Whitney Tilson's School Reform Blog: Blacks in Memphis Lose Decades of Economic Gains

Reading this article about the particularly acute devastation that this recession and the foreclosure crisis have had on African-Americans takes my breath away.

Not so long ago, Memphis, a city where a majority of the residents are black, was a symbol of a South where racial history no longer tightly constrained the choices of a rising black working and middle class. Now this city epitomizes something more grim: How rising unemployment and growing foreclosures in the recession have combined to destroy black wealth and income and erase two decades of slow progress.

The median income of black homeowners in Memphis rose steadily until five or six years ago. Now it has receded to a level below that of 1990 — and roughly half that of white Memphis homeowners, according to an analysis conducted by Queens College Sociology Department for The New York Times.

Black middle-class neighborhoods are hollowed out, with prices plummeting and homes standing vacant in places like Orange Mound, White Haven and Cordova. As job losses mount — black unemployment here, mirroring national trends, has risen to 16.9 percent from 9 percent two years ago; it stands at 5.3 percent for whites — many blacks speak of draining savings and retirement accounts in an effort to hold onto their homes. The overall local foreclosure rate is roughly twice the national average.

The repercussions will be long-lasting, in Memphis and nationwide. The most acute economic divide in America remains the steadily widening gap between the wealth of black and white families, according to a recent study by the Institute on Assets and Social Policy at Brandeis University. For every dollar of wealth owned by a white family, a black or Latino family owns just 16 cents, according to a recent Federal Reserve study.

The Economic Policy Institute's forthcoming "The State of Working America" analyzed the recession-driven drop in wealth. As of December 2009, median white wealth dipped 34 percent, to $94,600; median black wealth dropped 77 percent, to $2,100. So the chasm widens, and Memphis is left to deal with the consequences.

"This cancer is metastasizing into an economic crisis for the city," said Mayor A. C. Wharton Jr. in his riverfront office. "It's done more to set us back than anything since the beginning of the civil rights movement."

It is this economic reality, not the unions, that is the primary obstacle to reforming our schools. The school system is the largest employer in most cities and these jobs have been the avenue to the middle class for millions of African Americans in recent decades (for the data on this, see pages 166-170 of my school reform presentation at http://www.tilsonfunds.com/Personal/TheCriticalNeedforGenuineSchoolReform.pdf). In these communities – and to the politicians who represent them – reform is widely perceived (with some justification) as a threat to decades of progress.

Bill Perkins isn't selling out the children in his district because he's unintelligent, and only partially because he's owned by the unions – it's because he sees reform as a threat to a lot of jobs in his district. As a movement, we need to be MUCH more sensitive to this hard reality…

That said, we need to convert or replace politicians like Perkins with those like Basil Smikle (see my last email), who understand that ANY community with terrible schools (such as Harlem, where in 19 of 23 district schools more than half of children are below grade level) is PERMANENTLY screwed unless we fix its schools.

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The New Poor

Blacks in Memphis Lose Decades of Economic Gains

By MICHAEL POWELL

Published: May 30, 2010