Saturday, November 21, 2009

Black-owned businesses in America: another way to measure economic inequality

Income inequality between Blacks and Whites in America is bad, but in itself offers an incomplete picture of the real economic inequality between the two races.

Median per capita Black income, circa 2008, was $34,218.
Median per capita White (non-Hispanic) income was $55,530.

This means that Blacks, on average, made about 62% what whites made.

As dismal as this income disparity is, however, it is not representative of the extent of economic inequality.

When we look at economic inequality in terms of business ownership, a more disturbing picture emerges.

In 2002 (according to the U.S. Census' Survey of Business Owners):

White Americans, though only 69.1 percent of the population, owned 86.6 percent of business firms. Black Americans, despite making up 12.8 percent of the American population, owned 5.2 percent of firms. White-owned firms accounted for 36.6 percent of the total sales and receipts in the American market (excluding publicly held and other unclassifiable firms), while Black-owned firms accounted for only 0.4 percent of total sales and receipts.

This means that Whites are over-represented as business owners (per their proportion of the population) by 25%, while Blacks are under-represented by nearly 60%.

One of the most startling numbers in this analysis, however, is this: the total sales and receipts of White-owned firms are nearly 100 times that of Black-owned firms.

Considering that Blacks make up nearly 13 percent of the U.S. population and Whites make up about 70 percent, if all was fair the total sales and receipts of Black-owned firms would account for about 6.8 percent. In other words, Black businesses are making less than 6 percent of what they should be, in a just and fair world.

Finally, Whites are three and a half times more likely to own businesses with paid employees than Blacks; three and a half times more likely to be boss. And since Blacks make up a disproportionate number of employees (considering the relative lack of business ownership), we can guess that Whites are probably far, far more likely to boss around Black folks than the other way around.

This pattern is perpetuated outside of business ownership as well, where Blacks and Whites compete for positions of authority in businesses they don't own. According to the 2002 Census CPS, the percent of Blacks in the workforce who were working as administrators or in executive and managerial occupations in March of 2002 was 9.9 percent, compared to 17.2 percent of Whites. In 2003, Blacks made up 18.7 percent of social and community service workers but only 11 percent of social and community service managers. Similarly, while Blacks made up 13.9 percent of production, transportation, and material moving workers, they accounted for only 5.9 percent of transportation, storage, and distribution managers. The trend here is that Blacks make up a disproportionately low number of managers even within industries in which they are represented disproportionately higher than other races.

Sunday, November 8, 2009

Correlation of economic growth with resource depletion and/or environmental degradation

If the reduction of poverty comes at the expense of the natural environment, can it actually be considered a reduction of poverty?

I ask this question because it potentially undermines the basic legitimacy of economic growth as a means to reduce poverty, and not only the neo-liberal/neo-con version of the argument, but the social liberal version of the argument as well.

My social work readings so far tend to support the following analysis: though an increase in economic growth, as measured by GDP, does not necessarily correspond to a decrease in poverty, a decrease in economic growth is consistently correlated with an increase in poverty. The problem - so most of the readings say - is in the unequal distribution of that growth.

However, whether economic growth is distributed equally or not, if it occurs at the expense of the natural environment and/or involves the depletion of unreplenishable natural resources, then it cannot be considered a valid long-term gain, for either the rich or the poor.

There are social costs to environmental degradation that are crucial for a social worker to consider. It seems clear that the costs of environmental degradation accrue to the most vulnerable members of society, while the profits accrue to the wealthy or otherwise privileged. Of course, all pay in the end.

This analysis also (obviously) trumps the classic neo-liberal/neo-con argument that, as markets are consistently deregulated, the rich not only get richer (receiving a bigger piece of the pie) but the poor also get richer, or at least don't get poorer (because the overall pie gets bigger). Even if or when it's true (1949-1969, for example), this an invalid argument if the result of such deregulated market activity is resource depletion and environmental degradation.

It should be noted that natural resources and the quality of the environment are shared resources which industry consistently plunders for little or no cost, and at the expense of everyone. The so-called "tragedy of the commons" is as much its abuse by the wealthy as its neglect by the poor.

I would like to figure out the historical relationship of economic growth to environmental degradation/resource depletion. Have any scholars or economists attempted to measure the historical consumption of resources? Are there estimates as to the accrued cost of resource loss so far? It seems this would be easier to measure than environmental degradation - one might, for example, conceivably measure the amount of forested land lost and translate that to real dollars, even if this takes only partial account of the bigger, long-term costs to the environment.

In particular, if one could measure resource loss between 1949-1969, the same years which Iceland (Ch. 6) identifies as the most prosperous for all Americans including the poor, how much would the costs of resource loss impact the overall real gains for the poor?