Racism in Our Wallets

Racism in Our Wallets

The twentieth century brought a host of American triumphs: social security, universal free public education, state university systems, the GI Bill, the minimum wage and the right to join a union chief among them. These path-breaking changes reduced poverty, created opportunity, grew a middle class. They helped families, communities and the broader economy alike.

But here’s a devastating truth: these policies, so crucial to our economic mobility, all failed to fully include African Americans. At best, these innovations refused to tackle segregation and discrimination head on. At worst, they widened gaps – amounting to a sort of affirmative action for whites.

Good policy transforms lives. But a legacy of our racist past is that America’s best domestic policies were far less inclusive than they should have been. This meant that people of color did not benefit as they should have, and that ultimately these policies had less of a constituency and were more vulnerable as a result. In 2016, it’s time to fix that.

Economic justice is fundamental to racial justice. Until people of color can consistently earn a living wage, enjoy job security and build wealth, America’s promise will remain unfulfilled. Anti-worker and anti-integrationist forces have successfully divided us, convincing white voters to support policies that cut education, college aid, safety nets and wages. The result has been declining security and well-being for many Americans of all races.

America’s racially polarized approach to employment is rooted in history and perpetuated today. This piece explores that history and its contemporary implications.

Racism’s deep roots

The anti-slavery, labor rights and civil rights movements combined with modernization and industrial advances meant enormous progress for black and white American workers between 1935 and 1979. Poverty declined precipitously, basic household amenities like water and electricity became nearly universal, workplace fatalities dropped and standards of living increased astronomically: the result of social movements, government standards and technological advances coming together. But progress stalled just as the Civil Rights movement turned its attention from political to economic struggles.

Today, more than 150 years after slavery and 50 years after the Civil Rights Act was signed, the labor market in the US, Ohio and Cleveland remains racially segregated. Why?

Starting with the most basic standards and rights, the 1938 Fair Labor Standards Act, which established the minimum wage and overtime, exempted the agricultural and domestic jobs that most black workers held. This was no accident. Without those exemptions, Congress, controlled by racist Southern Democrats, would never have agreed to the law. So minimum wage and overtime protections initially went to many white workers but not most black workers, and workers of color are still more likely to be in less protected jobs.

The GI Bill – an extraordinary stride for upward mobility – gave returning World War II veterans low-cost home loans, free college, unemployment compensation and business loans. The often-racist state and local governments who administered it, however, excluded black veterans from the benefits that did so much to raise America’s college attainment. The low-interest home loans in the bill helped spark the home-ownership boom that enabled stability, wealth-building and inheritance. But this benefit went almost exclusively to white families – less than .1 percent of the home mortgages extended through the act went to veterans of color.

During the 1950s, ‘60s and ‘70s, America’s post-war manufacturing boom meant sharply rising living standards, but black families were often excluded by blatantly discriminatory hiring and compensation. The Civil Rights Act of 1964 made that discrimination illegal and until about 1980 strong enforcement led to remarkable gains for black men and for women of all races. But Ronald Reagan brought a halt to all that, attacking affirmative action in hiring, elevating racially antagonistic rhetoric, slashing the oversight budget, ordering a near stoppage in enforcing anti-discrimination law, and putting a hostile leader (Clarence Thomas) in charge of the Equal Employment Opportunity Commission, as Tamara Draut details in her phenomenal book.

In addition to impotent civil rights enforcement, economic decisions took a hammer to career ladders just as African Americans ascended the lower rungs. A mere decade and a half after equal employment laws allowed blacks to begin joining the middle class, manufacturing jobs that offered a solid income to high school graduates started disappearing. Cleveland was no exception – between 1985 and 2005 the city lost 40 percent of its manufacturing jobs, some 87,000 positions.

The Higher Education Act of 1965 created grants and loans to make college affordable for non-veterans, generating increased attendance. But since then, we’ve been disinvesting in public higher education. States including Ohio began raising in-state tuition, just as black and Latino students started attending in higher numbers.

Current consequences

These policies still take a toll. As Heather McGhee, director of the think tank Demos, says, “History shows up in our wallets.” Excluding African-Americans from thriving neighborhoods, wealth-building, labor law, higher education and good jobs, meant gross disparities set in, endured and sometimes grew.

Today in the United States, on average each year, white women earn $11,800 more than black woman working full time. White men average $21,800 more than black men, leaving black children three times more likely to grow up in poverty. The median white household has more than fifteen – fifteen! – times as much wealth as the median black household ($111,146 vs $7,113), in large part because of different access to home ownership and home values.

Poorly-paid jobs are disproportionately held by people of color and black workers are often paid less even in the same role. Workers of color also are less likely to be given full-time hours or predictable schedules.

In the land

Cleveland’s racial history includes points of pride and struggle. It was the site of early Civil Rights battles: the Future Outlook League started pushing as early as 1935 for companies to hire and unions to incorporate black workers. In 1967, Clevelanders elected the nation’s first big-city black mayor, Carl Stokes. Oberlin, America’s first co-ed, integrated college, began admitting black students in 1835. And a generation ago (1979), black men could find higher wages in Ohio cities than in much of the rest of the country – wages within ten percentage points of white wages.

Today, though, African Americans earn substantially less at the median than white Ohioans: just 76 percent, down from 90 percent in 1979. Last year, the median black Ohio worker earned just $13.26 an hour, a more than $2.60 inflation-adjusted pay cut since the peak, despite much greater educational attainment. At every educational level, white workers earn more than black workers – for college graduates there’s a thirty percent differential in wages alone. Black workers are also much more likely to be unemployed: In the first quarter of 2016, unemployment was more than 2.2 times as high for black Ohioans than for white Ohioans.

Race-unfriendly economic policies are still being advanced. Governor Kasich this year signed a law eliminating Cleveland’s ability to ensure that city residents (largely black) are included in the hiring when public construction dollars are spent. The Governor has repeatedly requested waivers of time limits on federal food aid only for almost entirely white rural areas, though urban areas where people of color are concentrated are also eligible. Black workers are far less likely to qualify for unemployment compensation when they lose jobs.

It’s not just policy, but also practice. Employers are less likely to interview identical applicants if their names “sound” black (Lakisha, Jamal); hiring managers were more likely to talk to white men with felonies than black men with clean records; university faculty are more likely to discuss research opportunities with students with white-sounding names; both black and white customers tip black drivers and servers less.

What to do?

Systemic, century-long policy and practice has left black workers out of many opportunities. Nonetheless, good policy is a prime force preventing discrimination, raising job quality, and ensuring inclusivity.

It’s true that the minimum wage omitted many jobs held by African Americans. It’s also true that each time we raise it, all workers are helped but of-color workers are helped to a larger degree.

It’s true that some unions and their members have excluded or not welcomed workers of color. It’s also true that unions fought for and won the compensation that brings any worker out of poverty and the transparent contracts that attack favoritism and promote equity. In 2013-15, black Ohio union workers earned a whopping 28 percent more than non-unionized black Ohioans, about triple the benefit that white workers got for their union card. And of course all union workers have much more pension coverage, health coverage, and other benefits.

That’s part of the reason why black workers are more likely to be in a union than white workers and it’s why black workers stand to lose more from ongoing broadsides against labor. Further, it explains why if houses of worship are the most segregated rooms in America, union halls are some of the most integrated.

Finally, it’s true that many policies did less than they should have to help African American workers. It’s also true that the military, regulated industries, and public sector occupations offered more or better jobs to African Americans long before and to a greater degree than many private occupations. Further, public sector civil rights enforcement forced much better private outcomes on racial equity, until Reagan abandoned that fight. That’s one among several reasons that the assault on public employment disproportionately hurts black workers (while also hurting black – and white – communities by reducing services).

Moving forward

So part of the answer must lie in recommitting to proven strategies that create good jobs and improve bad ones. But we must also fiercely defend stronger mechanisms to ensure that people of color share in the benefits of both. Happily, solving the jobs problem for Americans of color will also solve it for the many white Americans who are also, increasingly, left behind.

We can start by creating good jobs, as we’ve done before, and by stopping the assault on existing public jobs. This would both put people to work and improve communities. Some targets: Invest federal dollars to green communities. Starting in places like Cleveland, we could insulate buildings, install solar panels, erect wind turbines, and vastly increase mass transit. This would employ people now, reduce contributions to climate change, cut pollution, and slash what we spend on fossil fuels, particularly for the low-income families whose homes and cars are often least efficient. Simultaneously, we could create universal, high-quality, early education for every American child, funded through a progressive federal income tax. This would prepare toddlers for kindergarten, help parents work, and employ a diverse group of young adults, providing a first rung toward a career. Once those are in place, our communities have other imperatives that could generate employment while reducing future costs: after-school and after-work exercise programs, high quality universal childcare with good wages for providers, home visits to support young parents, bike lanes, and blighted property restoration, to name a few.

Improving all jobs, public and private, is also essential. We’ve back-pedaled on job quality for African Americans, but also for many white workers. Ohio’s 2015 median wage for all workers was just $16.61, lower when adjusted for inflation than in 1979. Only one of Ohio’s 12 most common occupations pays more than $34,000 a year. We can fix jobs by allowing and encouraging more union organizing, as we have at past points. Unions boost wages and benefits for all workers, but particularly for workers of color. We should raise the federal minimum wage and, given the racial inequity in tipping, get rid of the sub-minimum wage for workers who are supposed to be tipped.

We also need to enforce and modernize labor law. Once the social contract meant a career ladder, job security, and predictable schedules. Today workers are more likely to cycle between jobs with no upward mobility, be given less than full-time hours, work without the protection of a union, and have less clarity about who actually employs them (the rider or Uber, the home health client or the state). Creative campaigns must address these new challenges and get much more inclusive and innovative, given court decisions that have dramatically weakened worker power.

Black and Latino residents often feel locked out of the best or most important community jobs – including police officers, firefighters and skilled trades jobs, all of which rely on public funding. As we create more jobs by greening our cities and educating our toddlers, we have to give applicants of color priority, regardless of legislative and court attempts to thwart that. This will ensure that investment leads to broadly shared prosperity, rather than the same old two-tiered approach.

In 1966, labor and civil rights leader A. Philip Randolph presented a Freedom Budget for All Americans that would provide guaranteed employment, a higher minimum wage and a basic income, along with major new investments in education and health. A year before I was born, Randolph knew that a powerful economic agenda could help black and white working people alike.

We never implemented that agenda – certainly not for black Americans, but not for white Americans either. Our country has a frustrating habit of snatching opportunity from all of us just as it appears that black people might come close to fully sharing in it. As my friend Bakari Kitwana says, whites would almost rather miss out on things themselves than risk having blacks get them too.

It’s time to consider a different vision: one that fully includes those who’ve been left out of our economy and our democracy. In the process, we’ll all emerge better off.

We can go back to Randolph’s thinking in 1966. Or we can reach to a more poetic and much earlier black American voice, Clevelander Langston Hughes, writing in 1935 in words that still get me every time, “O, let America be America again— The land that never has been yet— And yet must be.” We never really tried to implement the promise of America. Maybe, just maybe, now is the time.


Written by Amy Hanauer, Director of Policy Matters Ohio     

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