Terrance Heath

Canaries in the Economic Coalmine

Filed By Terrance Heath | May 29, 2010 4:00 PM | comments

Filed in: Politics, Politics
Tags: African-American, coal miners, Kentucky, Latinos, Rand Paul, tea baggers

When the jobs-focused plenary panel at America’s Future Now convenes— with Angela Glover-Blackwell, Rich Trumka, Jared Bernstein, and Bob Herbert — it’s likely they will continue a discussion America desperately needs, and that tea party conservatives  wants desperately not to hear. It’s time, past time, to address the black and brown “canaries” in our economic coal mine, by protecting the social safety net and taking direct action to create jobs.

Less than six months ago, leaders of six progressive groups came together to warn that the country’s jobs crisis could cause severe and lasting damage to generations of Americans — especially people of color — unless immediate action was taken. That warning came with a notice that the African American and Latino canaries in our economic coal mine were in poor shape.

Janet Murguia, president and CEO of National Council of La Raza, and Benjamin Todd Jealous, president and CEO of the NAACP, echoed this concern about many minority groups already seeing Depression-level rates of joblessness, but also cautioned against viewing the problems of black and Hispanic communities in isolation.

“Black people in the U.S. are the canaries in the coal mine,” said Jealous. “What we get tends to hit everybody later.”

Last month I noted that the complaints of the overwhelmingly conservative white, male, well-off and well-educated tea party members weren’t that different from the 82% of the country, many of whom are worse off. That post started off with a question: What if the tea party was black? There are many ways to answer that question, but in this post I want to offer just two.

If the tea partiers were black:

  1. They’d be even worse off than they are.
  2. If they’re as consistent as their star candidate from Kentucky, they wouldn’t want anyone to care or do anything about it.

On the first point, they’d definitely be worse off in this economy, because they’d be a lot poorer. This week, a Brandies University study proved Jealous right, finding that years of deregulation and an increase in high-cost loans quadrupled the wealth gap between white and black Americans.

A disturbing new study shows African American families have fewer economic resources to fall back on during this economic crisis than do white families, mainly due to discrimination and tax policies that favor the rich.

The study by the Institute on Assets and Social Policy at Brandeis University reveals that the wealth gap between blacks and whites has more than quadrupled over the course of a generation from $20,000 to $95,000. The researchers studied the same set of families over 23 years (1984-2007) and found that white families were able to build assets-what you own minus what you owe, excluding home equity-while blacks essentially lost assets. In fact, a typical white family is now five times richer than its African-American counterpart of the same class.

That means blacks had little or no money to start businesses, send children to college or ensure a secure retirement, the authors say. In fact, because many low-wealth families are forced to turn to high-interest rate credit for emergencies, about 25 percent of all African Americans owe more than they own. Read the entire study here.

Many minority families end up turning to predatory lenders because they have no other option, the study says. Also African Americans and Hispanics were at least twice as likely to receive high-cost home mortgages as whites with similar incomes, the study says.

The reason is directly related to 30+ years of conservative policymaking.

The big question, of course, is why? Shapiro concludes that the main fault lies in discrimination and the economic policies of the last quarter century. Here is a look at some of the forces that contributed to the wealth disparity.

    * Predatory lending. We already know those sub-prime mortgages created a problem for the credit markets and the entire economy when it all came crashing down in 2008. But those loans were disproportionately pushed on African-American families — even those who could qualify for and afford better mortgages with lower interest rates.

    * Wealth-begets-wealth policies. Families that start with more money have access to better financial products, including tax-favored savings vehicles and less expensive credit. Furthermore, they have more opportunities to make money on their money. White families that started with more assets could afford to save more, invest more, and earn more.

    * Bank deregulation. The study’s authors say bank deregulation led to more payday lenders, check cashing stores and other expensive ways to access credit, and fewer consumer-protection controls. African-American families, starting with fewer emergency assets, were more driven to high cost loans in times of emergency. That problem is even worse now, the study’s authors suggest, concluding that more consumer protections are needed. Coincidentally, isn’t the Senate debating that financial reform bill this week? Just sayin’.

In fact, the study’s author says that even the highest-income African Americans have suffered decline.

Not only would the conservative, white, male, wealthy tea party members be worse off, but they have a longstanding historic disadvantage to overcome, before they could even reach their “bootstraps.”

The report attributes part of the cause to the “powerful role of persistent discrimination in housing, credit and labour markets. African-Americans and Hispanics were at least twice as likely to receive high-cost home mortgages as whites with similar incomes,” the report says.

Although many black families have moved up to better-paying jobs, they begin with fewer assets, such as inheritance, on which to build wealth. They are also more likely to have gone into debt to pay for university loans.

“African-Americans, before the 1960s, first by law and then by custom, were not really allowed to own businesses. They had very little access to credit. There was a very low artificial ceiling on the wealth that could be accumulated. Hence there was very little, if anything, that could be passed along to help their children get to college, to help their children buy their first homes, or as an inheritance when they die,” said Shapiro.

…There were also social factors, the study found. “In African-American families there is a much larger extended network of kin as well as other obligations. From other work we’ve done we know that there’s more call on the resources of relatively well-off African-American families; that they lend money that’s not given back; they help cousins go to school. They help brothers and sisters, aunts and uncles, with all kinds of legal and family problems,” said Shapiro.

If the conservative, white, male tea partiers were black men, they would face the reality of a 17.9% unemployment rate. Not only is that a close to double the 9.1% rate of white males, and higher than the 11.2% (Figures c/o the Bureau of Labor Statistics), but more than the 25-year high unemployment rate of 17.2% projected for African-Americans in general this year. 

Their unemployment rate would be driven in part by the kind of “persistent discrimination” even a college degree can’t overcome. In fact, the the educated white men of the tea party were educated black men, they would still face an unemployment rate of 8.4%, compared to 4.4% for their white counterparts. Even having a name that “sounds black” could hinder job prospects.

The same New York Times/CBS poll that revealed the homogeneous demographics of the tea party also suggested that they think too much has been made of all of the above.

Tea Party supporters’ fierce animosity toward Washington, and the president in particular, is rooted in deep pessimism about the direction of the country and the conviction that the policies of the Obama administration are disproportionately directed at helping the poor rather than the middle class or the rich.

The overwhelming majority of supporters say Mr. Obama does not share the values most Americans live by and that he does not understand the problems of people like themselves. More than half say the policies of the administration favor the poor, and 25 percent think that the administration favors blacks over whites — compared with 11 percent of the general public.

They are more likely than the general public, and Republicans, to say that too much has been made of the problems facing black people.

So, if they were black, they’d face the reality that tea partiers who are much better off think all of the above requires little in the way of action or attention.

Similar to the health care debate, complete with similar racial disparities, if the tea partiers were black they’d face the political reality that a segment of white Americans with media disproportionate to their numbers oppose any reform or government action that helps, well, the “wrong” people. That is, people who aren’t like them.

So, whites either think that only non-whites are poor and uninsured, or they just assume that that health care reform is going to benefit the non-whites regardless of whether whites are uninsured and poor. Either way, it’s a little weird, don’t you think?

…The unusual populist crossfire isn’t actually unusual at all. It’s called right wing populism and it goes like this: Obama has stolen the tax dollars of hard working white people (Real Americans) and given it to the blacks, Mexicans and rich “cosmopolitan” elites on Wall Street. Nothing unusual about that in the least. It’s as old as the hills.

Brownstein doesn’t seem to know that because he goes on and talking about how odd this whole thing is for the Democrats caught in a crossfire as working class whites rebel against the government bail outs and health care (which they believe is going to benefit people who don’t deserve it.) …

And as with health care, it’s likely that all of the above (along with a conservative disdain for government, and the political debate over the role of government) is at least part of the reason why job creation agencies remain off the table in negotiating our way to a recovery — even though agencies like the Civilian Conservation Corps (CCC) were part of the government’s strategy for unemployment during the Great Depression.

The problem then may have been worse, but today the fundamental imbalance — too many workers, too few jobs — is essentially the same. The economy is recovering, but the employment hasn’t come back. And in a couple of scattered corners, on the Internet and in academia, this has prompted a question born out of the Great Depression’s legacy of public employment.

“So why aren’t we doing this?” economist and liberal columnist Paul Krugman asked on his New York Times blog last fall.

If we’re going to spend $787 billion on a stimulus bill — and another $18 billion on the latest jobs bill just passed by Congress — trying to prod the private sector to hire, creating infrastructure orders in need of labor and promising tax breaks to anyone who can connect the two, wouldn’t it be better to just spend all that money hiring people directly?

And why isn’t anyone in Washington talking about this?

…Krugman answered his own question in a single word: Politics.

“The Obama administration is fearful of turning to the New Deal as a model for getting out of this recession,” Maher said. “I think they’re very weary of being painted as being even more liberal than they are.”

And that fear, and the distracting discourse on the deficit, is probably responsible for the lack of political will get put Americans back to work, and why thus far job creation strategies thus far have been largely focused on corporate tax cuts (and increased taxes on the rest of us via the “value added tax”).

The problem is, the “cut-taxes-and-hope-for-the-best” approach is a conservatives strategy that has yet to work for anyone but the wealthiest. It won’t work for job creation, because you can cut corporate taxes, but you can’t make invest that windfall in job creation.

Franklin Delano Roosevelt’s understanding, though — in a Keynesian argument often repeated today — was that the private sector could only do so much if people had no money in their pockets. You can offer tax breaks to encourage business to produce goods, but if no one will buy them, what incentive is there to hire workers in the first place?

“You can’t force capitalism,” Rose said. “You can’t force individual businesses to produce something. They do production for profit, and if they’re not going to be able to realize a profit, if they can’t sell what they’re producing, they’re not going to produce it.”

Is the way to get people back to work in the long and short term is direct job creation? It’s worked before, and could work again, if there’s sufficient political will.

There’s hope for a new direction. This Congress and this White House have passed, in just one year, have passed two sweeping reforms —health care reform and financial reform — bigger than any passed in a generation. And though neither is everything Americans needed it to be, both are better than they would have been without progressive activism and engagement.

The canaries in our too-long-deregulate economic mineshaft are gasping for air. We need to act quickly an decisively to get them and us out of the hole we’re in, before we’re all to weak to make the climb.

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To my mind, the miners don't give a crap about the canaries. The canaries are there to give their lives to save the miners. It's all part of the "everything's my property and I can do what I want with it" authoritarian conservative mindset. So there's a total disconnect between what's happening to Black and Latino families -- and what's happening to (omg) me!

One more thought: They're all "market forces" and "personal responsibility" when it comes to "them" but not (gasp!) when it comes to "us".

Terrance you make some very valid points. One of the problems is that Obama doesn't want to be seen as FDR all over again. So, let's do it the Republican way. Maybe if we offer a bailout to Walmart and Target in the form of negative interest rate lending to set up U.S. factories they would find it economically advantageous to fill their stores with American made goods. People might even buy American made goods if they could find any. I would love a dress labeled made in South Carolina and some bathroom shelving labeled made in Indiana.

The problem is not that American workers are less productive or more expensive. The problem is that funky exchange rates set by China and others make it seem that way.

And if the wealthy think they are taxed too much then they better pay attention to the earnings the canaries need in order to pay taxes because one thing is certain. Our government can not levy income taxes on foreign workers employed in foreign countries.

Waiting for Wal-Mart and Target is simply a pipe dream it ain't gonna happenif we leave it to these monster companies. The answer is to bring back those companies that left for cheap labor as I wrote privately to Dr. Jillian and to Terrance the answer is one that only we can employ by simply shopping locally made goods that come from our own factories ready to sell to the public.

That would be wonderful but the only thing I can find made in America is food crops. At least I can eat but who is working those fields? Its certainly not the unemployed in the inner cities. We need to create jobs in this economy.

You need to think outside the box, if you think that all you can find is food crops you are part of the problem without a usable answer.

DLF I don't know where you live but I can not find American made products in the local stores here. Believe me, I look.

As far as finding American made products I know this all to well and the main culprit was Wal-Mart and Target and their ilk (those who went along to go along). The answer lies in conspiring to get those American made manufacturers to come back and start creating jobs in our local areas. I wrote to Terrance and to Dr. Jillian with my idea and I held off posting it to this page as a comment now it appears that I will need to post because we need them now more than ever if we are to get any relief for the canaries of our society. Here is my private post and it will take time but it must be done before it is way to late to solve our economic dilemma. The first part was to Dr. Jillian the second to Mr. Heath. both are exact duplicates.

Jillian, Did you know that a military veteran has the opportunity to a small business loan guaranteed to 85%? All one needs to do is have an idea, write a business plan and apply for it in the normal ways needed. Color is not a
factor when it comes to start up businesses. Community Colleges have the ability to help anyone to write and plan at no cost to the small business world. All that it takes is leg work to find the help that is needed. You don't need a new product there are plenty of old ideas that can be modernized. I came up with leather suspenders and extra wide belts as my company products. As I wrote privately to Terrance Heath nd the fact that I am writing to you as a person who responded. The whole emphasis has to get over the "Oh poor poor me" you did it to get here you are today did you not? Yes I read most of the articles at BILERICO and I shake my head when I read stories like this. Third generation welfare makes me sick. We need to all get our collective butts in gear. The following is my comment to Terrance and it would work the same for you since you are in a position to find the help that your local economy needs to create sustainable wages.

Mr. Heath, I have a vested interest in growing the economy. I started a small manufacturing business that is also located on the Internet. Lest you think that I am White, Rich, and Privileged you would be quite wrong. I
grew up on a family farm where we grew most everything from Milk to Poultry as the oldest of 14 siblings before I turned 18 and a mom that while being pregnant most of the time sort of raised the kids. Yes we are white and Roman Catholic (sort of anyway) but the only thing that is privileged is owning our own home and farm, walking to school or church and the grocery store. I take my queue for my dad who is gone now but he said that making 4 times the cost of housing would make us rich with 25% for the house and land, 25% for taxes, 25% to live on, and 25% to save. To do this we had to create new money as in manufacturing or just working our hinnies off to bring home the bacon. This instilled in me the belief that American companies who took their labor market outside the USA were simply turning their products into dollar trading while flushing the labor costs down the crapper. Money earned in Manufacturing like housing creates the only way to bring in new money to be spent on goods and services. Anything else as I say is simply dollar trading and that gets eaten up quickly along the way.

So it is about time to quite complaining and just use the head for what it was meant to do "be creative".

That said I don't know exactly how it would work but I hear and read the complaints of the American Companies who left for cheap wages outside this country. They complain that the cost of customs, cost of transportation, and cost of advertising for their foreign made goods is killing any profit that they hoped to achieve with cheap labor. Foreign made products are now
only those products that need to be a competing force for the dollars that are leftover if there was anything left after we pay our monthly bills.

So my idea is to locate a head hunter (creates a short list of potential public opportunities like the one that was used to find the new University
of Oregon President and the new coach for university basketball yes we are the ducks at this home grown University) this entity would be charged with finding a company that manufactures ready to sell to the public. Items of what they might be is not that necessary just simply ready to sell and very visible. The companies in mind might even compete with each other as the simple idea is to get them to come back is showing a local workforce making that new money to be spent on the local economy and one simple idea. They
advertise that they "ARE BACK AND SORRY THEY LEFT, and WE ARE ONCE AGAIN AMERICAN MADE". I see the potential for people falling all over themselves to buy American again a novel idea you bet real American goods manufactured right here employing and paying a good wage. No give away in tax breaks for anything. We already tried the tax breaks. When it looked like they wanted
it again and didn't get it off they went to the cheap labor markets to do it all over again. American made is just the simple fact that their
transportation costs are reduced, customs costs are non-existent, and they are American products. Those products as I said have to be ready to sell to the public. The reason is that I look to even the auto industry that doesn't really manufacture American anymore they simply assemble a car from cheap parts made in low labor cost markets. there are plenty of bugs to
work out with each idea but the nucleus is there that could prove a vital link to improving the outlook of any area within the local economies all across the USA solving the economic crisis that got us into this mess in the first place with buying cheap at Wal-Mart as the worst of the offenders followed in suit by most everyone else.

You call the people of color and everyone else the canaries in the Economic Coalmine. Sure they will be the first to hit the bricks but it need not be that way at allow. I call people of color and whites as well the canaries in our economic future. Wages need to be set 4 times the cost of housing getting rid of minimum wage starvation wages. That should never ever have been the
barometer of a living wage.


It's a bizarre mentality that I just don't get: I'd rather starve than have to share a meal with the wrong people. Too bad there are lots of Americans in that camp.