[NYTr] For Black America, the "American Dream" Is a Nightmare

[All the News That Doesn't Fit]

Alternet - Dec 17, 2007
http://www.alternet.org/story/70694/

The American Dream, or a Nightmare for Black America?

By Joshua Holland

Thirty years after the civil rights era, middle-class African-American
families face a grim reality: their kids are far more likely to
experience downward mobility in today's economy than they are to move
up.

For both black and white families, America's vaunted upward mobility is
largely a myth, and research suggests that Americans actually enjoy
less upward mobility than people in many other wealthy countries. (I
discussed this phenomenon at some length in a recent article.) But the
outlook is different for white and black families.

A new study by Julia Isaacs, a Fellow with the Brookings Institution,
paints a dark picture for black families, and especially for the large
group of African-Americans who moved up and into the middle class
following the hard-fought gains of the 1950s and 1960s.

Isaacs looked at a unique set of data, one that allowed her to compare
the incomes of people in their 30s in 2004 with their parents'
generation in the mid-'70s (this allowed her to compare people at the
same general stage in their careers -- apples and apples).

While white men's incomes have been stagnant for the past three decades
-- for both white and black families, most of the increase in family
income was a result of women entering the workforce rather than wages
increasing -- the current generation of 30-something black men actually
earn, on average, 12 percent less than their fathers did in the
mid-1970s.

That trend toward downward mobility has an enormous impact on the black
middle class. While children of middle-class whites tend to do better
than their parents did at the same age, a majority of middle-class
African American children do worse than theirs, both in income and in
terms of their position on the nation's economic ladder. According to
Isaacs, "only 31 percent of black children born to parents in the
middle of the income distribution have family income greater than their
parents, compared to 68 percent of white children from the same income
bracket."

The key findings from the study are truly eye-opening:

    * Startlingly, almost half (45 percent) of black children whose
parents were solidly middle class end up falling to the bottom of the
income distribution, compared to only 16 percent of white children.
    * Achieving middle-income status does not appear to protect black
children from future economic adversity the same way it protects white
children.
    * Black children from poor families have poorer prospects than
white children from such families. More than half (54 percent) of black
children born to parents in the bottom quintile stay in the bottom,
compared to 31 percent of white children. 

Given these dynamics, it should come as no surprise that the
black/white income gap has risen, not fallen, in the decades since
legal, institutional racism ended in America. In 1974, black families
earned, on average, almost two-thirds of what whites did; by 2004, that
number had fallen to 58 percent.

But looking at income alone misses a crucial part of the story. The
differences in accumulated wealth -- in net worth -- are far greater
than the differences in income, and that impacts black families'
prospects of moving up in a big way. In Being Black, Living in the Red,
Dalton Conley, Director of NYU's Center for Advanced Social Science
Research, showed that white families, on average, had eight times the
accumulated wealth of black families who earned the same, and that
remained true even when you adjust for education levels and savings
rates. It is, as Conley told me in an interview last year, "the legacy
of racial inequality from generations past."

Crucial to understanding how that impacts economic mobility is the
concept of "intergenerational assistance." That's just a fancy way of
saying that your chances to advance economically are very much impacted
by whether your family can help with tuition payments, or a down
payment on a house or with seed-money to start a business. Conley
compares two hypothetical kids -- one from a family with some money and
the other without. Both are born with the same level of intelligence,
both are ambitious and both work hard in school. In a true meritocracy,
the two would enjoy the same opportunity to get ahead. But the fact
that one might graduate from college free and clear while the other is
burdened with $50,000 in debt makes a huge difference in terms of their
long-term earnings prospects.

And that's just one of the myriad ways that parents pass their economic
status onto their children. Conley concluded: "when you are talking
about the difference between financing their kid's college education,
starting a new business, moving if they need to move for a better job
opportunity - [differences] in net worth might make the difference
between upward mobility and stagnation."

America's limited and fraying social safety net also means that things
like temporary job loss, illness or pregnancy can lead to drops in
income -- opportunities to fall down the ladder -- that working
families in other advanced countries don't face.

Education plays a crucial part in reproducing African Americans' lower
economic status in their kids. Schools are primarily funded through
state and local taxes, which leads to dramatic differences in the
education available to kids in wealthier and poorer communities. That
goes a long way in explaining a phenomenon long observed in American
education: black children excel until the middle grades, and then their
achievement levels begin to decline. At younger ages, large numbers of
African American kids are enrolled in early childhood programs like
Head-start, but by the middle grades, the picture changes. According to
the Urban Institute's annual report on the State of Black America,
black children got 82 cents on the white education dollar last year.
You get what you pay for, and twice as many black children as white
kids are taught by instructors with less than 3 years of experience.

The wealth gap in America is the accumulated legacy of generations of
institutional racism at work. Black kids are starting from behind and
aren't afforded much chance to catch up. Isaacs sliced and diced the
economic pie into five equal parts. While nearly one in four white kids
are born into the top fifth; the number of black children in that group
doesn't even register on the scale. Three times the percentage of
whites are born into the next tier as blacks. Conversely, almost
two-thirds of all black children are born into the bottom fifth, while
fewer than one in seven white kids face that daunting prospect.

But these factors alone don't fully explain the disparity seen in white
and black families. The Urban Institute's annual study of black
attainment, which looks at five different measures of success in the
African American community, found that the greatest divide between
blacks and whites in America is not in political participation, health
or social justice, but in the economic realm. Clearly, racism still
plays a significant role in black America's extraordinarily insecure
economic status (this should be obvious, but is not). Studies have
shown that whites with criminal records are more likely to be hired
than blacks with identical backgrounds and no criminal past and that
fake resumes with "black-sounding names" get fewer calls for interviews
than others. A study of more than 300,000 auto loans in 33 states even
found that black buyers "consistently paid more than white customers,
regardless of their credit histories."

This is a story with little good news on the horizon. As bad as the
economic divide between black and white families is now, the sub-prime
lending crisis is going to fall particularly hard on people of color
and make matters far worse. In a study the Boston Globe called a
"smoking gun on race," University of Massachusetts researchers found
that black and Latino home-buyers were more than four times as likely
as their white counterparts to take out a sub-prime mortgage. The
research backs up findings in other U.S. cities.

There's an old saying that white folks keep their wealth in the bank
and black folks keep theirs in their houses. Given the degree to which
wealth and opportunity intersect, and with an estimated half-trillion
dollars worth of low-cost "teaser loans" ready to re-set next year,
black families in America are likely to face even more opportunities to
fall down the economic ladder.

[Joshua Holland is an AlterNet staff writer.]

© 2007 Independent Media Institute.