African Americans, Latinos and Economic Opportunity in the 21st Century
March 22, 2006
By Jennifer Wheary

View the document (pdf)

The United States faces major challenges in sustaining a strong middle class in the decades ahead. Rapidly changing, often volatile economic conditions are making it more difficult to enter the middle class -- and stay there. Even as the bar to a middle class life is raised higher, economic opportunity is fading. As a result, the most rapidly growing groups in the U.S. -- particularly African Americans and Latinos -- face growing obstacles to entering, and staying in, America's middle class.

The United States has a history of successfully incorporating individuals from divergent backgrounds and circumstances into the security and quality of life associated with being middle class. Public policy had a definitive hand in building America's middle class in the years following World War II. This success enabled many, including Eastern and Southern European immigrants, to integrate more fully into American life and realize the American Dream. Educational attainment rose as the GI Bill and Higher Education Act of 1965 increased college access and affordability. Homeownership increased as government programs enabled more people to obtain home loans, made mortgage interest tax deductible, promoted suburban housing development and enacted reforms targeting discriminatory lending practices. Income and wealth grew as legislation raised the minimum wage to a historic high in 1968 and policy bolstered the economy, ensured a tight labor market and facilitated union organizing.

While these post-war policy efforts created an infrastructure of opportunity that lifted millions into the middle class, they did so in an uneven fashion. Anti-discrimination policies arrived late to the process of constructing the middle class and have been incomplete in their achievement. African Americans and Latinos, the two largest racial and ethnic groups in the country, have made strong economic progress since the late 1960s and early 1970s and now have a greater presence in the middle class than ever before. Yet the incorporation of these two groups into the American Dream is far from complete. Educational attainment, homeownership, income level and wealth are still significantly lower among African Americans and Latinos than among whites.

Meanwhile, America's infrastructure of opportunity has begun to erode. The post-war emphasis on increasing educational attainment, homeownership and wages has given way to dramatic gaps between rich and poor -- and stagnant, even declining, mobility.

The combination of persistent racial inequities and an eroding opportunity infrastructure raises questions about the ability of the fastest growing groups of Americans to move into the middle class. Over the next five decades, the white population will grow 7 percent while the African American and Latino population will increase 129 percent. By 2050, African Americans and Latinos will make up about 40 percent of the United States population. With growth proceeding at a rate 18 times greater than the white population, African Americans and Latinos should constitute a large portion of the future middle class -- but this end result is far from certain. In fact, since 1984, Latinos have actually lost ground on major indicators of motion toward the middle class. African Americans have gained ground in the last three decades, but only slightly and far less in comparison to initial gains experienced by whites in the post-war years. Even with past gains that helped open access to the middle class, dramatic disparities still exist between the economic circumstances of Latinos and African Americans and those of the white population. Add to this a universal evaporation of affordable healthcare, declining real wages and skyrocketing education costs, and there is real cause for concern about our nation's future.

Drawing on recommendations from a previous Demos report, Millions to the Middle, we advocate policies that reinforce educational and economic opportunity for all Americans as the building blocks of a representative middle class. Foremost among these efforts should be developing programs that make college affordable, that foster homeownership and asset building and that ensure that work pays a living wage. We also advocate addressing discriminatory lending practices head on as one way to attack America's ongoing legacy of racial discrimination. We must bolster our existing opportunity infrastructure to prepare for the future middle class.