The Effects of Unemployment for Lower and Middle Class Black America on the Nation - Research Paper Example

The Effects of Unemployment for Lower and Middle Class Black America on the Nation As the nation reels in a downward economic spiral, the effects of unemployment are felt even more devastatingly for lower and middle class black Americans. Most of their wealth is invested in their homes with their jobs and businesses being a pivotal factor in their ability to compete for economic equality. The economic health of the nation depends on them to recover and once again send money into the economy through spending and business transactions. But how can they recover when they are the last ones hired and the first ones fired? Nearly a decade ago, it was the best time to be a black American. Everything was on the upswing in the American economy. Communities everywhere were growing due to an increased wealth base. There were more jobs, higher wages, less poverty, more homeownership and life was good. The housing industry was in a boom, inflated to capacity with subprime mortgages that were unfairly targeted towards minorities, particularly Blacks and Latinos. The finance industry capitalized on this boom by adding lots of extras such as balloon payments, adjustable interest rates, and penalties for early re-payment, creating a package that they sold to the highest bidder on the securities market; thereby creating an illusion of prosperity that just didn’t exist. (Prince, Jan. 6, 2009) So what does this have to do with unemployment for black Americans? As corporate America began outsourcing heavily at the turn of the century, it, in turn produced a gradual decline in manufacturing, information-based, and service related jobs at home. Many of those jobs were previously done by blacks. NAFTA guaranteed that America will purchase products made in Canada and Mexico; products previously made in America by American manufacturing, a predominantly black occupation. Not only is outsourcing an issue, but the U.S. issues specialized H-1B visas who’ll relocate to America in understaffed occupations, working for considerably much less than any American would. With more than 50% of Fortune 500 companies outsourcing to India, how can blacks compete? (Muhammad, 2006) Illegal immigrants also impact the problem; they are more docile, easily exploitable, and willingly work for less. Blacks ( as well as whites) often work from a position of entitlement, asking for higher wages, more benefits, and more time off; employers would rather not deal with that, especially smaller businesses where the capital isn’t there to pay more in wages and benefits, but the great need for unskilled labor is. Pay is a great variable, with many illegal immigrants working under the table and living in conditions below poverty; yet, still surpassing conditions in their own countries. Their impact is felt strongly in the materials moving, production, farming, construction, maintenance, and food service industries; areas previously dominated by low skilled and undereducated blacks. In 2007, the median income for African-Americans was $32,000, yet illegal immigrants surpassed that with a median income of $37,000; unemployment rates for blacks were 3.5% higher than for illegal immigrants. (Cord, 2010) As the industry declined, foreclosures and loan defaults became rampant bringing Wall Street and the nation’s economy spiraling downward at breakneck speed. It was the greatest financial devastation Black America had ever seen in U.S. History. Many people, whose home represented 80%-90% of their wealth, were financially ruined at foreclosure. The jobs that once provided the mortgage payment just weren’t there anymore. Black owned firms, and smaller companies that usually hire low paid black workers, saw a sharp decline in business as corporate giants pushed them out of the competitive edge by bidding for jobs at lower rates because they had the capital to ride out the recession and still operate. The overall revenue base created by people spending from earned income was being rapidly depleted, along with tax based social programs aimed at helping people survive economic crises. Charities were feeling the crunch as their donations dwindled, forcing them to eliminate many much needed assistance programs that many black Americans depended upon. There was a marked increase in homelessness, not only for single indigent adults, but also for families. Homes were abandoned by foreclosure, which led to increased crime activities, and devaluation of neighborhoods. It was a time of high stress as many families stretched to the breaking point attempting to help other family members fighting for survival. Financing was racing to a standstill. (Prince, Jan.6, 2009) Dropping unionization rates have also impacted wages for black Americans. Normally, union workers, which include a high percentage of black employees, earn about 12% higher wages and benefits than non-union workers; however, union workers have declined from 32% in 1983, to 16% in 2006. Due to decreased income, they weren’t able to save the money needed to offset the national financial crisis. Their income no longer covers the basic expenses so they have to work more, earning less, and rely more on credit. The problem is that most of the global growth over the last decade has been created through credit financing; giving people everywhere a false sense of hope and security. (Prince, Jan. 8, 2009) Black leadership is partly to blame in lacking the foresight and insight to be proactive and progressive in creating employment opportunities for blacks. There seems to be little understanding of the relationship between labor, ownership, and capital or the ways that relationship is affected by education and technology. Some feel that black leadership acquiesces to white political supremacy; fearful of technology and revamping education to meet the needs of the ways black students learn best. (Muhammad, 2006) Another part of the problem is the disparity issue. On all indexes – wealth, homeownership, income, educational attainment, and foreclosures; the disparity gap has widened to nearly four times what it was a quarter of a century ago. Black median household incomes are now only 61.6% of their white counterparts with black wealth at 25% of white wealth. (Patterson, 2010) Disparity is also displayed in the way black applicants are considered for employment. Statistics show that black male graduates over the age of 25 have an unemployment rate of 8.4% compared to their white equivalents at just 4.4%. Applicants with ethnic names receive 50% fewer call backs; most blacks decline to identify race on applications. White and Hispanic managers tend to hire white applicants over black, even if they less education, lower skills set, and less experience. It may or may not have been intentional, however the general consensus is that white applicants are more of a cultural fit for the work environment. (Luo, Dec. 1, 2009) This has led many black applicants to tone down their ethnicity when applying for jobs. They often use only their last names and initials, omitting any ethnic college work possible, listing only general colleges and universities attended. They feel they stand a better chance of presenting their potential in person after being scheduled for an interview. Most say they feel a lot of pressure to downplay their personal identities as African-Americans and emphasize more how they can pretend to be white. (Luo, Dec. 6, 2009) Metropolitan areas tend to be more heavily populated by blacks, with inner city areas almost exclusively inhabited by lower class blacks, non-whites, and those living below poverty level. A study of the national unemployment rates in 2009 showed overall unemployment at 9.3%, yet five of the 50 largest metro areas have rates over 11.3% as well as 7 with rates less than 7.3%. Only one metro area had white unemployment rates over 11.3%; that was Detroit, with a rate of 13.8%. Nine of the metro areas had black unemployment rates above that. None of the metro areas measured black unemployment at less than 7.3% while almost half of them had white unemployment at less than that. The white unemployment rate was 0.8 times the national overall rate. Minneapolis and Memphis had a ratio of 3:1 for black to white unemployment rate. It was proven that education is not a factor, although educated black applicants are more likely to find work than black high school dropouts. Along with unemployment, there is a proportional increase in underground economic activities, poverty and homelessness, teen pregnancy, and criminal activity associated with black communities and the metro areas. What hurts the economy inadvertently hurts social issues; making the situation much worse. (Austin, June 8, 2010) The Black middle class group not only lost ground, economically, they are also failing to replace themselves. Black middle class children today earn much less than their parents did, with more than half of them falling into the lower class or poverty levels. While blacks may be promoted publicly, and with legislation ensuring their civil rights, they are as segregated as ever privately. Many middle class blacks live on the fringes of inner city neighborhoods, in a higher class “ghetto”; they tend to be segregated in communities that are surrounded by lower class blacks, often sharing the same infrastructure, services and social programs. Economic and social success depends on network location, and access to cultural capital through formal education. This isn’t happening for the young black middle class; their social institutions, education and social networks keep them segregated, thereby reducing their chances for success. (Patterson, 2010) Less than 14 in 100 young black men have jobs. Even the percentage of white felons having jobs is higher than black male teens without a record. Of teens coming from middle class black families, with annual incomes of $100,000-$150,000, 28% are hired compared to 37% of white young males, with or without education, from poverty level incomes of less than $20,000 annually. One factor is that older laid off workers are also taking low paying jobs that teens would normally fill. Young black males are more likely to grow up in impoverished, racially isolated neighborhoods, attend inferior schools, and experience discrimination. There is also the fear factor that accompanies many young black males due to the stereotypes associated with drugs, violence and vice. Young black males are usually the last hired and the first fired. Teens need to work; it raises high school graduation rates, helps them obtain higher future incomes, and allows less time for criminal activity. (Sanders, 2009) Black America lost most of the gains of the 1990’s; for them it’s not a recession, but another Great Depression. More than 8 million jobs have been lost since the start of the Great Recession, with an addition of 3 million new workers added to the workforce. In order to recover, the American economy needs three things: 1) job creation that will support the state and local government tax base, 2) instantaneous job creation, and 3) creation of jobs in areas with the highest unemployment rates. (Patterson, 2010) The American Recovery and Reinvestment Act of 2009 was created to help the economy by creating millions of jobs with a large investment in scientific research, transportation, investing in greener, more efficient energy, and infrastructure improvements such as: repairing roads, bridges and construction/modernization of schools. If this legislation is used to support the most economically devastated areas, it has the potential to decrease economic disparity and help blacks as well as all Americans to begin recovering their lives and financial futures. (Prince, Jan. 6, 2009) It is estimated that by the year 2042, nearly half of the children less than five years of age will be non- white children; the minority now will be the new majority then. The black leadership crisis must be resolved in order for America to retain her place as a world leader. The Program on Race Ethnicity, and the Economy, PREE, is associated with the Economic Policy Institute. Its job is to do research on racial inequalities in the U.S. and work toward the advancement of full participation in the American economy in order to benefit from the gains and to prosper. The work they’re doing today will pave the way for a brighter future by providing leadership to increase the number and quality of jobs for non-whites, provide guidance in Washington for expanding and improving government work support programs, and help low wage earners to bridge the distance between insufficient income and the essentials of basic expenses. (PREE, 2010) If we, as a nation are going to recover economically and once again take our place at the top, we, are going to have to help each other. There is no room for racism or segregation; it hurts us all. When people have jobs; they have spending power to stimulate the economy. When they spend, they create new jobs. It’s advantageous to help other countries, but not to the exclusion of black Americans. It’s time for America to take a long hard look at their position as a world leader and realize that the black American played a huge role in obtaining that place. America must now drop issues of race and disparity, granting true equality to all; together we flourish or together we perish. Works Cited Austin, Algernon. Uneven Pain-Unemployment by Metropolitan area and race. Economic Policy Institute. June 8, 2010. EPI, 2010. Web. 11 Dec. 2010. www.epi.org/publications/entry/ib278/ Jefferson, Cord. How Illegal Immigration Hurts Black America. The Root.com. 10. Feb, 2010. Web. 11 Dec. 2010. http://www.theroot.com/views/how-illegal-immigration-hurts-black-america Luo, Michael. U.S.: In Job Hunt, College Degree Can’t Cross Racial Gap. The New York Times; Dec. 1, 2009. Web. 11 Dec. 2010. www.nytimes.com/2009/12/01/us/o/race.html?_r=1 Week in Review: Whitening the Resume. The New York Times; Dec. 6, 2009. Web. 11 Dec.2010. www.nytimes.com/2009/12/06/weekinreview/06Luo.html Muhammad, Cedric. Wall Street and Business Wednesdays: Outsourcing , the Black Sharecropper of 1944, and the Crisis of the Black Economist. The Black Electorate.com. 2006. Web. 11 Dec. 2010. http://www.blackelectorate.com/articles.asp?ID=1591 Patterson, Orlando. For African-Americans, A Virtual Depression – Why? The Nation. July 19, 2010. The Nation 2010. Web. 11 Dec. 2010. www.thenation.com/article/36882/african-americans-virtual-depression PREE, Race, Ethnicity, and the Economy. Economic Policy Institute; 2010. www.epi.org/issues/category/race_and_ethnicity/ Prince, Zenitha. Black Middle Class In Crisis. New American Media. Jan.6,2009. Pacific News Service 2010. Web 11 Dec. 2010. http://news.newamericamedia.org/news/view_article.html?article_id=2e8171d2d08fbf5345ff910add2ff366 Saunders, Sam. Black Teenage Males Crushed by Unemployment. Boston University. NPR. Jan.9,2010. American Public Media, 2010. Web. 11 Dec. 2010. www.wbur.org/npr/122367407 Read More