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Alan Aja, Daniel Bustillo, William Darity Jr., Darrick Hamilton
Dissent, Volume 61, Number 3, Summer 2014, pp. 39-43 (Article)
Published by University of Pennsylvania Press
DOI: 10.1353/dss.2014.0065
For additional information about this article
Access provided by Duke University Libraries (2 Sep 2014 14:34 GMT)
http://muse.jhu.edu/journals/dss/summary/v061/61.3.aja.html
SUMMER 2014 DISSENT 39
BEYOND STAGNATION
From a Tangle of Pathology to a
Race-Fair America
ALAN AJA, DANIEL BUSTILLO,
WILLIAM DARITY, JR., AND
DARRICK HAMILTON
When President Lyndon Johnson gave his
June 4, 1965 commencement address at
Howard University, he invoked a symbolic
language that would both seize the political
moment and serve as a foundation for subse-
quent policy. The Civil Rights Act had passed
only a year earlier, and Johnson, noting
that it is “not enough just to open the gates
of opportunity,” told the black graduating
class that America needed “not just equality
as a right and a theory but equality as a fact
and as a result.” This call for “results” was a
precursor to Johnson’s Executive Order 11246,
a mandate for the enforcement of positive anti-
discrimination measures in preferred positions
of society, or “affirmative action.”
But later in the speech, Johnson moved
away from his point of departure, abruptly
arguing that “perhaps most important—its
influence radiating to every part of life—is the
breakdown of the Negro family structure.”
This “rhetorical sleight of hand,” as soci-
ologist Stephen Steinberg aptly calls it, would
reverberate in public discussion for years to
come. By defining the central problem facing
the black community as not the deep-seated
structures that perpetuate racism but rather
deficiencies internal to blacks themselves, the
focus of policy would become the rehabili-
tation of the black family.
The roots of this ideology can be traced
to Oscar Lewis’s notion of a “culture of
poverty” and the 1965 Moynihan Report, in
which black families were characterized as
being caught up in a “tangle of pathology.”
The contemporary version of this thesis is
the “post-racial” narrative in which America
has largely transcended its racial divides.
The narrative of grand racial progress is
coupled with the claim that whatever racial
disparities remain are overwhelmingly the
result of actions (or inactions) on the part
of subaltern groups themselves. If blacks
(and other subaltern communities, including
Native Americans, Mexicans, Filipinos,
Puerto Ricans, and Vietnamese) simply would
reverse their self-sabotaging attitudes and
behaviors, this argument goes, full equality
could be achieved. Herein lies much of the
rationale for austerity policies. If behavioral
modification is the central issue, why fund
government agencies and programs, which,
at best, misallocate resources to irresponsible
individuals and, at worst, create dependencies
that further fuel irresponsible behavior?
Post-racialists often confirm their
perspective by pointing to black and minority
appointments to the nation’s elite positions,
including the election of Barack Obama to
the highest office in the land. Indeed, the
president himself often perpetuates this
“post-racial” trope. In his speech marking
the fiftieth anniversary of the March on
Washington for Jobs and Freedom, Obama
described how “legitimate grievances” had
“tipped into excuse-making” and “the trans-
formative message of unity and brotherhood
was drowned out by the language of recrimi-
nation.” “And what had once been a call for
equality of opportunity,” he continued, “the
chance for all Americans to work hard and
get ahead, was too often framed as a mere
desire for government support, as if we had
no agency in our own liberation, as if poverty
40 DISSENT SUMMER 2014
BEYOND STAGNATION
was an excuse for not raising your child and
the bigotry of others was reason to give up on
yourself.”
The president’s rhetoric on race is
consistent with the following premises:
1. The civil rights era has virtually ended
structural barriers to black equality; remaining
barriers are due to the legacy of past discrimi-
nation, the residual effects of concentrated
poverty, and black folks’ own behaviors.
After all, virtually all groups of Americans
have faced some form of discrimination but
managed to “get ahead” anyway.
2. Blacks need to cease making particu-
laristic claims on America and begin, in the
president’s words, to “[bind] our grievances to
the larger aspirations of all Americans.”
3. Blacks need to recognize their own
complicity in the continuation of racial
inequality, as well as their own responsibility
for directly changing their disparate position.
But if structural factors are largely artifacts
of the past, what explains the marked and
persistent racial gaps in employment and
wealth? Is discrimination genuinely of only
marginal importance in America today? Has
America really transcended the racial divide,
and can the enormous racial wealth gap
be explained on the basis of dysfunctional
behaviors?
The Racial Employment Gap
In marked contrast to incremental gains in
relative educational attainment and income,
the racial gap in mass long-term unem-
ployment continues to remain intolerably
high, with black Americans bearing a dispro-
portionate burden. In the spring of 2014 the
black unemployment rate was estimated at
12.0 percent, compared to 5.8 percent for
whites. This continues a structural trend
where the black rate remains roughly twice
as high as the white rate. In fact, over the
past forty years there has been only one year,
2000, in which the black unemployment rate
has been below 8.0 percent. In contrast, there
have only been four years in which the white
rate has reached that level. Blacks are in a
perpetual state of employment crisis.
At every rung of the educational ladder,
the black unemployment rate is twice the
white rate. In 2012 the unemployment rate
for whites with less than a high-school
diploma was 11.4 percent, but for blacks
with the same educational level the rate was
20.4 percent.Most telling as an indication of
ongoing discrimination in U.S. labor markets
is that the unemployment rate for adult white
high-school dropouts (11.4 percent) was less
than the rate for blacks with some college
education or an associate’s degree (11.6
percent).
Field experiments of employment audits
provide powerful evidence that employer
discrimination remains a plausible expla-
nation for racial labor market disparity.
Economists Marianne Bertrand and Sendhil
Mullainathan found a 50 percent higher
callback rate for résumés with “white-
sounding names” than for comparable résumés
with “African American–sounding names.”
Even more telling, the “better”-quality
résumés with African American–sounding
names received fewer callbacks than “lower”-
quality résumés with white-sounding names.
Princeton sociologist Devah Pager
conducted another employment study in
Milwaukee, Wisconsin that revealed the diffi-
culties for stigmatized populations in finding
a job. Wisconsin has outlawed employer
use of criminal background checks for most
jobs, yet among young males of comparable
race, experience, and education, audit testers
with a criminal record received half as many
employment callbacks as testers without a
record. Nonetheless, race was found to be even
more stigmatizing than incarceration. White
testers with criminal records had a slightly
higher callback rate than black testers without
criminal records.
Racial disparities persist even for those
employed. Nearly 87 percent of U.S. occupa-
If structural factors are largely artifacts of
the past, what explains the marked and
persistent racial gaps in employment and
wealth?
SUMMER 2014 DISSENT 41
tions can be classified as racially segregated
even after accounting for educational differ-
ences. Black males experience the most
severe underrepresentation in construction,
extraction, and maintenance occupations.
These occupations tend to require low educa-
tional credentials but offer relatively high
wages. At the other extreme, service occupa-
tions have the highest concentrations of black
males; these are also low-credentialed occu-
pations but, in contrast to construction, tend
to offer relatively low pay. This distinction is
noteworthy given the widely held view that
the lack of “soft skills” on the part of blacks is
a major factor in explaining their labor market
difficulties.
The “soft skills” explanation fits neatly
within the “post-racial” narrative. For
example, Harvard sociologist William Julius
Wilson argues that employers in service
industries fail to hire black men because they
“lack the soft skills that their jobs require: the
tendency to maintain eye contact, the ability
to carry on polite and friendly conversations
with consumers, the inclination to smile and
be responsive to consumer requests.” Yet the
hard fact remains that blacks are “crowded
in” to the service sector, which typically
requires customer and coworker interactions,
and “crowded out” of the construction sector,
which primarily involves not soft skills but
working with materials and machinery. This
contradicts the notion that soft-skills differen-
tials explain the racial labor market disparity.
The Racial Wealth Gap
Wealth is of paramount importance as a pool
of resources, beyond income, that individuals
or families can use as a sustained mechanism
for provision of support for their offspring.
Wealth represents long-term resource accu-
mulation and provides the economic security
to take risks, shield against financial loss, and
cope with emergencies.
Wealth is also the economic indicator in
which blacks and whites are farthest apart.
Prior to the Great Recession, white households
had a median net worth of approximately
$135,000 and black households a median net
worth of a little over $12,000. Thus, the typical
black family had less than 9 cents for every
dollar in wealth of the typical white family.
According to the Pew Hispanic Center, this
gap nearly doubled after the Great Recession,
with the typical black family having about a
nickel for every dollar in wealth held by the
typical white family; in 2009 the typical black
household had less than $6,000 in net worth.
Regardless of age, household structure,
education, occupation, or income, black
families typically have less than a quarter of
the wealth of otherwise comparable white
families. Perhaps even more disturbing, the
median wealth of black families whose head
graduated from college is less than the median
wealth of white families whose head dropped
out of high school, and high-earning married
black households typically have less wealth
than low-earning married white households.
Wealth provides, perhaps, the best evidence
to dispel the myth of a post-racial society.
It also provides the best evidence to dispel
the parallel and reinforcing myth that the
vestiges of racial inequality are the result of
poor choices on the part of blacks themselves.
The conventional wisdom explains the persis-
tence of this massive racial wealth gap across
all levels of income by invoking allegedly
poor savings behavior or inferior portfolio
management on the part of blacks. For
example, when asked at an April 2009 lecture
at Morehouse College about the racial wealth
gap, then Federal Reserve Chair Ben Bernanke
attributed the gap to a lack of “financial
literacy” on the part of blacks, particularly
with respect to savings behavior.
But greater financial literacy will do next
to nothing to close the racial wealth gap in
the absence of finances to manage; nor does it
provide insulation against heavy hits to one’s
investment portfolio. The massive loss in
wealth experienced by shareholders on Wall
Street in 2008 was not due to their financial
illiteracy; it was due to the stock market
crash. Most of the individuals defrauded
in Bernie Madoff’s pyramid scheme could
hardly be described as “financially illiterate.”
Presumably, all Americans may benefit from
improved knowledge about management of
their personal financial resources, but racial
differences in knowledge about management
of personal financial resources do not explain
the racial gulf in wealth. Maury Gittleman and
BEYOND STAGNATION
42 DISSENT SUMMER 2014
BEYOND STAGNATION
Ed Wolff reinforced this in an analysis of data
predating the mortgage market crisis that finds
no significant racial advantage in asset appre-
ciation rates for white families with positive
assets after controlling for household income.
They also find no meaningful difference in
savings by race after controlling for household
income—a conclusion that economists as ideo-
logically disparate as Milton Friedman and
Marcus Alexis (a founding member of Black
Enterprise’s Board of Economists) have reached.
Most of the racial wealth gap is explained
by inheritances, bequests, and intra-family
transfers—transfers largely based on the
economic position of the family into which an
individual is born. Indeed, inheritances and
intra-family transfers are far more important
considerations in explaining the racial wealth
gap than education, income, and household
structure. Moreover, intra-familial shifts of
resources are transfers made on a non-merit
basis. The continued structural barriers that
inhibit blacks from amassing resources and
making intergenerational transfers provide
strong opposition to the post-racial narrative.
Past, present, and prospective racial exploi-
tation and discrimination provide a sounder
basis for understanding the vast material
disparities between blacks and whites in
the United States. There is a long history
of structural impediments to black wealth
accumulation. Beginning with the period of
chattel slavery, when blacks were literally
the property of white slave owners, and
continuing through the use of restrictive cove-
nants, redlining, general housing and lending
discrimination—policies that generated a
white asset-based middle class—and the
foreclosure crisis (which was characterized
by predation and racially disparate impacts),
blacks have faced structural barriers to wealth
accumulation.
The Racial Self-Employment Gap
Substantial attention has been given to black
business development as a means of closing
the racial wealth gap. This confuses cause
and effect: the racial wealth gap would have
to be closed as a prelude to closing the racial
self-employment gap. Business formation,
success, and survival depend heavily on the
initial level of financial capital available to the
entrepreneur, and black firms start with much
less initial capital than white firms. Policy
has often reinforced this initial disadvantage.
Tamara Nopper has documented specific
changes in Small Business Administration
policy—such as more aggregate targeting of
women and other minority groups, and a shift
to private-sector lenders with more stringent
collateral and credit requirements—that
accounted for a substantial reduction in loans
directed to black business. Nopper also noted
that the tendency for ethnic banks to service
co-ethnics coupled with a relative paucity of
black-owned banks and undercapitalization of
these banks negatively affected black business
access to finance. For example, in 2008 the
Federal Deposit Insurance Corporation iden-
tified a total of ninety-six Asian- and Pacific
Islander–owned banks with a total of $53
billion in assets in contrast to only forty-
four black-owned banks with $7.5 billion in
assets. The business success of certain immi-
grant groups relative to blacks is a conse-
quence of greater initial wealth upon entry
into the United States, the selectivity of immi-
gration, and the support of the Small Business
Administration, rather than a “deficient”
entrepreneurial spirit or cultural orientation
toward business among blacks.
What Can Be Done?
The most parsimonious policy approach
would be carefully targeted race-based
policies. However, if such policies are
becoming politically unfeasible, then we need
bold policies that lead to economic security,
mobility, and sustainability for all Americans,
or what john a. powell has labeled “targeted
Addressing the racial employment and
wealth gaps will require not paternalistic
policy, but policies providing access to jobs
and asset building for all Americans.
SUMMER 2014 DISSENT 43
universalism.”
Child Trust Accounts (Baby Bonds). These
accounts are designed to provide an oppor-
tunity for asset development for all newborns
regardless of the financial position in which
they are born. The baby bonds would set
up trusts for all newborns with an average
account of $20,000 that progressively rise
to $60,000 for babies born into the poorest
families. The accounts would be federally
managed and grow at a federally guaranteed
annual interest rate of 1.5–2 percent to be
accessed when the child becomes an adult and
used for asset-enhancing endeavors, such as
purchasing a home or starting a new business.
With approximately 4 million infants born
each year, and an average endowment of
around $20,000, we estimate the cost of the
program to be $80 billion. In relative propor-
tional costs, this would constitute only 2.2
percent of 2012 federal expenditures.
These accounts could be paid for by a
more equitable allocation of what the federal
government already spends on asset devel-
opment. A 2010 report by the Corporation
for Enterprise Development and the Annie
E. Casey Foundation estimates that the
federal government allocated $400 billion of
its 2009 budget in the form of tax subsidies
and savings to promote asset-development
policies, with more than half of the benefits
going to the top 5 percent of earners—those
with incomes higher than $160,000. In
contrast, the bottom 60 percent of taxpayers
received only 4 percent of the benefits. If the
federal asset-promotion budget were allo-
cated in a more progressive manner, federal
policies could be transformative for low-
income Americans. For example, repealing
the mortgage interest deduction—which
primarily benefits middle- and upper-income
households—would be in important first step
in creating a tax code that is fairer for all and
treats renters and homeowners alike.
A Federal Job Guarantee. This would provide
economic security, mobility, and sustainability
for all Americans, while also addressing the
longstanding pattern of racial inequality in
employment. We estimate that the average cost
per job directly created by the employment
corps—including salary, benefits, training,
and equipment—would be $50,000, with the
total compensation package amounting to
$750 billion, which is less than the first $787
billion stimulus package and considerably
less than the first phase of the bailout of the
investment banks estimated at $1.3 trillion.
The net expenses of the job-guarantee program
would be reduced because of a wide array
of cost savings from other social programs;
in 2011 alone, federal antipoverty programs
(Medicaid, unemployment insurance, and so
on) cost approximately $746 billion.
While liberal leaders, whether they be Lyndon
Johnson or Barack Obama, may rhetori-
cally acknowledge the legacies of racism,
they often support policies that are based on
conservative notions of a culture of poverty.
Policies that emphasize deficient norms,
values, and behaviors on the part of blacks
and other subaltern groups amount to what
William Ryan categorized over forty years
ago as simply “blaming the victim.” These
include efforts to encourage small business
development without first addressing the
racial maldistribution of wealth and the
current White House initiative, “My Brother’s
Keeper,” which is aimed at transforming the
motivation and behaviors of “defective” black
male youths to make them more “employable”
without addressing their lack of job oppor-
tunities and labor market discrimination.
Addressing the racial employment and wealth
gaps will require not paternalistic policy, but
policies providing access to jobs and asset
building for all Americans.
Alan Aja is in the Department of Puerto Rican and
Latino Studies at Brooklyn College. Daniel Bustillo is at
the Columbia University School of Social Work. William
Darity, Jr. is in the Sanford School of Public Policy and the
Departments of African and African-American Studies and
Economics at Duke University. Darrick Hamilton is at the
Milano School of International Affairs, Management, and
Urban Policy, and the Schwartz Center for Economic Policy
Analysis at The New School.
BEYOND STAGNATION
