Race and the Wealth Gap

During the last several decades leading into the twenty-first century, a hodgepodge of policies were enacted in order to bridge the wealth gap between whites and racial minorities, specifically African Americans. Innovative programs of the New Deal, Fair Deal, and Great Society, for example, were meant to equalize economic opportunities across all races in order to ameliorate poverty. Nevertheless, American society witnessed during this time an incongruous increase in the stratification of wealth and income and a deepening concentration of poverty and racial disparities. The primary contributing cause for this stunt in economic and social progress was the presence of conservative and disinterested political groups that hindered the efficacy of these public policy initiatives by either by limiting the outreach of new social programs to needy racial minorities or by enervating these programs of the power needed to enforce anti-discrimination and anti-poverty practices.

To provide some background, during the later half of the twentieth century, urban centers were experiencing a bout of economic growth. Unfortunately, given certain conditions, racial and ethnic minorities were obstructed from taking advantage of the surge in new jobs created during this time period, thus leading to an increase in racial economic disparity. The urban job growth trend of the 1970’s and 1980’s occurred concurrently with a shift of the economy from a goods-producing industry to a service- producing industry. The increased focus on providing services to consumers lead to a subsequent straitening of job prerequisites, such that individuals had to have more education experience to be employed. This hurt the African Americans and Latinos that made up the wave of migrants who flooded into urban areas at this time, many of whom were young and had less professional experience. This increase in potential employees that lacked the skills to fill in these numerous opening positions lead to the creation of a labor surplus environment. During Nixon’s presidency, his Great Society entailed the implementation of welfare programs that was intended to ameliorate this labor surplus environment for all races.

Unfortunately, given the obstinate Republican Congress during Nixon’s presidency, many of the programs that were enacted in the Great Society plan were amended by Republicans such that the programs lost their efficacy and did not aid African Americans. These amendments were the results of compromises Nixon made with Dixiecrats (i.e.: conservative, Southern Republicans) who wanted to preserve Jim Crow conditions in the South. For example, new organizations such as the Federal Housing Administration were allowed to use racial restrictive covenants or practice redlining for quite some time in order to insure that recipients of housing welfare were racially segregated. The absence of racial integration in public housing complexes only exacerbated the conditions perpetuated by poverty because the social buffer that whites presented remained lacking. Moreover, cases in which racial discrimination occurred in housing were hard to report given the confinements that were placed on the Federal Housing Administration. For example, plaintiffs only had 25 days after signing their housing contract to file a case for racial discrimination. Even then, these cases could only be filed individually and the plaintiff – if found to be a victim of housing discrimination – could not make the defendant responsible for paying the fees for his lawyer. This made discrimination lawsuits both harder – and more expensive – to file and made them less impactful, since they were now individualized and could not be fought on a societal scale.

Blacks were also hurt in welfare programs in the New Deal and Great Society that sough to increase employment rates. In drafting law such as the National Industrial Recovery Act (NIRA), the Agricultural Adjustment Act (AAA), the Wagner Act, and the Tennessee Valley Authority (TVA) Act, lawmakers did not account for the historical, social, and geographical factors that could potentially disallow African Americans benefiting from these programs. For example, the NIRA was meant to restrict production in such a way that both the wages and prices of goods would increase. Although this act was meant to increase the economic prosperity industrial laborers, it ended up hurting many African Americans. The NIRA also included a clause that regulated minimum wage. The minimum wage increased so much that employers were dissuaded from hiring unskilled workers – many of which were racial and ethnic minorities – since their labor was no longer worth this new minimum wage. As a result, 500,000 blacks lost their jobs. The Agricultural Adjustment Act of 1933 was meant to aid farmers by lessening their workload so as to minimize their production and consequently maximizing their profit. However, by forcing farmers – most of who were white – to produce fewer crops, there was less work for poor, black sharecroppers. The AAA hurt black sharecroppers even more because they now had less money to spend on crops that were now increasing in price. Lastly, in creating programs that strengthened workers’ rights, the federal government made it easier for unions to be racist. The Wagner Act of 1935 did just this by legalizing labor union monopolies. After the passage of this legislation, unions such as the American Federation of Labor were able to create a cohort of skilled laborers that excluded the majority of African Americans workers, most of who were unskilled. This decreased the amount of representation that African Americans received in various industries and led to a disparity in working conditions in industries were the majority of employees were African American.

As a result of the unemployment of African Americans in a labor surplus environment and the inability of new welfare programs to aid them in areas such as employment or housing, African Americans became stuck in a spiral of poverty. Neoconservatives view poverty as the result of innate cultural denigration that is inherent of the African American community, which is one of the reasons why wealthier blacks and whites moved away from these communities. However, in reality poverty resulted from the inability of blacks to actively participate in the nation’s workforce. Ideally, what needed to occur to avoid these problems was for the Dixiecrats not to have deprived these welfare programs of their administrative power and for some of these policies to have specifically targeted racial and ethnic minorities such as African Americans. This shift from universal welfare programs and public policies to narrower, identity group- specific policies will be discussed more thoroughly in my next blog post.

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Race and the Wealth Gap

2 thoughts on “Race and the Wealth Gap

  1. Nicole, you are now entering complex territory. You paint a picture of failed or misguided government programs reinforcing the wealth gap between races, and those programs certainly played a role. There were, however, a number of other factors that federal programs could not control, if one accepts the notion that structural racism and slavery created huge setbacks for racial minorities. You mention the “great migration” to northern urban areas. You rightly contend that blacks should have been better off working in urban areas, but the increased supply of labor bid the price of labor down, particularly for unskilled jobs. That coupled with a migration of the white middle class away from the cities to the suburbs may have corrected the labor supply issues, but it also moved many skilled jobs out of the cities, and increased the demand for bigger jobs in the cities, staffed by whites who commuted from the suburbs, but did not spend their money in the city. Experiments like Levittown were subsidized by the government, and they unknowingly disadvantaged the minority unskilled population in the cities by providing incentives for those who could afford to move to the suburbs. Structural racism prevented even middle class minorities for moving as well because they could not obtain conventional bank mortgages.

    While this scenario peaked more than fifty years ago, nothing has really changed except that the 1% now also occupy the cities, but in their own neighborhoods. The wealth gap is such that there is little contact between the upper and lower classes in these cities, and not a large enough middle class to help bridge the gap. The question now becomes whether this problem can be addressed without social engineering, knowing that such experiments have failed miserably in the past. As late as the early nineties in our own backyard, the state proposed an experiment to bus students from Madison, CT to New Haven and New Haven students to Madison. There was such a public outcry that the plan was abandoned, primarily because the quality of local schools is driven by local property taxes (there was some structural racism embedded in the objections as well). Today, the income inequality issue has grown so large that race has vanished from the conversation and we are losing site of what Coates claims in his Atlantic article, that we are not reckoning with the compounding moral debt of our ancestors. I wish you luck finding solutions.

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    1. Thanks for sharing those interesting thoughts, Mr. Backon! I definitely understand and agree with your point regarding the fact that these federal programs cannot account for all factors that may be reinforcing the wealth gap between whites and people of color. However, I would like to clarify my original point regarding the migration of whites from urban areas into the suburbs. When I had offered that as a reason as to why blacks were suffering from low employment rates due to the devaluing of unskilled labor, that is not to exclude the blatant racism that may have been involved in the hiring process for certain individuals. Although there was an increase in the number of white-collar and skilled jobs offered in the city, at least a few of those jobs probably only required a minimal skill set, one that can be learned either through a brief job training period or by learning on the job for a few days or weeks. If blacks weren’t offered these lower-tier skilled jobs, I would assume that one of the only reasonable explanations as to why that is would be racism on part of the employer.

      Furthermore, in your second paragraph you suggest that in order to bridge the wealth gap between the lower and upper classes in certain city neighborhoods, there has to be a sufficient number of middle class individuals and families present. Although I think that in general, that is a condition that must be established to ameliorate wealth disparities, I would like to acknowledge that there are certain scenarios in which the middle class individuals only worsen the issue. Take, for example, the case of gentrification. If middle class individuals are moving into an area like Bed-Stuy because they can no longer afford the rising prices of housing in the Upper East side, they are now changing this area that was once considered a slum into a place that now has an improved, albeit more expensive standard of living. Such a shift in the community atmosphere only exacerbates wealth disparities because those poor people, many of which are people of color, who once lived in Bed-Stuy are now being forced out of their own communities by middle class individuals.

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