United for a Fair Economy State of the Dream 2009: The Silent Depression
By Amaad Rivera, Jeannette Huezo, Christina Kasica (D2D Fund)and Dedrick Muhammad (Institute for Policy Studies)
United for a Fair Economy, 29 Winter Street 2nd Floor, Boston, MA 02108
www.faireconomy.org
African Americans face a "silent depression" according to a new report by the United for a Fair Economy organization. It is an ongoing depression that has been "exacerbated by the recession that communities of color have been experiencing for the past 5–7 years." The report warned of the consequences of an anticipated rise in black unemployment from its present official rate of 11.9 percent to an estimated 29 percent. The study, authored by Amaad Rivera, Jeannette Huezo, Christina Kasica and Dedrick Muhammad, speaks to several relevant issues as America tries to adjust to the grip of the ongoing global economic crisis.
Historically oppressed African Americans and Latinos, in particular, have seen their dreams evaporate as the ongoing global economic crisis spreads to new areas and intensifies everywhere. For the past three decades working and low-income peoples’ wealth have been drained by policies favoring the rich. Inequality has markedly increased both within individual nations, as well as, between nations. Structural reforms favoring greater inequality and fostering massive poverty have been implemented by neo-conservatives worldwide and the outcomes have left societies in which the mass of working and poor are pitted against small segments of the rich and affluent. The spreading crisis increasingly threatens to plunge the globe into an era of strife as billions struggle to meet their financial and physiological needs.
Finding that for 2006, in excess of 68.6 percent of government funding to for programs promoting financial mobility flowed to those in the top 10 percent of income earners, the authors recommend that this be redirected to those in the bottom 40 percent.
In 2006, more than 68.6% of funds in government programs designed to increase economic mobility were directed toward the top 10% of income earners. We recommend more federal asset-building funds be directed toward Individual Development Accounts and financial education for people in the bottom 40%. (p. 28)"
Stressing the relationship between overall economic inequality and economic growth, the report uses the United States South as a prime example of extremely unequal social relations leading to a chronically depressed regional economy.
The authors also write:
Interestingly, the negative impact of economic inequality is understood to exist in most industrialized countries throughout the entire world. Vast economic disparity, typically characterized by concentration of income and wealth, has been recognized as a key harbinger of economic recessions and depressions in our country’s history. This phenomenon was most notable in relation to the Great Depression of 1929.
Also noted is the relatively poor standing of the US among other advanced capitalist nations in terms of inequality as expressed by the GINI coefficient.
The United States has consistently had one of the highest Gini Coefficient rankings among comparable countries in the entire world. At times, we have had the worst rating. In 2004, the 20% of the population with the highest incomes claimed 48% of all family income in the U.S., 12 times the amount of income of the bottom 20%. This degree of disparity has not been seen since the Great Depression of 1929.
n contrast to the persistent rhetoric of establishment politicians, the "land of opportunity" has formidable barriers to upward social mobility. Citing research conducted by the Center for American Progress entitled "Understanding Mobility in America," the authors write:
. . . children born in the bottom 20% only have a 1% chance of reaching the top 5% of income earners, while a child born to high-income parents has 22 times the probability of reaching the top 5%. Even more disturbing, according to another study done by the Economic Mobility Project, 42% of those born in the bottom fifth of income earners will remain there, and an additional 42% will only make it to the lower-middle or middle class.
The current condition of the African American communities across the nation is described as depressed as the long-term "recession" has further deteriorated under the pressure of the global economic crisis.
The Black unemployment rate is currently 11.9% and is expected to increase to nearly 29%, a level unmatched in over 20 years. Among young Black males age 16–19, unemployment is 32.8%, a rate not seen by any population since the Great Depression. In any other population, this rate of unemployment would generate disturbing news headlines about an economic depression.
The current crisis is particularly harsh since African Americans and Latinos were much more likely to be victimized by sub-prime mortgage loans:
Disproportionately, people of color received subprime loans at higher rates than their white counterparts, and consequently are suffering relatively more. For example, in Chicago, African-Americans were 14 times more likely to receive a high-cost (subprime) loan than their white counterparts. Upper income Latinos and Blacks/African-Americans were more likely to receive subprime loans than their white low-income counterparts. While on a national level foreclosure rates are exceeding those of the Great Depression, they are nearly twice as high in communities of color.
Making matters worse, people of color in the United States tend to work in the sectors of the economy most vulnerable in times of economic slowdown. The hard-hit construction industry, for example, is a disproportionate employer of Latinos. Temporary employment has been hard hit since businesses are eager to reduce costs under these conditions. The crisis has meant financial, familial, and personal setbacks for millions of individuals.
Since the conservative takeover of the federal government in 1980, conditions have steadily deteriorated until mulltiple breakdowns and disasters occurred during the presidency of George W. Bush. Today, a situation akin to Reconstruction exist as the Obama presidency attempts to stop the slide downward.
The United for a Fair Economy State of the Dream 2009: The Silent Depression study concludes that the subprime crisis alone has "led to the greatest loss of wealth in recent history for people of color." Others bluntly state that it represents that greatest loss of wealth in African American history as millions have loss the wealth invested in their homes.
Black Politics Today 2009