The Black Middle Class is Going through a Period of Crisis Triggered by Foreclosures

It cannot be denied that right now the black middle class is going through a period of crisis that has been triggered off by rampant foreclosures. This is the view of many experts.

Algernon Austin is the director of Program on Race, Ethnicity and the Economy at the Economic Policy Institute. He said that for the Afro-Americans the previous year of 2008 was not a good one. He adds that most unfortunately the indications are that the situation will become worse.

There is an adage that when America sneezes then the blacks in the country catches a cold. – in other words whenever there is a crisis it is this community that bears the brunt of the attack.

John Schmitt of Center for Economic Policy Research said, “Whenever there is an economic downturn, African Americans are the most negatively affected. This is because of the economic gap that continues to exist between the blacks and whites since long. Schmitt explained, “The unique challenge for African-American middle class is they tend to have much less financial wealth (like stocks and bonds) and wealth in general so they have much less of a margin to get through tough times.”

Only ten years ago Ellis Cose, a journalist said those days were good for the blacks. He said, “It’s the best time ever to be black in America.” At that time there was an increase in job prospects, wages and house ownership. Unemployment went down together with poverty promising halcyon days. But many of the blacks have not been able to recover from losses they had suffered during the 2001 recession; other Americans did recover. This has made them vulnerable to new attacks when the economy swings down. This is what started to happen in recent years.

This recession is particularly agonizing because it started with the foreclosure crisis affecting the roof above people’s head. Schmitt said, “The problem with housing is you have two-thirds of Americans who are homeowners so when housing prices fall 15-25% it has a bigger impact on the wealth of a typical person. So this is a particularly hard recession because (people’s) wealth was directly attacked.”

For many years The National Urban League had given out the warning that the sub-prime mortgages being peddled in a predatory manner to the blacks and Latinos would lead to catastrophic foreclosures. But none paid heed.

Via

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