Conceptions of the American Dream often frame upward mobility as an ideal best accomplished through individual effort and perseverance. However, persistent racial disparities despite similar inputs demand a reconsideration of the story we tell ourselves about the degree to which success is available to everyone. A recent report using data from the Survey of Consumer Finances shows that, in 1983, white households held, on average, 5.3 times greater wealth than black households and 6.1 times greater wealth than Latino households. By 2013, those rates had increased to 7.7 and 6.7 times greater, respectively. This is a growth of 85 percent for white households, but only 27 percent for black households, and 69 percent for Latino households.
What is more striking, however, is that even if the wealth of black and Latino households had grown at the same rate as white households or even as drastically as those on the Forbes 400 list (a 736 percent increase in wealth between 1983 and 2013), their wealth would still not match the wealth held by white households. Black households would fall short by $181,000 and Latino households would fall short by $270,000. The report concludes that:
“If average Black family wealth continues to grow at the same pace it has over the past three decades, it would take Black families 228 years to amass the same amount of wealth White families have today. That’s just 17 years shorter than the 245-year span of slavery in this country.”
Catching Up: The Racial Wealth Gap is Unlikely to Narrow
In order to catch up to white families, black and Latino families would need to find a way to increase their wealth by over 700 percent. But traditional drivers of wealth creation do not produce as much value for people of color relative to their white counterparts (with the exception of Asians). For example, education has long been described as the great equalizer and, while there are significant economic returns to a college degree, there are large earnings and wealth gaps by race even among those who have earned postsecondary degrees. Similarly, homeownership is the largest expenditure for many families and represents a large portion of their total wealth, but non-whites are less likely to own their own home and, when they do, their property values are significantly lower. Given the extent to which homeownership is constrained by income and student loan debt (which is accumulated in larger amounts by non-white students), these racial disparities are not surprising.
Source: Georgetown University Center on Education and the Workforce. The College Payoff. 2011
Intergenerational transfers of wealth are another major contributor to wealth creation, but for black families, this strategy is much less successful. Black children born into moderately wealthy families (the middle wealth quintile), are more than twice as likely as white children to fall from the middle to the bottom quintile as adults (33 percent vs. 14 percent).
This trend is especially concerning in the South, with deep racial divides in economic opportunities and a long history of excluding racial minorities from sources of wealth accumulation. For example, the high degree of residential segregation found in the South further exacerbates the gap in wealth created by home ownership; neighborhoods with higher concentrations of non-white residents often have significantly lower property values. Coupled with lower rates of intergenerational income mobility, this suggests that an even greater challenge exists for black and Latino families hoping to build wealth and economic security.
New Outcomes Require New Systems
If black and Latino families are pursuing the same strategies for upward economic mobility as white families, why aren’t they reaping similar rewards? As we’ve written before, our history, particularly in the South, of economic dependence on forced and exploitative labor limited opportunities for wealth creation for those outside the economic elite, and particularly for people of color. Unequal investment in community resources that are beneficial to the entire population, like schools, transportation, and healthcare compounded these issues. This history and it’s continued legacy, apparent in current disparities, undermines a pillar of our proclaimed American ideal that upward economic mobility is available to all who are motivated, persistent, and hard-working. If we believe that closing the racial wealth gap is an issue best solved with strategies implemented at the individual level, what then, is a viable pathway for black and Latino families to catch up, if not through education, income, or homeownership? If we do not have a good answer to this question, we cannot continue to tell ourselves that the only thing standing between poverty and prosperity is a strong work ethic. Instead, we must commit to systemic changes at the institutional level, which focus on the racial disparities among major drivers of wealth creation and create an infrastructure of opportunity that is prosperous for everyone.
A new report released last month by the Economic Policy Institute displays data on the extensive income inequality across the United States. With the gap between the rich and the poor increasingly widening, traversing what CityLab best describes as an income “chasm” can be exceptionally difficult for those at the bottom of the income distribution. A person’s ability to improve her economic security is inextricably linked to income and as the rungs in the ladder move further and further apart, the more momentum required to make the leap and the higher the risk of never scrambling to the next step. The share of all income controlled by the top 1 percent of the U.S. population has steadily increased for the past thirty years, climbing to 21.1 percent, the highest concentration of wealth controlled by the top 1 percent since before the Great Depression.
How did this happen?
Since the 1970s, those already at the top have reaped the benefits of productivity gains, while those lower on the distribution didn’t, as worker wages didn’t keep pace with increasing productivity. Because of the difficulty of upward economic movement, those at the top often stay where they are—and so do those on the lower end.
Income inequality in the South
Inequality varies across the South and from state to state and continues to be a pressing issue for many Americans. The stickiness at the top and bottom is a national issue, but it’s particularly problematic in the South, even though what you need to make to be considered in the top 1 percent is much lower here than in other parts of the country.
In North Carolina, Kentucky, and Mississippi, an income of less than $330,000 would, at minimum, put you in the top 1 percent, while in some New England states like Connecticut and New Jersey, the top 1percent starts at more than $600,000. New York has the highest rate of income inequality, with the top 1 percent making 45.4 times more than the other 99. That 1 percent collects almost a third of New York’s entire income.
So while the South’s income inequality might not be as drastic as other areas, it’s harder to move up here than anywhere else—in large part because of policies that have concentrated affluence and poverty in different places, limited investment in public education and infrastructure, and reinforced racial inequity that limits the mobility of a large portion of Southerners. The South is home to centers of economic and cultural growth, but also elevated levels of poverty and socioeconomic stagnation.
With the right tools and resources, Southern states can work to alleviate the burden of income inequity and make upward mobility an achievable reality. Financial empowerment efforts to address the racial wealth gap and local programs to build strong connections between education and career advancement are key to creating a region where people can thrive—no matter where they start.
Since the N.C. General Assembly passed and Gov. Pat McCrory signed House Bill 2 on March 23, there have been multiple interpretations about how exactly the bill would change lesbian, gay, bisexual, and transgender (as well as non-LGBT) rights, in the state at large and in local municipalities. One effect of HB2’s passing, however, has been clear and immediate: the state’s non-discrimination policies have come under sharper review. Indeed, the question of protecting LGBT-identifying individuals from discrimination in obtaining employment and receiving services is one that many Southern states, such as Tennessee, Mississippi, and Georgia have been grappling with, particularly in the past few weeks. North Carolina explicitly protects its residents against discrimination of any kind based on “race, religion, color, national origin, age, handicap or biological sex as designated on a person’s birth certificate.” The wording of HB2 suggests that local governments in the state must adhere to this same nondiscrimination policy—protecting no more and no fewer identities in the public sphere, and no fewer identities in the private sphere. This would mean, for example, that while we at MDC can (and do) protect against discrimination based on gender expression, the city of Durham now cannot. (Last week, Governor McCrory issued an executive order for the North Carolina state government to include sexual orientation and gender identity in its nondiscrimination policy for state employees, in addition to race, religion, color, national origin, age, and handicap.)
In the Jim Crow South, for the state to require that municipalities protect all residents—in public and private spaces—from race discrimination was regarded by many as an infringement upon the white population’s freedom, but the work of the Civil Rights movement achieved on-the-books protections for race identity. This de-jure protection acknowledges that groups of people experience unique realities given race identity, and that these experiences, while based on constructed categories, result in real non-white disadvantage. Protections based on identity categories are intended to ensure that all people are treated with justice and dignity within our society. Although systemic racism still exists—in our educational , judicial and healthcare systems—we know that explicitly stated policies of nondiscrimination on the basis of race are integral to creating systems and institutions in which people are treated equitably. So if your employer is on record listing your race, national origin, or other protected identity as reason for firing you, that’s unlawful by North Carolina and federal standards. We are not, however, at the point of conferring this same de-jure recognition and protection to the LGBT community. Much of this stems from differing arguments about whether LGBT identities are morally acceptable. Because many legislators and voters do not see these identities as valid, explicit protections for the LGBT community are not prioritized.
Inherent in the absence of LGBT individuals as a protected class in both N.C. and many other states’ laws is an underlying argument that LGBT individuals do not experience a disadvantageous distance from opportunity based on these identities—that these individuals’ experiences of being non-cisgender and/or non-heterosexual do not create real disadvantage.
Here are a few snapshots of data that shine light on the current challenges that LGBT individuals face in attaining the types of mobility we talk about here on the State of the South blog. According to a recent Williams Institute at the University of California study, 35 percent of LGBT adults live in the South—more than any other region in the U.S.
- Between 20 and 40 percent of homeless youth in the U.S. are LGBT youth. A 2011 survey study reported that the rate of homelessness among trans respondents was twice that of the general population rate
- Transgender individuals are four times more likely than the general population to have household incomes less than $10,000/year and are twice as likely to be unemployed than the general population
- Data released in 2016 show that in North Carolina, 77 percent of transgender workers had experienced harassment, 47 percent had not been hired due to lack of protections against gender-identity discrimination, 16 percent had been denied a promotion, and 16 percent had lost a job
- LGBT individuals in states that lack protections against gender-identity and sexual orientation discrimination are less likely to have health insurance than LGBT individuals in states that do have such protections
- Southern LGBT individuals have the lowest health insurance rate of any region in the country, with nearly one in four lacking insurance, as opposed to one in six non-LGBT people in the South lacking health insurance
- This data overview is, indeed, just an overview. It should be noted that transgender individuals, just like all individuals, experience varying degrees of challenges and discrimination based on overlapping identities. For example, African-American transgender individuals are significantly more likely to experience employment discrimination and housing segregation.
We’re always trying to refine our perspective to take in the full picture of what’s going on in the Southern landscape of equitable opportunity for upward social and economic mobility. We describe equitable mobility using three measures of well-being: thriving, belonging, and contributing. Upward mobility will be more likely when residents can, for example, find belonging in safe, affordable housing, thrive in equitable educational settings, and contribute to society in good health. If we only measure the well-being of people that our laws consider members of protected classes, we resign ourselves to the current state and operation of our systems and policies, making it easy to miss those on the margins—those for whom opportunity is particularly far off. Housing, education, and health, along with equal opportunity for employment and economic security, are necessary for an infrastructure of opportunity in which all young people and adults have an equitable opportunity to achieve upward social and economic mobility. But when a specific demographic of people in the U.S., many of whom reside in the South, are regularly and systemically barred from these building blocks to opportunity, the overall integrity and wellbeing of our society and economy suffers, and we betray our proud American belief in equal opportunity for all. These systemic barriers are not inevitable, but rather are created; therefore our systems’ outcomes are also not inevitable, but rather can be improved by building an infrastructure of opportunity complete with affirming and supportive pathways and policies.
Through a partnership with the John M. Belk Endowment, MDC is profiling eight North Carolina communities to learn how they are working to improve economic conditions in North Carolina and strengthening the systems and supports that boost people to higher rungs on the economic ladder. One focus area is a four-county region made up of Vance, Granville, Franklin, and Warren counties, where MDC held enlightening conversations with education leaders, community foundations, and workforce partners about at mobility, current and emerging living-wage employment opportunities, and patterns of postsecondary persistence. The new superintendent of Vance County Schools, Dr. Anthony Jackson, participated in those discussions. Jackson was featured last week in WUNC’s series on rural schools, Perils and Promise. In his interview with Leoneda Inge, Jackson spoke about how his personal experiences influence how he sees his students:
Coming from DC as an individual, growing up in what I considered somewhat of a desperate situation, in what people call the projects of Washington, D.C., I’ve learned that it’s truly about helping children close what we call the ‘opportunity gap.’ And having them understand that because you can’t see it doesn’t mean it doesn’t exist.
Today, the opportunity gap in Vance—and surrounding counties—is stark. Parts of Granville and Franklin counties have become bedroom communities for the Research Triangle region of Raleigh, Durham, and Chapel Hill—part of the halo of one of the fastest growing metros in the U.S. The labor markets of the areas blend together, potentially creating more diverse job opportunities for residents. But Vance and Warren counties, while not impossibly far for determined commuters, retain their largely rural character. After centuries of economic structures that allowed few chances of upward mobility and wealth building for the majority of residents, particularly African Americans, the area continues to have high levels of inequality and poverty. Unemployment is high, and for those who do have jobs, median wages are low. Educational attainment, which was unnecessary for earlier manufacturing employment, is much lower than state and national averages: only 18 percent of adults in Vance County and 20 percent in Warren County have a two-year degree or higher.
In Vance County Schools, 91 percent of students are eligible for free or reduced-price meals, and the 2013 graduation rate was 65 percent, much lower than the state average of 83 percent. In parts of the region, many affluent families have enrolled their children in private schools. In this environment, young people growing up in low-income families aren’t getting much positive reinforcement from the community. “Being poor doesn’t relegate you to being unsuccessful,” says Carolyn Paylor, executive director of Franklin-Granville-Vance Smart Start. Young people in the community need to know that their future matters and that the community wants them to succeed.
“Too many people seem paralyzed by past failures—we aren’t spending enough time lifting up current success stories,” says Dr. Jackson. In his view, this mindset is the first thing that needs to change. So, along with other leaders in the region, the superintendent is committed to changing the conversation about student success. “We are waiting for some magic bullet program, but it’s really about building the capacity of our parents, about teaching them how to advocate for their kids to get the most out of parent-teacher conferences,” he says. Since he started as superintendent, he looks around and sees students, parents, and teachers who are trying in spite of difficult circumstances—and he sees many who are succeeding. He wants to make sure all students receive the support they need, even those who don’t match what people imagine as a “typical” successful student.
To begin that shift toward more collective concern for community well-being and expanded aspirations, strategic improvements in the education-to-career continuum are being made. Several new programs to provide students with additional pathways to career success are underway: two career academies, one focused on medicine and another on fire and public safety, as well as an alternative high school for students who were not successful at the county’s other high schools. Vance-Granville Community College (VGCC) has partnered with the local school systems to establish early-college programs in each of the four counties. Students enroll at the start of high school and graduate with a two-year degree, or college credit, within five years. The community college also links to nearby four-year institutions to ensure students have an array of degree options and clear academic pathways; through a partnership with North Carolina Central University, students can complete a Bachelor of Science degree in Criminal Justice on the VGCC campus.
These pockets of innovation and excellence show what is possible for the future. But the region still needs strong collaborative leadership to organize around a vision for the future economy. Local leaders must continue their work to change the conversation about poverty and who is likely to succeed. “We can’t allow poverty to be an excuse for not providing opportunity,” says Dr. Jackson. Changing that mentality will take inclusive planning strategies so that the region’s people share ownership of a vision for educational and economic success.
Abby Parcell contributed to this post.
The beginning of the year always makes me revisit my annual budget, evaluate my savings plan, and start to think about taxes. As I think about the additional amount of money I still need to save for my family to be comfortable in the future, I am reminded that there are many people I encounter on a daily basis that are not as fortunate. When it comes to having enough income to cover my basic expenses, I’m lucky. I can pay my bills and still save for my family’s future—assuming we don’t have any unexpected medical expenses that deplete our savings. My job pays me a family-sustaining wage, but what about the people I depend on to take care of my family and me on a daily basis?
Last year, Fortune reported that more than 42 percent of U.S. workers hold jobs that pay a low wage. The article assumes any job with wages below $15 an hour is a low-wage job. The $15 an hour rate is based on national studies which have calculated an equilibrium where wages are high enough to lift families out of poverty, but still low enough to not result in massive job losses. In North Carolina, the percent of jobs paying a low wage is 48.7 percent.
We often associate jobs that pay low wages in our economy with low skilled or unskilled labor. Many of us think of fast food jobs and teenagers. However, many of the jobs that pay a less than what is needed to maintain a normal standard of living are the very jobs our society depends on to take care of our family members and teach our children. As the Fortune article points out, low-wage jobs are held disproportionately by women, people of color, and persons 20 years of age or older.
Is $15 an hour enough?
Another definition of low-wage job is one that pays less than a living wage, which is defined as the amount of money a person must earn to cover their family’s basic living expenses. In 2014, MIT and the Living Wage Project calculated the living wage for North Carolina to be $10.53 for one person, living alone. The addition of children obviously increases a family’s expenses. Hence, one adult with a one child will need to make $44,990 a year ($21.63 an hour) to break even every month. This amount does not include emergency savings or funds to splurge on birthday and holiday gifts. Overall, 72 percent of our state’s workforce makes less than $44,990 a year. Here are the living wage calculations for other family configurations:
Many of the jobs that pay less than a living wage typically require postsecondary credentials and are occupations that are growing in our economy:
Half of the preschool teaching jobs in the state earn less than $11.35 an hour. At this wage rate, someone working as a preschool teacher, with a child at home, would not be able be able to cover his basic living expenses. He would not be able to save for his family’s future, and he is probably asking himself a different set of questions at the beginning of the year. All of the jobs listed in the table above require some kind of investment in postsecondary training; the very investment that is touted for getting ahead and securing employment that leads to economic security. But the investment can’t just be on the worker’s side of the equation. We have to invest in making those jobs that require skill and training—and there aren’t many jobs that don’t—quality jobs that provide wages commensurate with the training and value they bring to individuals and communities. Our society is dependent on a host of skilled labor to take care of our families, so we need policies and wage rates that help them take care of theirs.