WHAT IS A working-class family’s most valuable asset? What does every family seek to own?
It is the family home — not just for security but also for retirement. This is true for all ethnic groups, all racial groups, all citizens, all new immigrants — whites, African Americans, Asian Americans, Latinos.
In fact, the fastest road to wealth, to increase net worth, is to own property, especially home ownership. Those of us living in California have seen double-digit increase in home values for many years.
If you own your place of residence, it becomes an asset to pay for college for your kids, buy other commodities and take vacations. Refinancing is now the “norm” to use housing capital to purchase a new and bigger home or rental property.
However, if a family can’t afford to own a home the “wealth” effect doesn’t exist. Most likely, the family lives paycheck to paycheck, unable to save for college or improve the family’s quality of life. For younger workers, especially in minority communities, this is definitely the case in cities like San Francisco, New York or Chicago, where housing prices have put sons and daughters of the “baby boomers” outside the housing market.
In a 1998 study by the Jerome Levy Economics Institute, the median net worth of Black families was $16,000, a mere 12% of the median white net worth of $81,700. Household income on the other hand was $20,000, or 54% of the median white household income of $37,000.
The net worth gap is directly tied to the level of home ownership. The “ownership society,” as President Bush calls it, is less of a reality for the typical African-American family than for white families. Moreover, the value of the homes owned by Blacks as compared to whites is and has always been disproportionate. The latest data put it as 53%.
As bad as these numbers are, the reality is much worse for African Americans living in major cities that experienced “riots” in the 1960s. The economic divide among African Americans is greater today than any time in U.S. history.
The irony of the gains of the civil rights movement is that they allowed the “Black flight” of the middle class to the suburbs and better areas, which had been off limits in the era of legal and de facto segregation that preceded the civil rights victory in the 1960s.
For Blacks unable to “escape” the reality of inner city dog-eat-dog life, it has meant deeper poverty and isolation from wealth and potential for a better life. The social services are worse, drugs and crime rates higher, schools and jobs inferior.
This is one conclusion of two important working papers written by two economists from Vanderbilt University in Nashville, Tennessee. The two economics professors, William Collins and Robert Margo, show through the most objective study I’ve seen, the long-term consequences of the “riots” in the 1960s on property value and wealth of African Americans.
The studies reference some of the most violent outbreaks in Watts, Los Angeles in 1965 (34 deaths), Detroit in 1967 (43 deaths), and Newark, New Jersey in 1967 (24 deaths).
I differ with the use of the term “riots,” however, which has a neutral meaning or identifies random acts of violence. Riots generally are disorderly with no real objective; rebellions on the other hand tend to be organized and with a clear goal in mind.
While the 1960s violence were a mixture of undirected riots and rebellions, for the most part the targets were clear: governmental authority and with the aim of getting more political influence.
After the 1967–68 rebellions came the election of the first Black mayors of cities like Cleveland, Ohio and Gary, Indiana, and a qualitative increase of African American representation in state and federal offices. The radical elements in the community raised the chant of “Black Power,” and solidarity with the African Liberation Movements.
There are different types of riots and rebellions — progressive or reactionary (although these are not firm categories). The race riots of the 1940s, for example, were generally reactionary because white vigilantes responded to Black anger to oppression and racism with terror. This sometimes involved groups like the KKK and at other times simple mobs. White workers refused to work with Black workers in promoted jobs in the plants.
In 1943 Detroit, for example, white riots against Blacks took place. It was blatant racist violence. My mother, who grew up in the city then, told me about those racist attacks.
The following is from a story on those racist riots from the Detroit News, The 1943 Detroit Race Riots. After describing how vigilante whites began attacking Blacks on the streets, the reporters observed
“Thurgood Marshall, then with the NAACP, assailed the city’s handling of the riot. He charged that police unfairly targeted blacks while turning their backs on white atrocities. He said 85% of those arrested were black while whites overturned and burned cars in front of the Roxy Theater with impunity while police watched.”
In 1967, the “rebellions” were directed against the economic, social and political status quo maintained by the city, state and federal governments. Blacks were desperate and angry but also inspired by the very powerful civil rights movement.
The incidents that led to the uprisings varied, from a run-in with cops in Detroit to an explosion in Washington DC after Martin Luther King Jr.’s assassination. The aim of the anger was to protest the lack of political and economic power, and to demand justice.
The 1960s upsurges led to political gains, including winning affirmative action programs in education and hiring. Many political leaders of the Black community owe their positions to the power brokers in Washington and state capitals responding to those social explosions. Open attempts to coopt rising civil rights leaders became governmental and corporate policy.
Collins and Margo’s method is to assign an “index of severity” for “deaths, injuries, arrest, arsons, and days of rioting.” They explain, “We add the index values for each riot within a city to form a cumulative city-level riot severity measure.”
There are shortcomings to this approach, but it is clear that the most serious riots had the greatest economic impact on the biggest communities even though 91 percent of cities with rebellions or riots did not lead to any deaths.
Nevertheless, from 1964 to 1971 some 750 riots occurred, killing 228 people and injuring 12,741 others. After 15,000 separate incidents of arsons, many urban neighborhoods were in ruins.
The studies expose the economics of racism. It is a major reason why Blacks who could pick up and leave did so. They left the inner cities to move out of poverty — to seek a better life for their families. I know many of my auto worker family members did the same. Most now live in the outer suburbs of Detroit.
I grew up in Detroit in the 1960s when the city was nearly two million residents. It was segregated but the lines between communities were starting to fray.
The 1967 rebellion changed that as the parents of my childhood white friends on the East Side of the city left as soon as they could. After the rebellion my parents did the same, moving us to the better off Northwest side in 1969.
Today the city is under one million people with whole areas of the city lying vacant. My old Eastside neighborhood has few homes standing. My block has only three houses on the block. (I last visited the area several years ago.)
As Collins and Margo point out in their May 2004 paper, The Economic Aftermath of the 1960s riots in American cities. Evidence from property values:
“We find that the occurrence of a riot significantly depressed the value of Black-owned property between 1960 and 1970, and that there was little or no rebound during the 1970s.”
The Detroit rebellion of 1967 led to 43 deaths (the most of any city) and some $51 million of property loss for Black-owned businesses and homes. My parent’s home sold for what they bought it for 10 years earlier. Some 30 years later, my father’s Northwest side home sold for a similar price that he paid in 1969.
In their working paper written in December 2003, The labor market effects of the 1960s riots, the authors conclude:
“The riots had negative effects on Blacks’ income and employment that were economically significant and that appear to have been larger in the long run (1960–1980) than in the short run (1960–1970). We view these findings as suggestive rather than definitive for two reasons. First, the data are not detailed enough to identify the precise mechanisms at work. Second, the wave of riots may have had negative spillover effects to cities that did not experience severe riots; if so, we would tend to underestimate the riots’ overalls effect.”
What’s weak in the economists’ analysis is the context of fundamental Black/white social relations (legal and real) since the 1960s. While it is true that the relative ownership in the Black populations is not greater today than it was in 1940 as compared to whites, the type of Black home and business ownership has changed significantly.
There are two fundamental factors behind this — Black flight and middle-class development. The Blacks in the inner city are more isolated than ever from better off African Americans who are no longer segregated in the inner cities as was the case under Jim Crow and de facto segregation throughout the country.
The evolution toward less overt racism has resulted in a deeper class division amongst Blacks — two classes within the community. The authors don’t expound on this historical change in U.S. society.
The studies could also be stronger if the historical role of racism in political economy was elaborated upon. New technologies and expanded globalization have had a big impact on the working class, particularly African Americans.
The decline of manufacturing jobs in cities like Detroit is a fact. Many of the auto plants that once dotted the city landscape have moved to the suburbs, denying mainly high school educated Blacks fewer opportunities for jobs in the inner city. The jobs lost have been partly replaced — but by much lower-paid, less stable ones. The rise of foreign competitors also led to fewer auto jobs.
The contradiction, at the same time, is that for the first time a greater number of African Americans are now in the skilled trades in the auto industry. Overall, though, the new two-tier political economy of auto and other manufacturing and unionized industries led to a decline in Black home ownership and net wealth.
The new middle class (i.e. executives in major companies, lawyers, government politicians, doctors, etc.), are integrated into the overall middle class. The percentage of Blacks in that social class, while relatively small as compared to the population as a whole, serves to “convince” society, including the leading Black conservatives, that the problems of poor Blacks are mainly their own doing.
Nevertheless, Collins and Margo’s studies show how the rebellions undermined the economies of major cities that did not re-shape and change in the new reality. The wealth gap widened and poverty increased in many of these cities.
The lessons for the working-class movement are to recognize the advances, and yet understand racism’s objectively-based longterm impact on society.
The ability to own your own property is essential for African Americans to build a better quality of life for the future. Society as a whole needs to support that goal. Blacks alone can’t do it. The government’s role is important.
While the federal government established commissions to evaluate the root cause of the rebellions, little has been done to redress their longterm economic and labor market impact. For the most part, that history is buried as a growing layer of Blacks integrate into the political and economic power centers of the country.
Collins and Margo have done a valuable service by their studies, even though they readily admit a lot more research is needed. I hope that their scholarship leads other economists and political scientists to take up the challenge.
(Both working papers are available at http://www.www.vanderbilt.edu/Econ/wparchive/working03.html).
ATC 116, May–June 2005