African American and Latino households still haven’t recovered to pre-recession levels, another sign of the growing racial wealth divide.
Recently the Bureau of Labor Statistics released its employment situation report, which announced that 287,000 jobs had been created in June and that the nation has a 4.9% unemployment rate, a rate which many economists argue is equivalent to full employment. Clearly our nation is in better economic shape than 2009 when the national unemployment rate was 10%, there were 2.8 million foreclosures, and the stock market had hit a 12- year low.
Yet, most Americans still see today’s economy as fair to poor. Examining this tension between economic indicators and the sentiments of so many Americans, we have identified three factors that contribute to the strong feeling of economic insecurity seven years into the economic recovery.
- Unemployment rates have recovered but underemployment hasn’t.
To get a fuller picture of how Americans are doing in the job market we must examine the “hidden unemployment rate,” which is known as the U-6 unemployment rate or underemployment rate. The underemployment rate, includes workers who are working a part-time job who would prefer to work fulltime, overqualified workers working low paying jobs, and people who have been job-seeking in the past year but have not actively searched in the past four weeks. [pullquote]Today, African Americans and Latinos have underemployment rates of 15.9% and 12.9% which are about 2% higher than they were before the Great Recession. [/pullquote]
If we stopped and looked at these rates we would see that they have increased from their pre-recession rates. Pre-recession the national underemployment rate was 8.2%, it is currently at a rate of 10.1%. Today, African Americans and Latinos have underemployment rates of 15.9% and 12.9% which are about 2% higher than they were before the Great Recession. Most all American communities are still experiencing high underemployment.
- Wages have been sluggish and more and more unequal for the last 35 years.
If we were to adjust the national income of today by inflation, we would see that many American families are earning the same income they would’ve earned decades ago.
- Most importantly, wealth hasn’t recovered to pre-recession levels and for African Americans and Latinos continues to recede.
In 2014, Pew Research Center reported that median wealth of all households was $135,700 in 2007, in 2013 (the year with the most recent data on wealth) medial household wealth was at $81,400. If we look at the 3 largest racial/ethnic groups we see the great economic insecurity of African Americans and Latinos and how their wealth continues to decline while white wealth has begun to recover. Black median household wealth has declined from a poor $19,200 in 2007 to $16,600 in 2010 to $11,000 in 2013.
Similarly, Latino median household wealth declined from $23,600 to $16,000 to $13,700. White Americans also saw a dramatic loss of wealth during the Great Recession and still aren’t near their pre-recession levels but have started to see their median household wealth rebound with wealth of $192,500 in 2007, $138,600 in 2010 and $141,900 in 2013.
Low unemployment and a strong stock market does not mitigate the reality of stagnant wages, growing economic inequality, a growth in underemployment and a decline in median household wealth. Wealth is the foundation of economic security and well-being and until the country sees a rebound in median household wealth with a decline in racial wealth inequality the country will still be far from building a strong and inclusive middle class economy.
Turning this tide of economic insecurity and inequality requires bold and audacious policy shifts some of which has been written about in reports like “From Upside Down To Right-Side Up: Redeploying $540 Billion in Federal Spending To Help All Families Save, Invest, and Build Wealth“ and “Beyond Broke; Why Closing the Racial Wealth Gap Is a Priority for National Economic Security.” As the issues of race, economics and politics are searing the headlines of our news outlets, it is as important as ever that the nation focuses on building an economy where the nation can be united in economic security verses the current reality of an increasingly fractured and insecure populace.
Dedrick Asante-Muhammad is the Director of the Racial Wealth Divide Project for CFED. Check out the latest edition of their podcast: Race and Wealth and Entrepreneurship in Florida with Torey Alston.