Although the American economy has grown significantly since 2000, African Americans have not shared in America’s prosperity. The current economic downturn and the subprime mortgage crisis bode ill for the immediate future for African Americans.
The overall social well-being of African American communities depends upon strong job growth. The historical evidence shows clearly that strong job and wage growth are the keys to reducing black poverty. Without reductions in child poverty, we can expect continued lower educational achievement, higher rates of teen pregnancy, and a higher than average rate of crime in black communities.
All Americans are hurting from the failure of recent strong productivity growth to translate into wage growth for average workers. All Americans will benefit from a more equitable distribution of the wealth of American society. African Americans, in particular, need policies that will attend to their low employment rates, low wages, and high poverty rates.
For most of the 20th century, increased productivity led to increased wages. Since the 1970s, with the exception of the 1990s, increased productivity has not been matched by comparable increases in wages (Mishel et al. 2008). From 2000 to 2007, although American workers were 19.2% more productive on average, the weekly wages for prime-aged workers declined by $1. The weekly wages for prime-aged African American workers declined by $3. The wealth created by the American economy has been going overwhelmingly to the richest Americans.
Overall, the economic condition of African Americans has worsened since 2000. Wage growth for the median black worker has stagnated, incomes and employment have declined, and poverty has increased. This Briefing Paper shows:
• African American median family income declined by $404 or 1% between 2000 and 2007. This is the first decline in black median family income in a business cycle of this length since World War II. Single, African American, male-headed families saw the largest percentage decline-9.1%-in median family income.
• Worker productivity grew 19.2% between 2000 and 2007, but wage growth for American workers generally and African American workers specifically has stagnated. For black workers 25 to 54 years old, the median black weekly wage fell 0.6% from 2000 to 2007.
• The African American unemployment rate increased by 0.7 percentage points between 2000 and 2007, while the employment rate shows a 2.4 percentage-point decline, or three times the number not working indicated by the change in the unemployment rate.
• The black home ownership rate, after increasing to 49.1% in 2004, dropped to 47.2% in 2007. Because the foreclosures from the housing crisis have continued into 2008 and will likely continue into 2009, the African American home ownership rate is also likely to decline into 2009.
• The tight labor market of the late 1990s led to the largest decline in African American poverty since the 1960s. From 1989 to 2000, the black family poverty rate fell by 8.5 percentage points. In contrast, from 2000 to 2007, the African American family poverty rate increased 2.8 percentage points.
• Crime and criminal justice policies are increasingly entangled with the economic outcomes of African Americans and particularly of black men. If one adjusts the employment rate of African American men by counting men in prison as non-working, the already low African American male employment rate drops by about 3 percentage points.
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