As I discussed yesterday, many of the objectives of the March on Washington have not been achieved. Blacks, once held back by pernicious racial discrimination, now face a double-whammy with the downward pressure of the invisible hand. Rather than making progress up the ladder of success, they find themselves struggling up a down escalator—and it’s a crowded one.
How did this happen? How has the once-vibrant American economy turned so sour?
For one, the middle class has ceased to be a place of upward mobility. In 2011, according to Census data, median household income, $50,054, was actually 1.1 percent less than it was in 1989. What this means is that, in two decades, the typical household was downwardly mobile, relative to itself.
Of course, the typical tendency, troubling as it is, obscures profound shifts between socioeconomic strata. Between 1989 and 2011, mean income for the lowest income quintile fell 8.2 percent, to $11,239. The second and third quintiles also dropped, 4 percent and 2 percent, respectively. At the same time, the average income for the top five percent of households grew 29 percent.
To make matters worse, the widening of the income distribution has been accompanied by the weakening of the safety net. In 1996, the year welfare reform was enacted, the Aid to Families with Dependent Children (AFDC) program covered three-quarters of poor families. By 2011, the program that replaced AFDC, Temporary Assistance for Needy Families (TANF), covered just a quarter of them.
Benefits have also become less generous. The maximum monthly benefit for a family of three averaged $564 across all states in 1996 (in 2011 dollars). It has since fallen 23 percent in real terms, to just $436. In other words, a single mom struggling to support two kids but unable to find a job must survive on just over $5,000 a year. (And she must be engaged in “work activities” full-time to receive it.)
More and more, the U.S. has come to stand for the unequal states of its citizens. For many, the American dream has become something of a nightmare: an unachievable standard, a lesson in comparative disadvantage.
A major factor has been the disappearance of good-paying blue-collar jobs. Manufacturing employment has declined by a third since the 1980s. Construction, retail, and wholesale trade – others source of moderately skilled employment – have collectively grown at less than a third the rate of the working age population.
A second factor is de-unionization. The last two decades have seen the continued decline of organized labor. Just one in eight American workers today – and one in 15 in the private sector – are represented by unions. A third of union coverage has vanished since 1989. According to one study, the diminished role of unions explains a third of the rise in wage inequality among men since the 1970s.
A third factor is education. College graduates earn nearly twice as much as the high school educated; their unemployment rate is three and a half times less than that of high school dropouts. While the median income of college grads working full-time, year round has increased by 5 percent during the last two decades (pretty bad), that of full-time, year-round workers with a high school education or less dropped 2 percent (really bad).
Yet access to colleges – and especially the best colleges, which are often gatekeepers to the upper class – remains unequally distributed. According to research at Stanford’s Center for Education Policy Analysis, students from the top income quintile are more than seven times more likely to enroll at a highly selective college than students from the bottom quintile (and their definition of “highly selective” is quite broad, encompassing 171 schools).
What is true of higher education is even truer in students’ early years. Half of public school students attend schools where the poverty concentration is greater than 50 percent. As TCF’s Rick Kahlenberg has spent his career demonstrating, poor schools literally mean poor schools: academic performance is impaired in high poverty settings.
But perhaps the biggest part of the story is residential segregation. Concentrated poverty is on the rise. According to Pew, American society is as residentially divided as it’s ever been. 28 percent of lower-income households live in majority low-income neighborhoods (a 22 percent increase since 1980), while 18 percent of upper-income households live in high-income neighborhoods (a doubling since 1980).
Disadvantaged neighborhoods mean limited access to good schools and good jobs. They mean higher crime, less private investment, and worse health. Residents of extreme poverty neighborhoods (where the poverty rate is 40 percent or greater) – some 8.7 million people – are three times less likely to graduate college than the average American and two and a half times more likely to drop out of high school, the Brookings Institution has found.
In these neighborhoods, a third of working age males are absent from the labor force. A seventh of 16-19-year-olds fail to attend school. One need not possess the towering intellect of William Julius Wilson (a TCF emeritus trustee) to recognize that chronic idleness is breeding ground for pernicious habits. Disadvantage propagates disadvantage. Poverty compounds.
With so many Americans lacking prospects for climbing the economic ladder, is it any wonder that Martin Luther King’s dream seems as distant as ever?