raised in the middle quintile of income earners will out-earn their parents, compared to 88 percent of whites. The picture is worse for blacks in the second quintile from the bottom; only 66 percent out-earn their parents, compared to 89 percent of whites. Things are even worse when it comes to wealth:
Those stars in the fourth and top quintiles represent “insufficient data.” There are so few African-Americans among the top income earners that Pew couldn’t accurately measure their mobility. To a large degree, this illustrates one of the underlying stories of the Pew report—the extent to which African-American wealth has been devastated by the Great Recession. Some of this is born out by the Pew study—black family wealth is dwarfed by white family wealth—but you can get a fuller picture from a Pew Research Center report released last summer.
The median wealth of white households is twenty times that of their black counterparts. Moreover, from 2005 to 2009, black wealth declined by 53 percent—in 2009, the typical black household had just $5,677 in wealth. African-American wealth was wiped out by the Great Recession, making it a tremendously destructive event for economic mobility among black families.
Unfortunately, there’s no sign that the picture will improve. The African-American joblessness rate surged to 14.4 percent in June, and shows no signs of going down. Blacks are over-represented among the long-term unemployed, and as a result, a large and growing proportion of African-Americans are losing the skills necessary to compete in the economy. This has almost always been a problem within the black community, if we stay on the current path, it’s almost certain to get worse.
Indeed, there’s a sense in which the future of the American economy is a variation on what happened to black communities throughout the 1970s and 1980s. Economic crises, outsourcing and rapid technological change led to hollowed-out communities in urban and rural America. In many communities, the result was persistently high unemployment—further exacerbated by the recession—and a small underclass of desperately poor people. If the weak recovery falters into recession, we could see the same for the United States writ large.
In which case, through policy inaction, we would vindicate the oft-made observation that minorities—and African-Americans in particular—are the canaries in the coal mine for the country.this looks like a plausible future for the rest of us, if the weak recovery falters into recession.