Even in Better Times, Some Americans Seem Farther Behind. Here’s Why. | Financial Times

Even in Better Times, Some Americans Seem Farther Behind. Here’s Why.

Getty Images Americans' household earnings are finally stretching back to their pre-recession heights. But feeling secure and co...

Getty Images
Americans' household earnings are finally stretching back to their pre-recession heights. But feeling secure and comfortable isn't only a measure of how much money you have. It's also a measure of how much you have compared with others.
For many, that is one reason that recent financial progress may seem overshadowed by the gains they've missed out on and a needling sense that they've lost ground.
As new research illustrates, two groups in particular have stalled: whites without a college degree, and blacks and Hispanics with one. Both are being far outpaced by college-educated whites.
"America has been a story of getting ahead, of progress," said Morris P. Fiorina, a political scientist at Stanford University. "There's been no story of progress — for them."
The findings, part of a study on the demographics of wealth between 1989 and 2016 from the Federal Reserve Bank of St. Louis, show significant advances in education and earnings among white, black and Hispanic Americans over that period. A Census Bureau report this week also showed continued income gains last year. But the study highlights the growing importance of relative shifts in position up or down the income ladder at a time when the economy's riches are flowing increasingly to the wealthiest sliver.
The economic swoops and comebacks of the last three decades have chipped away at many measures of well-being. An advanced global economy has radically revalued the contributions of blue-collar labor and technological skills.
The lingering economic insecurity has fired resentments, sharpened identity politics and fueled populism on the right and left that is upending hierarchies in the Democratic and Republican Parties.
But parallels between whites who did not finish college and blacks and Hispanics who did show that "this is not clearly a race story and not clearly an education story," said William R. Emmons, an economist at the St. Louis Fed and a co-author of its report.
To Mr. Emmons, the most striking result was the steep declines among white families headed by someone without a college degree. Members of this group — labeled the white working class — not only were left behind financially, but also lagged in other measures of well-being, like self-reported health, homeownership, and marriage or cohabitation rates.
In absolute terms, they are still doing better than their black and Hispanic counterparts, with nine times the wealth and a higher median income. But as Theodore Roosevelt observed, "Comparison is the thief of joy."
The white working class, which once dominated the American work force and reaped a hefty chunk of its rewards, has seen its incomes trail far behind those of college graduates. In less than three decades, its share of total income sank to 27 percent from 45 percent. For these workers, the education gap is starker than ever.
At the same time, working-class blacks and Hispanics began to catch up. These groups' median incomes grew at an accelerated pace over the same period that the median income of working-class whites declined.
"Their relative position has fallen dramatically," said Ronald Inglehart, a political scientist and professor emeritus at the University of Michigan, "at a time when the desirable standard of living has risen a lot."
To Mr. Inglehart, expanding inequality is the primary culprit, decreasing satisfaction while fanning ethnic and racial tensions and anti-immigrant sentiment around the world. "Rewards are being sucked up at the top to a degree that is stunning," he said.
In the United States, polls have shown that a majority of whites feel whites are discriminated against. The sociologist Arlie Hochschilddescribes it as a powerful feeling that the government is helping others to cut ahead of them in line as they fall further back. This has helped turn them more aggressively, she argues, against affirmative action and policies that assist displaced migrants. But as the Fed data suggests, waning privilege is a more likely reason.
The most plausible explanation, the report concluded, is the "diminishing set of advantages relative to nonwhite working-class families in terms of high school graduation rates, access to relatively high-paying jobs, and freedom from explicit workplace discrimination."
What may be surprising is that the group with the most similar experience in some respects is black and Hispanic college graduates. Additional education has clearly paid off in terms of greater wealth and income. Yet they are lagging well behind their white counterparts. Among college graduates, white families, for instance, had six times the median wealth of black and Hispanic families, extending a stubborn racial gap.
Without a cushion of family assets, the housing bubble and recession cut deep among minorities, gnawing away the assets even of college graduates. White households with similar education levels also lost wealth, but their relative position was enhanced. In the 1990s, their real median net worth was 256 percent of the general population's. That figure jumped to 416 percent by 2016.
"Racial privilege is alive and well among college-educated elites," said Joan C. Williams, a law professor at the University of California Hastings College of the Law and the author of "White Working Class: Overcoming Class Cluelessness in America."
Black college graduates were also the only other group besides the white working class that experienced declines in all three nonfinancial measures tracked — health, homeownership, and marriage or cohabitation rates.
Researchers have found that socioeconomic status and health shadow each other, climbing or falling in tandem.
For upwardly mobile African-Americans, and to a lesser extent Hispanics, achieving the American dream has had a peculiar side effect. They tend to encounter more discrimination because they live and work in predominantly white environments, said Cynthia Colen, an associate professor at Ohio State University's College of Public Health.

"They're playing the game, and yet they're still facing discrimination in workplaces and neighborhoods," she said. "It absolutely harms their mental health and their physical health."
These shifting economic and social fortunes have been shaping voters' attitudes and candidates' pitches as the midterm elections approach.
White working-class men in particular have responded to President Trump's frequent expressions of concern about their lost ground, his skepticism of affirmative action and his promises that reduced immigration and trade wars will restore them to their former status. His administration is also dialing back its enforcement of anti-discrimination laws and regulations.
Within the Democratic Party, attacks on widening inequality and enduring racial privilege coupled with support for free college education have resonated with voters and delivered surprising victories to several left-leaning political challengers.
The feeling of decline among the groups lagging behind is well founded, Ms. Williams said. "What's at issue here is whether they're going to interpret that decline through the lens of race or through the lens of class," she said. "There's a war over interpretation."
Wade Green - Financial Analyst

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Financial Times: Even in Better Times, Some Americans Seem Farther Behind. Here’s Why.
Even in Better Times, Some Americans Seem Farther Behind. Here’s Why.
Financial Times
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