Why The Black Middle-Class Is Shrinking

Photo Credit: Floyd Brown

From DCentric:

"Here are five factors contributing to the “decimation” of the black middle class:

Wealth versus income

The wealth gap between whites and blacks in the same socioeconomic classes had quadrupled in the decade preceding the recession. Wealth is how much a person owns, minus any debt. So even if African Americans had made strides to hold jobs with incomes that took them into the middle and upper classes, as a whole, their accumulated wealth wasn’t on par with their white counterparts.

For instance, in 2007, about 63 percent of black Americans’ net worth was tied to their housing, compared to 38.5 percent for white Americans . A loss of income, depreciated home values or losing a home to foreclosure — all of those have a greater power to knock you out of your socioeconomic class if you don’t have some accumulated wealth to rely upon.

Foreclosures

It’s been well-documented that sub-prime mortgage lending, which contributed greatly to the foreclosure crisis, targeted minority neighborhoods, regardless of class.

Locally, the area that was hit the hardest by the foreclosure crisis was Prince George’s County, the country’s wealthiest majority black county. In Prince George’s County, half of the county’s sales have been foreclosure-based this year.

Loss of government jobs

The public sector has cut the most jobs out of any industry this year, and black people hold a disproportionately high number of government jobs. For years, African Americans have often relied upon government jobs as alternatives to the private sector. They presented a way to circumvent discrimination that prevented them from private sector jobs.

College-educated and unemployed

For many Americans, a college degree translates to better job opportunities and increased job security. And although that’s diminished during the recession, college-educated African Americans are more likely to be unemployed than college-educated white Americans. According to the AP story:

In 2007, unemployment for college-educated whites was 1.8 percent; for college-educated blacks it was 2.7 percent. Now, the college-educated unemployment rate is 3.9 percent for whites and 7 percent for blacks.

The situation is even worse for recent college grads who don’t have years’ of experience in the workforce to help them: in 2010, the jobless rate for black college graduates under 25 was 19 percent, compared to 8.4 percent for white men.

The ‘old boys network’ and discrimination

It’s only been a few decades since anti-discrimination laws have been passed and thoroughly enforced, but it took even longer for the effects to trickle through the black community, Wiley tells Washington. That means fewer generations’ of minorities have been able to climb corporate ladders.

Chris Wilder, a 43-year-old black unemployed journalist who fell victim to losses in the media industry, describes the situation to Washington this way:

“It’s definitely harder for black people to get jobs… With the economy as bad as it is, people are hiring nephews and family friends and friends of friends. It’s hard for black people to break that cycle. We don’t own or even run the big companies.”"

To read the complete article please click here.

(h/t to Black Voices for the link)

Michigan is Hit Hardest By the Recession

Photo Credit: aflcio

The current recession has affected all corners of the United States, but perhaps no other state has felt the weight of the financial downturn more than my home state of Michigan. According to the Detroit News, Michigan families have borne the brunt of the economy:

"Michigan families have been hit the hardest by the recession, with incomes plummeting and poverty rising at rates seen nowhere else in the country, according to the U.S. Census Bureau statistics released today.

Median household income for the state in 2009 was 21.3 percent below 2000 levels, the biggest drop in the nation and 6.5 percent lower than 2008. And the poverty rate, although not the highest in the nation at 16.2 percent, rose the fastest among all states since 2000, according to the U.S. Census.

With economists now saying the recession ended in 2009, it could be that the income drop seen last year will provide the bottom for the state. But a substantial bottom it is: The median household income was $42,255, more than $12,000 lower than the median was at in 2000 when adjusted for inflation.

Locally, Sterling Heights recorded the steepest income drop off all U.S. cities with a population of 65,000 or more, shedding more than $25,000 in annual income. The city had a 2009 median household income of $51,545, more than third lower than its $77,873 median income in 2000. Similar drops were recorded in Kalamazoo and Detroit.

Nationwide, median household income is down just 2.9 percent from 2008 and 6.6 percent from 2000. Michigan's national ranking during that time went from 16th in 2000 to 35th in 2009.

Much of the decline is attributed to the loss of hundreds of thousands of high-paying, yet lower-skill manufacturing job that once were the backbone of the state economy. As many of those jobs vanished, workers were forced to find alternative work in lower-paying industries.

The shakeout of the nation's manufacturing sector ravaged the Midwest, and the closest other states in terms of income loss are neighbors Indiana and Ohio, where median household income is down 15.1 percent and 13.9 percent, respectively."

In light of the current economic realities within the Great Lakes state, it should be no surprise that the housing market there has also suffered. A study by Coldwell-Banker was cited in a recent article in my hometown newspaper, The Times Herald, as saying that of the top ten cities in the country to find the cheapest house, three of them were from Michigan.  Detroit topped the list, Grayling was second and my hometown, Port Huron, was ninth on the list.

With some indicators pointing to economic recovery, hopefully the people of Michigan will be able to soon get on their feet.  In the meantime, we hope and pray for the best. 

Sports Illustrated Focuses on Detroit

At a time when things seem bleakest in the city of Detroit, the Detroit Tigers are offering a ray of hope as they march towards a possible playoff bid. Sports Illustrated's most recent cover story features the Tigers resurgence and the effect that the successful ball team is having on the city.

Looking back over forty years, Detroit faced another challenging time when the riots of 1967 left the city reeling as many residents, primarily white, left the city for the suburbs. An inspired 1968 Tigers squad beat the heavily favored St. Louis Cardinals in the World Series. My dad, who was in the U.S. Marine Corps in Vietnam at the time, likes to share how he won a lot of money on that series from some leathernecks that didn't think Detroit had a shot :)

In these current times, the Tigers have stood with the community and demonstrated an undeniable degree of support for the auto industry. SI comments:

"The most stunning example of community outreach did not involve a nonprofit organization but a bankrupt one. At the end of last season General Motors decided it could no longer afford to sponsor the fountain over the centerfield fence at Comerica Park, which shoots great plumes into the air whenever a Tiger hits a home run. The fountain is the most valuable piece of advertising space in the stadium, and two corporations quickly expressed interest in taking GM's place. One offered to pay $1.5 million for three years. Mike Ilitch, the Tigers' owner, considered the offer seriously. Then he rejected it in favor of a deal that would pay him nothing at all. Ilitch kept the GM name where it was, free of charge, and added the Ford and Chrysler logos on each flank, over the message: THE DETROIT TIGERS SUPPORT OUR AUTOMAKERS. To emphasize the point, the Tigers invited one employee from each of the embattled car giants to throw out the first pitch on Opening Day. Before GM inspector Loretta Abiodun went into her windup, she turned and looked at the fountain. "It was breathtaking," she says."

The Tigers will have to get past a good Minnesota team in order to make the playoffs and will be underdogs throughout if they are able to advance. But I'm one Tigers fan that thinks a championship this year (the 25th anniversary of the '84 champions) would be pretty neat to see.

How the Economy Has Affected Hispanics

According to Ethnic Technologies, LLC, at least one broad ethnic group in the United States, Hispanics, has not felt the effects of the current economic downturn as much others. In a recent article, the following is stated:

"The U.S. Hispanic market is booming. Hispanic households across the United States will sharply increase their economic clout over the next ten years. The demographic explosion has continued since 1990 and there is no let up. Go to Wal-Mart, Sears, K-Mart, to name a few stores, and you will see many Hispanic families loaded with consumer goods. The fact is, Hispanics love to buy and almost always buy in cash.

This is not a debt-ridden community. For years they learned the hard way that to have something, one has to earn it and save. Credit card companies solicit many Hispanic households.

Hispanics send money to the families they left behind in their country of origin. And it is true that these remittances are billions of dollars. But according to the National Immigration Forum, in addition to consumer spending, "immigrants and their businesses contribute $162 billion dollars in tax revenue to federal, state and local governments. They work in key sectors, start their own businesses and in general contribute to a thriving economy."

I guess there's something to be said for saving and only buying what you can afford. You can read the complete article here.

Thanks to my friend, Keith, for the link.

Holding Out Hope for Detroit

As far as American cities go, it would be hard to find another one that is having as rough a go at it as Detroit is right now. With an economy in steady deadline and a population that is half the size it was a half-century ago, Motown has certainly seen better days. Having just seen a mayor leave office after a well-publicized scandal and a professional football team that has become the butt of jokes in sports bars across the country, Detroit is a city that needs some hope. And needs it fast.

Although I didn't grow up in D-Town (I was raised outside of Detroit - an hour traveling northeast on I-94), my heart is with the Motor City. Some of my fondest memories of childhood are taking of trips downtown to Tiger Stadium, just blocks from where my dad has worked for years. My wife grew up mere minutes from Detroit and went to college in the heart of the city at Wayne State University. The blue-collar work ethic and grittiness of the city defines southeastern Michigan and, thus, is part of who I am.

Our home now is in central Florida but we feel the pain of fellow Michiganders. The auto industry is what made Detroit (and the state of Michigan) what it is and the decline of that same industry is what so affects it today. Other factors have contributed to its present state:

"The roots of Detroit's current plight go back decades. Court-ordered school busing and the 12th Street riots of 1967 accelerated an exodus of whites to the suburbs, and many middle-class blacks followed, shrinking the city's population from a peak of 1.8 million in the 1950s to half that now. About 83% of the current population is African American. Detroit's crime, poverty, unemployment and school dropout rates are among the worst of any major U.S. city. Car and home insurance rates are high. Chain grocery stores are absent, forcing many Detroiters to rely on high-priced corner stores. "There's always been a real can-do spirit among our people," said the Rev. Edgar Vann, pastor of Second Ebenezer Church. "That's being beaten down right now. ... These times, unlike others, have sapped a lot of that spirit from them.""

Not only is it difficult to see the challenges that the current economic realities have brought to a large number of family and friends, but it affects us in a very direct and tangible way. As missionaries dependent upon the financial generosity of others, we feel the struggling economy as well. Over 3/4 of our financial support base is within southeastern Michigan so although our jobs might not be on the line, we feel it every time a financial partner gets laid off or loses their job.

Even with those realities, we are so thankful for those that give sacrificially so that we can engage in our ministry to college students. We have ministry partners that are on fixed or limited incomes but still give because they believe in what we do. They give because they recognize that eternity is in the balance for individuals and that their giving, no matter how small or large, makes a difference.

It is these types of people that make up the city of Detroit and the state of Michigan. We are hard workers. We are people committed to our families. We are folks loyal to our employers. We are fans that stick through thick and thin with our teams (although the Lions are testing this truth.) And we are hard-nosed individuals that don't back down from a fight. It is this spirit that defines Detroit and the good people of Michigan.

I am proud to say that I am from Michigan and that I have kids (though they haven't really lived in the state) that know where their parents come from. Detroit is a city and Michigan is a state that possesses a rich history that has helped to shape America in so many ways. From the auto industry to the music of Motown. From the greatness that is Michigan Wolverine football to influencers like Malcolm X and Gerald Ford and Magic Johnson and Thomas Edison. From Coney Island hot dogs and Better Made chips to Vernors pop and paczis.

I'm confident that the faith and spirit of the residents of Detroit will one day help this great city to return to better days. I am in no way an economic expert so I really can't speculate on what has caused the Big Three of GM, Ford and Chrysler to bring things to where they stand today. I do know that in order to see Detroit return to its previous glory there needs to be better leadership in place across the board. The residents of Detroit and Michigan cannot elect people or support leaders of business that are high on eloquence but low on morals. The recent mayoral embarrassment and excesses of selected CEO's goes to show that morality does still matter.

It is times like these that many turn to a higher power to get them through their struggles. I trust that many will return to Jesus or, for some, turn to Him for the first time. Our cars may fail us, our money may run out and our sports teams may come up short, but I believe that God is not through with Detroit or its people yet. I'm still holding out hope...