Recommended Policy Responses

By Alex Mikulich, Research Fellow

As the economic crisis exacerbates long-standing challenges facing marginalized communities, the economic recovery has been elusive for too many people of color. Although the Bureau of Labor Statistics reports that the overall unemployment rate remained steady at 9.7 percent last month, the Black unemployment rate has risen from 15.8 to 16.5 percent. This is the second similar jump in the past five months in which unemployment among people of color continues to increase while unemployment for whites remains steady or has decreased.

Hazel Trice Edney reports in The Louisiana Weekly that the unemployment rate for Black women rose from 12.1 to 12.4% and increased for African American men from 17.8% to 19%. The unemployment rate for Black youth is now more than 43% and the growth in unemployment over the past year for Latino workers has increased by 38%, the steepest increase of any group. Meanwhile, unemployment rates for White Americans is half the rate of African Americans and remained steady or decreased.

Dr. Barry Chiswick, distinguished professor of economics and director of the Center for Economic Education at the University of Illinois at Chicago (UIC), tells The Louisiana Weekly that “there is a very sharp relationship between the level of education and unemployment rates.” Chiswick explains that “those with less than a high school degree had an unemployment rate or 14.5 percent, while those with a bachelors degree or more had an unemployment rate of 4.9 percent. ”

Attributing the economic disparity to education and spatial mismatch between where jobs are located and where people of color live tells only part of the story, explained Algeron Austin, a sociologist on race and poverty, in his March 17, 2010, testimony before the Black Congressional Caucus.

Data from before the “Great Recession” shows that at every educational level blacks were more likely to be unemployed. Austin points to the fact that prior to the recession, utilizing data from Illinois that is similar to other urban centers throughout the nation, the unemployment rate of 12.8% for blacks with some college education was most similar to the rate of 11.6% for white high school dropouts. He concludes that the nation needs to find ways to “combat the continuing racial discrimination in the labor market. ”

The National Urban League’s (NUL) 34th edition of its State of Black America Jobs: Responding to the Crisis With the 2010 Equality Index illuminates Austin’s perspective. State of Black America was released March 25, 2010, upon NUL’s 100th anniversary. NUL reports that the small gain made in black-white real median household income in 2009 has been erased in 2010. The real median household income for whites rose faster for whites than for blacks, 7% and 1% respectively. Less than half of black and Hispanic families own a home (47.4% and 49%) compared to over 75% of white families. Blacks and Hispanics are more than three times more likely as whites to live in poverty. The NUL report details continuing disparities in health, education, and criminal justice.

Among its extensive policy recommendations, NUL suggests expanding and expediting the Small Business Administration’s Community Express Loan Program, creating Green Empowerment zones, expanding the hiring of housing counselors nationwide, expanding the Youth Summer Jobs Program, creating Urban Job Academies to employ and train chronically unemployed, and complementing these strategies with housing assistance to low and moderate income households by creating an alternative healthcare “public option” to contend with high under-insurance rates for African and Latino Americans.

The Mississippi Economic Policy Center’s (MEPC) Overlooked and Undercounted report confirms the findings of Algeron Austin and NUL.

MEPC utilizes a “self-sufficiency” standard that provides a measure of how much a Mississippi family needs to earn to cover basic living expenses without any public or private assistance. The Self-Sufficiency Standard takes into account family size, type and geographic location, and is drawn from widely accepted public data sources including Housing and Urban Development Fair Market Rents and the Mississippi Child Care Market Rate Survey. While African-American families constitute just over one third of all Mississippi households (35%), over half of all Mississippi households (55%) with incomes below the Self-Sufficiency Standard are African-American. By comparison, white households constitute a greater percentage of all Mississippi households (61%), yet only 41% of households with incomes below the Self-Sufficiency Standard.

MEPC stresses that having year-round full-time work is a key to self-sufficiency; but it is not a guarantee. In Mississippi households with incomes below the Self-Sufficiency Standard, 83% already have at least one full-time worker. Moreover, MEPC reports that households with incomes above the Self-Sufficiency Standard work only 14% more hours per year than those whose incomes fall below.

MEPC recommends a broad-based policy effort that includes workforce training and workforce supports to increase income adequacy and create additional opportunities to move Mississippians toward self-sufficiency through two principal means:

1. investment in adult education and training programs that enable students to secure employment in a specific industry or occupational sector; and

2. updating income and sales taxes in a way that would generate more revenue for the state while creating opportunities for families to move toward self-sufficiency.

The issues of under-recovery for communities of color concern global, national, and regional entrepreneurial opportunity and business development. In its latest March 2010 “Race-Recovery Index: Is Stimulus Helping Communities in Crisis?” the Kirwan Institute notes how Federal stimulus contracts to businesses owned by women and people of color is an important measure of how equitable America’s recovery is. The Kirwan Institute’s report states that “Contracting figures from the Federal Procurement Data System continue to show that firms owned by minorities and disadvantaged business owners are receiving disproportionately small shares of Federal recovery contracts and even smaller shares of contract pay-out value. This is a trend which has become increasingly disparate as the Recovery has unfolded, potentially signaling a diminishing sense of accountability regarding equity.”

Women-owned, Latino-owned, Black-owned, and Asian-owned businesses account for 28.2%, 6.8%, 5.2%, and 4.8% respectively, of all U.S. Businesses according to the U.S. Census Bureau’s 2002 Economic Census Survey of Business Owners. However, women-owned, Latino-owned, Black-owned, and Asian-owned businesses have received only 9%, 4.1%, 3.2%, and 2.9% respectively of all contracts awarded by Federal ARRA Procurement. These groups are receiving “even smaller shares of contract pay-out value. ”

The Kirwan Institute report notes that there have been increases in the number of contracts awarded to women-owned, Latino-owned, and Black-owned businesses between February and March 2010. This is a good trend that needs to be sustained over time.

The Kirwan Institute advocates “targeted universalism” as a vision and strategy for economic empowerment of communities of color and all Americans. In order to reach universal goals, explains Senior Researcher Jason Reece, policy responses “need to be sensitive to the needs of varying communities and populations. ”  The problem with universal programs that are not sensitive to particular needs of marginalized communities is that they assume a “one-size-fits-all” mentality that tend to disadvantage those communities in most need.

Reece explains, for example, that:

"…communities with higher-than-average unemployment rates, poverty increases, etc. could get proportional additional resources. Demographics are also an additional indicator to use to assess job creation efforts and potentially target responses to economic crisis. A resource stream, tax incentive, or matching funds could be targeted to programs or industries that educate, train, or employ the people headed fastest to economic crisis, like African-American male youth, American Indians in the West, Rust Belt communities hammered by continuing patterns of manufacturing decline, or persistent poverty counties in the South."

Kirwan further recommends gathering adequate and accurate data to track the expenditure impact of investments and programs by race, gender, and geography. This is necessary for two reasons:  1) the data is necessary to judge compliance with applicable civil rights laws; and 2) “because the current economic crisis disparately impacts marginalized communities,” it is necessary to ensure “accountability in targeting job creation and retention by those who have been most impacted by the crisis. ”

The National Urban League and the Kirwan Institute both recommend universal, comprehensive and targeted economic investments and strategies that will help the most vulnerable communities to the benefit of all Americans. Read Targeted Universalism and the Jobs Bills: Helping Communities in Crisis Through Targeted Investments.