A post-1960s phenomenon

        The black middle class, as defined by education, occupation, and income, is primarily a post-1960s development. Prior to the 1960s, because of racial discrimination, segregation, and the fact that most blacks lived in the rural South, African Americans experienced a limited opportunity structure.
        In 1960, only 20 percent of the black population finished high school, compared with 43 percent of the white population. African Americans had little access to higher education, except at historically black colleges, and were largely excluded from graduate and professional schools. Only 3 percent of African Americans graduated from college, less than half the white graduation rate of 8 percent.
        The small number of black professionals were largely confined to serving the black population. They were primarily small businessmen, ministers, teachers, and undertakers--with a few doctors, lawyers, and pharmacists. African Americans found minuscule white-collar opportunities in either the public or private sectors.
        Outside the black community, African Americans worked in unskilled industrial or service jobs. Black women, in particular, labored almost exclusively as domestic servants. African Americans rarely worked in sales or clerical positions.
        Prior to World War II, the black population was predominantly southern and rural. It was only during World War II that the black population became largely urban, whereas the white population had become mostly urban during World War I. In 1950, a sizable portion of African Americans still picked cotton for a living, as 90 percent of the South's cotton was harvested by hand.
        Within a decade, 70 percent of it was being reaped by machine. The displacement of black sharecroppers and tenant farmers that began during World War II joined with the lure of jobs in munition industries, dispersing African Americans to urban areas of the South, North, and West.

Pushed by civil rights

        The civil rights movement, black skill development, public policy, and economic growth contributed to the emergence of a sizable black middle class. The civil rights movement desegregated the military and removed barriers to graduate and professional education. In 1954, the Supreme Court decision of Brown v. Board of Education overturned the doctrine of "separate but equal."
        Although the Supreme Court ruled against racial segregation, the civil rights movement sought through demonstrations, boycotts, and sit-ins to make racial equality a reality. The high tide of the movement was reached in three pieces of legislation: the Civil Rights Act of 1964, which barred discrimination in public accommodations, transportation, education, and employment; the Voting Rights Act of 1965, which made the ballot more accessible to African Americans, especially in the South; and the Housing Act of 1968, which banned discrimination in the sale or rental of housing.
        As the opportunity structure in this country began to expand, African Americans took advantage of the new possibilities. By 1980, over 50 percent of young African Americans were graduating from high school.
        Today, about 86 percent of African Americans from 25 to 29 years of age have graduated from high school, a rate comparable to that of whites. In 1980, 8 percent of African Americans were graduating from college, still less than half the white rate of 17 percent. Today, about a third of black high school graduates attend college and 13 percent graduate. Although the gap is narrowing, white students attend college at a higher rate (about 42 percent) than African Americans, and about 23 percent graduate.
        As a result, African Americans hold a wide range of jobs. They have been particularly successful in securing middle-income employment in the public sector. African Americans are twice as likely as whites to work for city, state, or federal government.
        Although the public sector has provided African Americans with generally stable middle-income positions, it does not pay as much as the private sector. African Americans in the private sector are as likely as whites to be in technical, sales, and clerical positions but less likely to hold executive, administrative, and managerial positions.
        Black professionals in corporations have been relegated more to soft positions in personnel and public relations than to line authority in planning and production, jobs that would help them move up the corporate ladder. The Glass Ceiling Commission report revealed that in 1992, white males at Fortune 1,000 industrial and Fortune 500 service companies made up 43 percent of the workforce but held 97 percent of the senior-level managerial positions. Only 0.6 percent of the managers were African American, 0.4 percent Latino, and 0.3 percent Asian American.
        Public policy also helped expand the black middle class. The Civil Rights Act of 1964 established the Equal Employment Opportunity Commission (EEOC) to monitor compliance with the federal ban against discrimination on the basis of race or sex in hiring, training, compensation, promotion, and termination.
        Private-sector firms with 100 or more employees had to report to the EEOC on minority and female employment. The Office of Federal Contract Compliance (OFCC) was set up a year later to monitor minority and female employment in firms with government contracts. Because of these government affirmative-action programs, African Americans were hired at faster and higher rates by companies reporting under EEOC and OFCC regulations than by employers as a whole.

Income increasing

        Black median household income in 1997 was $25,050. That income level placed about 40 percent of black households in the middle class, compared with about 60 percent of white households. This proportion had almost doubled since 1960. The black middle class grew at a faster rate than the white middle class in that period, increasing from about 40 to 60 percent.
        Middle-income status for African Americans, however, requires that black women contribute more to household income than white women do. Although middle-income status today demands more two paycheck households, black wives are one and a half times more likely than white wives to work full time.
        The median income of black men is about $9,000 less than that of white men, but the median income of black women is only about $1,500 less than that of white women. Because of differences in the opportunity structure for black men and women, more black than white families owe their middle-income status to the wife's occupational and income position than to the husband's.
        More black women than men are graduating from college and from graduate and professional schools that place them in a better position for professional employment. Although still significant, the median income gap between black male and female college graduates is beginning to close faster than the gap between black and white male college graduates.
        The declining number of black male college graduates and the improved economic status of black females might explain the recent drop in the percentage of female-headed black family households below the poverty line. In 1987, 51 percent of black female-headed households were below the poverty line. A decade later, 40 percent of such households are impoverished. Although improving, the percentage is still much larger than the 24 percent of all black families in poverty and only 8 percent of married families.

Can it grow?

        Whether the black middle class can reproduce itself remains questionable. Hugh Price, president of the National Urban League, noted this past August, "Many of us have been laboring under the false comfort that the expansion of the black middle class and the creation of individual black millionaires have moved African Americans closer to economic parity. The reality is, no matter how great incomes become for individual blacks, our wealth is not sustained because we have very few assets that can be passed on."
        The black middle class, unfortunately, is based more on income than on assets. Black married couples have about 80 percent of the income of white married couples but only one-quarter the net worth.
        The net worth of college-educated whites is about $58,000 more than the net worth of college-educated African Americans. Given its net financial assets, a typical middle-class white family can sustain itself at its present standard of living for about four and one-third months if it loses its income stream, while the typical middle-class black family could not sustain itself for a month.
        Among some African Americans, there is the sad but true expression that the difference between being middle class and poor is one paycheck. Although recent economic prosperity has been good for African Americans, they face instability as the "last hired" and "first fired" in an economic downturn.
        Most African Americans' assets are in their homes and vehicles. Whites have more diversified investments in income-producing and financial assets such as stocks, bonds, mutual funds, and individual retirement accounts.
        Seventy-four percent of middle-class whites and about 62 percent of middle-class African Americans own their homes, but 63 percent of black assets are in home equity, compared to 43 percent of white assets. The median value of black home equity, however, is about $14,000 less than that of white home equity.
        Black property is located primarily in urban areas and close-in suburbs. White property, generally in the outer suburbs, appreciates at a higher rate than black property. Houses of similar size, design, and appearance are appraised higher in white communities than in black or integrated neighborhoods.
        Fewer middle-class African Americans than whites own homes because of continued discrimination in the housing and banking industry, despite laws against it. A Federal Reserve Bank study indicated that African-American and Hispanic applicants were denied mortgage loans two to three times more often than whites. Even with the same creditworthiness and neighborhood characteristics for a new home, black applicants were denied loans more often. The suburbs remain one of the last bastions of segregation in the United States. In 1993, 86 percent of suburban whites lived in communities with fewer than 1 percent of black households.
        To perpetuate and enlarge the black middle class, the National Urban League has proposed the following measures: establishment of individual development accounts (similar to individual retirement accounts), which could be used for first-time home purchases, education, job training, or starting a new business; creation of home-mortgage programs to make home ownership a reality for more African Americans; and development of technical assistance and financial counseling for African Americans who plan to start their own businesses.

Impact of black businesses

        Black businesses have always contributed to the composition of the black middle class. They have a larger impact on the middle class than the elite, a very small stratum of the black population, about 1 percent, compared with about 5 percent of the white population.
        Prior to the 1960s, black businesses primarily served the black community in beauty parlors, grocery stores, barbershops, funeral parlors, insurance agencies, small savings and loans, and beauty products. As in occupational distribution, black businesses have broadened their base and now include car dealerships, construction, beverage distributorship, small manufacturing, technology, and fast food franchises. Automobile dealers and food and beverage distributors account for almost three-quarters of the sales of Black Enterprise magazine's 100 largest black-owned businesses in 1997.
        With few exceptions, black businesses still cater to black consumers in cosmetics, communications, and entertainment. In banking and insurance, black businesses have declined over the past decade, due to competition with industry giants that have consolidated and commanded market share for black and white consumers.
        In 1975, Black Enterprise listed 39 black-owned insurance companies. Today, it lists only 10. The National Insurance Association, which represents black-owned insurance companies, has only 13 members. In 1977, the banking industry as a whole experienced a 9.5 percent growth in assets, its largest percentage gain since 1980, while black bank assets increased by 8 percent.
        Even black domestic companies, once a preserve of black business, have suffered from competition with larger white companies that have found black consumers a lucrative market. For the first time since 1988, total sales for Black Enterprise's top 100 black businesses declined, from $14.1 billion in 1996 to $13.19 billion in 1997, a 6.49 percent drop. This decrease occurred despite a booming national economy.
        Because of its fragility, the black middle class confronts more economic strains than the white middle class does and is less able to pass on human and financial capital to the next generation. Although white middle-class adults need to help their parents in old age, their parents are more likely to be financially secure and to leave an inheritance.
        Among the elderly, more whites than blacks receive Social Security benefits and pensions. In 1992, 93 percent of white seniors received Social Security, compared with 89 percent of black seniors. Forty-eight percent of white retirees had pensions but only 26 percent of black retirees. Three times as many elderly whites as elderly blacks had asset income. The black middle class bears a greater burden in assisting parents in old age, is less able to help children purchase their first homes, and has fewer assets to invest in the education and enrichment of its grandchildren.
        Although the gap between the black and the white middle class has narrowed considerably, it will probably continue to exist for the foreseeable future. Education has been a major means for African Americans to achieve middle-income status.
        If African Americans graduated from college at the same rate as whites, much of the gap would disappear. Although African Americans might catch up to whites in income, especially as the national demographics change and fewer white males enter the labor market, they will still have a way to go in matching assets. Black educational initiatives, public policy, and a robust economy are still important for the preservation and reproduction of the black middle class.n

Additional Reading