By Dawn Turner Trice
October 7, 2012
Generations of Valerie Magee's family, from her grandparents to her children, have deepened their roots in the black middle class, finding a pathway to prosperity through college education and the support of family members.
But as Magee, 56, watches college tuition skyrocket and wealth and incomes plummet, she worries that college might be moving beyond her young grandchildren's grasp.
So Magee, a divorced nurse administrator, recently sold her pricey south suburban Matteson home, hoping that will free her up financially to better assist her children if they need help with a future mortgage payment or tuition.
"Every generation wants the next to move up at least one more rung on the ladder, not backward — never backward," she said. "My daughter and son-in-law are doing OK for now, but who knows what will happen tomorrow?"
For months, the presidential candidates have been trying to court the middle class, extending offers of tax cuts, lower gas prices and better schools. The message: America does well when the middle class does well. The corollary: We feel your pain.
But much less attention has been given to the black middle class, which since the recession and slow recovery has suffered massive decreases in wealth and high rates of home foreclosures. Blacks overall are experiencing a 13.4 percent unemployment rate, according to figures released Friday, much higher than the national rate of 7.8 percent.
The Pew Charitable Trusts' Economic Mobility Project recently released a report projecting that 68 percent of African-Americans reared in the middle of the wealth ladder will not do as well as the previous generation.
In August, the National Urban League's State of Black America 2012 report found that nearly all the economic gains that the black middle class made during the last 30 years have been wiped out by the economic downturn.
But the other reason is the property tax base of many local governments is being whittled away by the home foreclosure crisis.
After the housing bubble burst in 2006, everyone was affected, but blacks were hit particularly hard. About one-quarter of blacks have lost their homes or are seriously delinquent and at risk of losing them, according to the North Carolina-based Center for Responsible Lending.
The center also found that African-American borrowers with good credit scores received subprime, predatory loans associated with high foreclosure rates three times as often as white borrowers with comparable credit scores.
Earlier this year, the Woodstock Institute, a Chicago-based nonprofit research group focused on fair lending issues, found that although 25 percent of homes in the Chicago area were underwater, about 40 percent of homes in predominantly black neighborhoods were.
The average equity for mortgaged properties in communities that are more than 90 percent white is about $108,000. In communities that are 80 percent or more black, the average is $6,800.
Spencer Cowan, Woodstock's vice president, said the institute didn't break the research down by income range.
"But the disparity is so great that it would almost be impossible for even a black middle-class neighborhood to have significantly more equity, so that the wealth disparity wouldn't be on that order or magnitude," said Cowan.
Home values and equity are a huge deal because homes accounts for about 60 percent of black wealth.
"For whites at the upper-income levels, their home is a component of their wealth, but they may have a 401(k) and other assets," Cowan said. "But for most black middle-class folk and those at the lower rungs, it's all about their homes."