May 10 (Bloomberg) -- Half a century after the Civil Rights Act committed the federal government to narrowing the racial divide, black Americans are still being left behind.
Blacks remain less likely to climb the income ladder and more likely to drop than whites, according to research published by the Federal Reserve Bank of Chicago last month. It also found that blacks will probably continue to suffer from lower mobility unless the causes of the disparities are addressed.
Such stagnation isn’t just troubling in the framework of American history -- it’s bad for the economy, said Richard Reeves, a fellow in economic studies at the Brookings Institution in Washington. If blacks don’t have the opportunity to rise, income inequality will become more severe, labor markets more inefficient and welfare rolls more burdened.
“It’s nice to look at Obama and the higher-profile African Americans who have done well, but the U.S. is very far from being a post-racial society,” Reeves said in an interview. “Crudely, we can’t afford to maintain such sharp divides in the life chances of black and white Americans.”
Fissures persist since President Lyndon B. Johnson signed the Civil Rights Act on July 2, 1964, forbidding discrimination on the basis of race and sex in hiring, job advancement and firing as well as banning segregation in public accommodations.
At 11.6 percent, the unemployment rate for blacks in April was more than double whites’ 5.3 percent. The spread is little changed from where it was in 1990. The median income of black households was $33,321 in 2012, about 58 percent of the $57,009 for whites. In 1972, the comparable figures were $5,938 and $10,318, also 58 percent.
Bhashkar Mazumder, a senior economist and research adviser at the Chicago Fed who wrote the bank’s study, found that 50 percent of black children born between the late 1950s and early 1980s who lived in households at the bottom 20 percent of the income scale remained in the same relative position in adulthood. For whites, the comparable figure was 26 percent.
Conversely, about 60 percent of blacks whose parents were in the top half of the income distribution fell to the bottom half later in life. Thirty-six percent of whites showed a similar drop.
A labor market that fails to develop the most qualified people regardless of race makes the economy less competitive, creating a “waste of black human capital on a really quite significant scale,” Reeves said.
With blacks more likely than whites to receive federal help, boosting mobility would also save taxpayers money, he said. Some 27 percent of blacks received benefits from three or more government entitlement programs in their lifetimes, compared with 14 percent of whites, a December 2012 study from Pew Research Center in Washington found.
“Whether you care about macroeconomic growth or global competitiveness, or whether you just have a basic notion of the United States as a place where people have equality of opportunity -- in either case, you should be concerned about mobility and absolutely should be concerned about the black-white gap,” Erin Currier, who directs Pew’s work on financial security and mobility, said in an interview.
The disadvantages of growing up in poor neighborhoods explain up to a third of the racial gap among those sliding down the income scale, 2009 Pew Charitable Trusts research by New York University associate professor Patrick Sharkey found. Residents in those areas may have less political influence, more trouble finding or maintaining a job and more exposure to crime, the report said.
Half of black children live in communities where the poverty rate is greater than 20 percent, compared with 14 percent of whites, according to an April report from the Annie E. Casey Foundation, a Baltimore-based charitable group dedicated to helping disadvantaged children.
While Mazumder’s research didn’t try to identify the causes of these disparities, he did find some linkages. Improving cognitive abilities by adolescence will have an effect.
Test scores reflect such things as how much parents read to their children, school quality and peer influences rather than inherent ability, he said. That argues for intervening early in life, according to Mazumder.
In addition, having two parents in the household, as only 37 percent of black children do, improves upward mobility relative to whites, Mazumder’s research showed. Seventy-seven percent of white children live in two-parent families.
At the same time, living with just one adult didn’t cause people to be less well-off than their parent, Mazumder found.
Family composition is “a big factor and maybe the largest factor” in influencing mobility, said Stuart Butler, a distinguished fellow and the director of the Center for Policy Innovation at the Heritage Foundation in Washington. “When you combine that with communities where there’s an environment of pessimism, low expectations, low levels of work -- as a child and as an adult, it’s harder to stick with it and do well and to take the steps needed to move up the economic ladder.”
Americans don’t have to look any further than the nation’s capital to see stark evidence of the divergence between races.
Blacks made up half of the District of Columbia’s population in 2010, higher than any U.S. state, according to Census data. Even so, whites made up 81 percent of the top 1 percent of earners. If it were a state, Washington would rank as the worst for minority representation in the top 1 percent, according to a Bloomberg ranking.
The Nineteenth Street Baptist Church, one of the oldest African-American churches in Washington with roots back to 1839, has doled out more food from its pantry in the past two years than in the preceding five, pastor Derrick Harkins said in an interview.
Even for his “thoroughly” middle-class congregation, “things are still very slippery,” said Harkins, who counted President Barack Obama and the first family as guests at his Easter sermon this year. While leaders from Obama and Massachusetts Governor Deval Patrick to U.S. Attorney General Eric Holder represent minorities who have risen through the ranks, they’re the exception, not the rule, Harkins said.
Thomas Piketty, whose best-selling book “Capital in the Twenty-First Century” has spurred debate over income inequality, said in an April 15 interview that “the whole structure of inequality of income and wealth in the U.S. is very much related to race.”
At the same time, Piketty said, while his book explores such things as the abolition of slavery in a historical context, “I don’t have many things to say about the future of racial inequalities in the U.S., I’m afraid.”
That future may be affected by recent rulings from the judiciary. The U.S. Supreme Court last month upheld a voter initiative in Michigan that bans racial preferences in admissions to the state’s public universities.
University of Michigan
Black enrollment at the University of Michigan in Ann Arbor is down at the undergraduate and law schools since the ban on racial preference took effect in 2006, according to the university’s figures.
“I think people have this reaction, ‘Well slavery’s over. Civil rights happened in the 1960s, why do we still need affirmative action?’” the Chicago Fed’s Mazumder said. “If we had a really rapid rate of intergenerational mobility, that might be a reasonable point.”
The court’s ruling may be even more troubling since improving educational attainment among blacks is one way of fixing the mobility problem, Mazumder found. Among blacks with 16 years of schooling, the upward-mobility gap with whites almost closes.
Mazumder said making credit more readily available to help increase access to higher education is another policy solution.
“I don’t want this to come across as hopeless,” Mazumder said. “Certainly in the past, major gains have been made and policy can play a role.”
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