When Do Black Incomes Increase? A Historical Picture of Racial Economic Progress

Figure 1: Median Income over time for Black and white households in dollars; race refers to the household held. Included household heads are 25 years old and older. All amounts adjusted to 2016 USD.

A few weeks ago, I wrote about how black capitalism won’t be the solvent for decades of racial inequality. After reading my post, a good number of folks reached out to discuss next steps (if you did, thanks!). While I’m eager and excited to tackle remedies to economic inequality and community-wide mobility generators, it also is important to better contextualize the problem. The need for additional Black mobility pathways comes from the longstanding and disproportionate representation of Black people among the American poor. This reality is no surprise; most of us know that while Black incomes have increased over time, they still lag significantly behind white household earnings, and always have (see Figure 1 above). In fact, in 2016 dollars, the current median Black household still hasn’t caught up to the median white household in 1968.

Still, this reality obscures some nuance. In the figure above, both Black and white household incomes seem to trend up over time; likely growing with the expansion of American GDP. But, putting the initial income inequality aside for a moment, are Black and white incomes growing at least a similar rate? Are there particular periods of white/Black economic prosperity? Or do Americans experience gains and losses at similar times and rates?

A few days ago, I didn’t really know. From my studies, I knew anecdotally that Black incomes globally should show improvements in a few periods. Mainly, the post-Civil Rights era gains due to the expansion of the public sector and increased access to higher education. Maybe some economic improvements in the 1940–1970s due to employment gains in the Great Migration and the boom of the World War II manufacturing economy, although scholars have debated whether Black people actually saw economic improvements after moving North. And of course, the greatest economic improvement for Black lives undoubtedly came with Emancipation. …Yea, that part.

But in a more modern context, I still couldn’t empirically list times of Black economic growth. Until now.

Here’s what I did: Since 1968, the Census has collected detailed data on household income by race, education, etc. To figure out the modern periods of Black economic boom and bust, I take the raw median income graph from above and turn those numbers into a growth rate, comparing each year to 5 years before. In other words, to see when Black families do well economically, I calculate a 5-year growth rate by comparing Black median earnings in 2008 to Black median earnings in 2005, then Black median earnings in 2009 to 2006, 2010 to 2007 and so on from 1968–2016. This way, instead of just raw dollars, we can see the percent to which Black incomes change over time. All growth rates are calculated from 2016-inflation adjusted U.S. dollars.

The results? These fun looking charts.

Figure 2: Growth Rate of Median Household Incomes by Race, 1968–2016. One bar refers to change within the proceeding five year period (i.e. “2000"= change from 1995–2000). Source: Current Population Survey ASEC sample.

Generally, I show that Black and white households in the U.S. experience similar periods of economic boom and bust. For both groups we see loses from 1981 to 1983, peaks from about 1984 to 1992, losses again from 1992 to 1994, followed by growth from 1996 to about 2003.

Next point: Across all periods, when Americans experience loss, Black households appear to lose more. Between 1975 and 1980, white household incomes fell by about 6%; Black households lost over 10%. This reality also applies to the recent Great Recession period as well.

Finally, this figure reveals that three periods were particularly beneficial to Black incomes: the 1970s, 1996–2001, and to lesser extent 1980–1990. I’ll discuss these in reverse order.

Look at the 1987 bar for African Americans. This bar represents the growth rate from 1982 and 1987. It shows that Black household incomes experienced their largest growth ever recorded — 18%. Growth wasn’t limited to one period though. The mid to late 1980s show serious growth across quite a few periods. The issue is that this growth was preceded by serious loss in the early 1980s, so the absolute increase is not that significant. Black incomes in many ways just made up for earlier losses.

However, from 1996–2001, Blacks experience growth that supersedes losses of the last period. This is Clinton-era boom that benefitted both groups, but the growth rate for Black incomes is clearly higher. This may be for a few reasons. It may be that policies, like the implementation of the Earned Income Tax Credit really did target Black families and increase their incomes faster during this time. It also may be that Black families globally begin at such an income deficit that gains experienced by all Americans benefit them much more. Or it could be that a segment of the Black population, perhaps college grads, are driving this effect (more on this later).

Finally, the 1970s shows meaningful growth to Black incomes, especially in the period from 1968 to 1973 (about 11%; shown by the 1973 bar). At first glance, many would explain this growth by post-Civil Rights gains. After the Civil Rights Act of 1965, sociologists like William Julius Wilson argue that educated African Americans especially benefitted from the new law which expanded the public sector to workers of color. Often these public sector jobs required a college degree, leading to Wilson’s assertion that most Black people did not benefit from Civil Rights legislation.

So are the gains I present only experienced by the Talented Tenth? Below, I replicate the same data, that is the 5-year growth rate of household incomes. This time, however, I look only at Black households and I disaggregate by education levels. In the interest of time, I won’t go through this figure too much because the general takeaways are less clear here. Also, I whipped this graph up rather quickly and will probably revisit it later to clean it up. Still I wanted to share this first crack. Obviously, Black high school grads came up from 1986–1990 and then lost from 1992–1996. It was great to have a Bachelor’s degree from 1982–1986. Otherwise, there don’t seem to be any significant patterns for any education group. This may be a bit surprising — we are consistently shown data on how a college degree should earn individuals more income. This figure does not negate that truth; Black college grads do earn more than high school grads. However, economic growth does not seem to going to one particular Black educational segment. This echoes other research that demonstrates challenges Black college graduates face despite their educational accomplishments.

Again, I’ll revisit this figure later and clean it up a bit. Overall, there do seem to be periods where Black households experience significant growth and loss. More work needs to be done to isolate what happens in these periods of gain to produce even more global community benefits. Any thoughts? Let me know if anything jumps out at you in the comments.

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