Information Cultural Initiatives Committee (ICIC)

Request Number 1

Subtitled: Where is the Money?

Prepared this the eighth day of September, 1997

Submitted to:

Secretary Andrew Cuomo - Housing and Urban Development

Secretary Dan Glickman - Agriculture Department

Senator Alfonse M. D'Amato - Banking/Housing and Urban Affairs

Senator Richard G. Lugar - Agriculture, Nutrition and Forestry

Rep. Robert F. Smith - House Agriculture Committee

Rep. Bill Archer - House Ways and Means Committee

Rep. Bob Livingston - House Appropriations Committee

Rep. Jim Bunn - House Committee on Banking & Financial Service

Victor Vasquez - Office of Community Development - USDA

Harold E. Ford, Sr. - Former Tennessee Congressman

Pursuant to the fundamental principles of democratic government and in the interest of an informed citizenry, we offer the following and make this formal request.

The Bureau of Labor Statistics' Profile on the Working Poor found far too many in the land of plenty living below the official poverty level. In 1995, approximately 36.4 million Americans existed in poverty; seven and one half million people were classified as "working poor," a euphemism for minimum wage earners with families to support. According to the Profile, "About three-fourths of the working poor was comprised of white workers; however, poverty rates for blacks and Hispanics were two and three times higher, respectively, than the rate for whites." These 1995 percentages along demographic lines were 5.1, 12.3, and 15.0%, respectively, for whites, blacks and people of Hispanic origin. According to The Employment Situation: July 1997, the monthly seasonally unadjusted civilian non-institutional unemployment rate for the nation as a whole was a low 5.0%. In examining its demographic composition, this low aggregate rate translated into an even lower rate for Whites topping the unemployment chart at 4.3%. Blacks struggled under the burden of another monthly double-digit rate weighing in at 10.4%. Hispanics fared marginally better than Blacks, but were significantly worse off than their white counterparts at 8.2%. While these aggregate group rates are telling, American youth are far more likely than adults to be counted among the nation's unemployed.

The unemployment rate for American youth ages 16-19 was 16.6% in July 1997, down slightly from a 16.7% monthly rate posted for July 1996. For whites, both sexes ages 16-19, the unemployment rate was 14.2%; for blacks in this category the rate surged to 31.7%. Traditionally, the hardest hit segment of the American labor force is young African American males; their unemployment rate stood at 35.4% in July down from its lofty 41.9% recorded for the same month a year earlier. Clearly, these statistics illustrate that a significant portion of the American populace does not experience the wealth and prosperity of American life. Indeed, the pervasive pockets of poverty these numbers represent and the resulting unequal distribution of economic welfare loss raises questions about the American image televised around the world. In viewing this data from an historic perspective, moral and ethical questions are raised about the national strategic economic vision for minorities, particularly African Americans, because disproportionately, the national economic welfare loss is borne by young African American males. This national historic economic trend and the practices and policies used to foster it must not be allowed to continue; they must be brought to an end, if this nation is to heal its social fabric and find peace within.

To properly place this analysis in perspective, voluminous statistics and reports on the concentration of poverty and unemployment among African Americans and Hispanics were obtained from archives maintained by the Labor Department's Bureau of Labor Statistics (BLS). Utilizing this historical data, an objective analysis of the distribution or pattern of economic welfare loss is possible. These employment and earnings statistics, when viewed along demographic lines, empirically support the contention that African American economic welfare, measured as median family income, is adversely affected by forces beyond those normally influencing labor markets and the national economic welfare. Economists willing to objectively examine the historical data will agree there is some unexplained mechanism or influence, if you will, that defies empirical explanation. Of particular difficulty here for empirical analysis is an explanation of the readily identifiable stable but inverse relationship between the unemployment and median family income ratios of minority and white Americans. Over the nearly fifty (50) year data interval, minority unemployment averaged 2.1 times whites and the minority to white median family income ratio fluctuated between the narrow band of .5 to .65. Objective observers conclude that African American economic welfare is unquestionably influenced by institutionalized racism, for lack of a better combination of words to describe this phenomenon. However, in support of placing the measurable but unexplained differences on institutionalized racism, those examining the historic socioeconomic and political relationship between whites and African Americans point to the Three-Fifths Compromise claiming the data supports the notion that it continues to negatively influence African American economic welfare. Given this document as part and parcel of the socioeconomic and political backdrop, it is understandable that the historic economic relationship between whites and African Americans is also characterized by gross disparities.

According to Yohannes Sharriff Smith, these disparities extend across the board for African Americans, and in combination generate a welfare gap of significant proportions. Termed the Chasm of Inequality by Smith, the welfare gap is essentially the difference between the economic welfare of Whites and African Americans, in terms of median family incomes. In his book entitled T.H.I.N.C.:The Chrysalis of Evolution, Smith employs BLS demographic data to provide a graphic representation of this anomaly. Along with a more in depth analysis of this phenomenon, the book explores the problems confronting young African Americans through the author's experiences and unique youthful perspective. For purposes of empirical economic analysis here, Smith points out that the chasm's stable existence defies objective explanation. Given education, geographic location, age, and experiences, there remains an empirical difference between the incomes of whites and African Americans. Thus, the author concludes the most cogent argument available for the existence of this stable difference is institutionalized racism.

(Note: A graph of the median income data for selective years.)

As a test of its stability, the data clearly show that cyclical fluctuations in the economy fail to impact America's Chasm of Inequality or welfare gap. For even in these, the best of economic times, the African American community endures rates of poverty and unemployment in the double digits. If experienced by the entire nation, the country would collapse beneath the constant strain of economic depression. Yet, according to prominent American economic analysts in the media, as well as our illustrious President and his efficient Cabinet, these are the best of times. For African Americans, these prognostications of economic prosperity must be viewed with a jaundiced eye. Glowing economic report cards handed out by these gurus are biased, since the analyses are based on profit margins and other favorable business indicators as the gauges of national health. By pointing to profits, which are way up, these gurus will have us believe "America is economically viable and in the healthiest shape in decades and all is well with the world." Like most Americans, African Americans derive their economic welfare from employment and wages not profits. A double digit unemployment rate among African Americans coupled with African American communities numbering among the most impoverished in the nation make celebrating the national prosperity at this time not only a bit premature, but callously inappropriate.

Because American workers are working harder and more for less, labor finds little to cheer about in these great for business economic reports. With real wages, wages adjusted for inflation, having steadily declined over the past three decades, it is little wonder the American worker finds nothing to celebrate in the current economic climate. In particular, African Americans feel they are little, if any, better off than they were at the end of the 1960's when the black to white median family income ratio rose to its high of .61, a little more than the historic Three-fifths agreed to in the Missouri Compromise. For 1996, the ratio was .0609 rounded to .61. Thus, African Americans claiming their relative condition has not changed since the abolition of slavery are essentially correct, relatively speaking. Given this information, a national celebration is not only premature, but shortsighted and asinine.

A real quandary in improving worker economic welfare is the conglomeration of problems posed by big business and government operating in tandem to keep aggregate wages low. A good example of this is provided by an examination of the real consequences for labor in the current political environment that embraces the basic socioeconomic and political tenets of "Contract with America." There has been and continues to be a broad base of bipartisan support for achieving economic efficiency in the government. This has become synonymous with "Contract with America, " i.e., the downsizing the public sector, privatization, outsourcing, relaxation of anti-trust legislation and enforcement, more stringent crime legislation and increased enforcement funding, all areas of government reorganization or reinvention, which negatively impacts labor force participation and employment. Like its private sector counterpart, the government is apparently adhering to the policy of last hired first fired in reinventing itself. Traditionally, African Americans make up the vast majority of this group. Ask seasonal employees replaced by terms and part-time employees in growing numbers within the government, especially the Internal Revenue Service. Ask those being negatively impact by the reduction in force in the IRS' national office. Included should be those negatively impacted by aggressive attrition policies throughout the federal sector. Blacks in Government (BIG) has amassed significant data that substantiates the negative impact of government reorganization and downsizing on African Americans, because, disproportionately, those losing their jobs as the government reinvents itself are African Americans. Through outsourcing and privatization, downsizing opportunities are created resulting in more Americans losing their jobs or being demoted to remain gainfully employed. These activities exert downward pressure on employment and wages. Who benefits and who lose?

Government reinvention, restructuring and downsizing makes available a growing number of relatively low-paid skilled workers to the civilian labor force, because government employees tend to make less than their private sector counterparts. Few African American government workers, though productive and highly skilled, hold upper level management positions. African Americans do not make the hiring and firing decisions. They are more likely to be beating the pavement as a result of downsizing and reorganization than whites in government. Hence, the assertion that the government adheres to the same hiring and promotional practices as the private sector is given credence. Like its private big business counterpart, public sector downsizing has had a disproportionately negative impact on African American economic welfare. We can conclude then that they represent the biggest losers in the "Contract with America" version of government reinvention. So, the question remains, who benefits?

The quest for greater profits and the ability to purchase favorable Congressional and presidential support have enabled big business to export operations and jobs to poorer nations around the globe, causing downward pressures on some sectors of the American labor market, and in the process boosting profits. By exploiting low cost labor populations, America's big business and wealthy assure obscene profits by reducing total labor outlay, exploiting new consumer markets, and, in the process, forcing American workers to lower their standard of living to survive. As labor demands a greater share of economic welfare, i.e., higher wages, better benefits and working conditions, big business will retaliate with threats of downsizing, reorganization, outsourcing, etc. to bring the employees back in line with their profit scheme, a strategy that necessarily includes keeping total labor outlay low. Even among organized labor, big business retaliation against union labor generally results in a greater percentage of African American jobs lost. Based on historic trends, a safe bet is that in the fallout from the United Parcel Service (UPS) strike the percentage of minorities losing their jobs will be at least as twice as high as whites.

In the negotiations with UPS, part time employment emerged as an obstacle to an agreement. Big business, including the government, embraced part-time employment to lower total labor outlay. The media provided coverage of some individuals benefitting from the availability of part-time employment, tooting big business' horn for making available different types of employment to meet the changing needs of the American labor force. In truth, big businesses benefit, because full and part-time employees compete for a limited number of jobs keeping downward pressure on wages. Any downward pressure on wages helps to keep the minimum wage low. Disproportionately, a low minimum wage affects African Americans slaving on menial jobs. Consequently, part-time employment, downsizing and reorganization in all sectors of the economy, disproportionately affect African Americans.

In addition, welfare reform, a victim of government downsizing, provides another even lower less skilled pool of employees creating additional downward pressure on wages. Granted welfare reform is needed to honestly address the role of government in the economy. However, the "Contract with America" welfare reform initiatives targets public assistance for individuals only, totally excluding the real reason welfare reform is needed, i.e., big business subsidies. What "Contract with America" dubiously labels welfare reform appears little more an opportunity to exert downward pressure on the unskilled labor market, increase the working poor and provide another subsidy for business. Ironically, completely obscuring the real welfare reform issues, pictures transmitted by the media, print and electronic, is of a black single parent receiving AFDC and food stamps. Funding for these two programs make up a relatively minuscule portion of government spending on entitlement programs that should be included in any realistic reform of "welfare." So, true welfare reform was never the objective of current debate or recent legislation. If reform was the true object, American taxpayers would not be subsidizing tobacco farmers and an industry that kills and maims millions of people annually, nor would we pass legislation and engage in acts that favor big business at the expense of the international consuming public. Yes, we need welfare reform. Honest welfare reform would have eliminated the U.S. deficit this year alone, and provided American taxpayers with a huge tax cut to boot. And, America would not have had to achieve that goal by increasing the number of working poor, increasing the business welfare, i.e., tax credits for training and hiring former welfare recipients and funding of unrealistic training programs supposedly designed to aid individuals making the forced transition from welfare to workfare.

The most likely outcome of this welfare reform is more economically depressed conditions for American families and workers. So, rather than reducing the working poor, eradicating poverty and addressing the historic distribution of unemployment, the "Contract with America" is viewed as the official rollback of any socioeconomic and political gains made by African Americans during the 1960 's Civil Rights struggle. Newt Gingrich, personification of the "Contract with America," identifies 1965 as the exact year the country turned from its former pragmatic ways and began funding social welfare programs to address national historic disparities. No doubt, since denial reigns supreme among "real" pragmatic Americans, this "Contract With America" philosophy and sentiment will completely ignore the real consequence of government spending and intervention in the private sector. As an historian, the erudite Speaker of the House of Representatives should know "real" government intervention has historically aided big business like his friends, those "real" Americans residing and doing business in Cobb County, Georgia and other titans of industry. Moreover, government policy and administration to date has served as the single most powerful mechanism to maintain the status quo. The Newt Gingrich "Contract with America" will assure African Americans continue in an economic state of depression. After all, it is the "real" American platform.

To understand this assessment, one must be cognizant of the nation's tragic slave history. Cognizing this, chronic poverty and unemployment among African Americans is perceived as a natural consequence of forced servitude. Given free enterprise American-style, the total usurpation of a group's economic wealth for generations, without reparations, necessarily condemns its progeny to struggle in abject poverty for succeeding generations. Really now! Let commonsense and some of that Christian American morality intrudes. Where is the competition in pitting ignorant freed slaves against the "superior" intelligence of duly profit-motivated free white Americans never exploited by human bondage? Where is the competition in that? To add insult to this heinous crime, pragmatic "real" Americans sought to exacerbate every effort undertaken by emancipated slaves to improve their socioeconomic and political conditions for generations following the abolition of slavery. So, African Americans not only competed for survival on an uneven playing field against the hostile offspring of their former usurpers, but they were forced by an impressive array of impediments to constantly fight in the streets and courts against roadblocks to the most basic of human rights. Shamelessly, the unequal competitive nature of this struggle continues today; its uneven toll is reflected in the distribution of national economic welfare, poverty and unemployment. Regrettably, because this morally bankrupt situation is a continuing saga, the world is provided with a unique contemporary example of slavery's evolutionary process ala American style.

As long as America fails to confront and humanely address slavery, BLS statistics and the conditions they represent will never receive honest examination or appropriate redress. Can we ignore the obvious contradictions? Certainly! Pragmatic "real" Americans, operating with tunnel vision, will deny the obvious. But, just as certainly, the message conveyed to the rest of the civilized world by these numbers and the conditions they represent will not change: America is a nation of racist hypocrites. Gross anomalies in the distribution of American wealth will always pose pesky problems painting perfect pictures of American life. Their existence falsifies rose-tinted economic analyses. Instead, these historic disparities lay the framework for a stark diagnosis of and prognosis for the success of current public policy, given the nation's refusal to confront the real problem of slavery. Poverty and unemployment will continue to defy public policy, and the working poor will continue to pay to the tune of millions of tax dollars annually. Inevitably, the nation pays with more than mere tax dollars.

The societal cost extracted by this national denial and failure to confront the real problem cannot be adequately measured, at least not solely on the basis of tax dollars expended; the human cost alone defies quantification. However, we can examine and, to some extent, shed some light on the real cost of public policy designed to address poverty and unemployment. Will the nation ever benefit from spending tax dollars on these symptoms without acknowledging the real problem? When viewed in historic perspective, the intelligent answer is, probably not. The statistics are staggering and cry out for solutions. Understandably, they have managed to prick the national conscience and spur elected leaders to act more times than former President Jimmy Carter has peanuts. In every generation, the government responded with public policy to address poverty and unemployment. Trillions of tax dollars later, these tenacious blights on the American social fabric persist. In light of this impressive array of public policies enacted and programs funded in the name of improving the economic condition of America's poorest citizens, the current generation of public policies implemented to do it again is justifiably viewed with skepticism. Given past failures to impact poverty and unemployment and the "real" agenda outlined in the "Contract with America," failure for this barrel of urban renewal pork is a foregone conclusion. We are confident it will be business as usual for the government, i.e., big business.

African Americans are the unwitting victims of a classic case of policy structuring to benefit the dominant social class. Public policy to eliminate poverty and reduce unemployment among African Americans is a sham; it is like built in product obsolescence. Only in this case, the obsolescence assures the structural maintenance of the status quo and the continued redistribution of national welfare to the same class. Examine the towering record of economic public policy and administration to date; it is one of astronomical amounts of tax dollars expended, accompanied by a dismal failure to improve the relative condition of African American life. Why?

African Americans have never benefited from tax dollars spent on programs like Revenue Sharing, Urban Renewal, Urban Revitalization, Enterprise Communities, Urban Renovation, and we are not impressed with the current slight of hand flim-flam taking place with Empowerment Zones. Given the current poverty and unemployment among segments of America's population, which qualified for the earlier generation of programs, i.e., Urban Renewal, Urban Revitalization, Revenue Sharing or whatever felonious title the program received during the 1960-80's, one is forced to ask, who benefited from the revenues spent in the past? Certainly not impoverished African American communities. With Empowerment Zones, African American impoverishment and unemployment are being used to justify programs, which simply redistributes national income to the wealthy.

This perception is based on an historical analysis of urban renewal policy in Memphis, Tennessee and its impact on African American unemployment and poverty, the stated aim of urban renewal. Following the riots and the assassination of Dr. Martin Luther King, Jr., Memphis employed federal urban development funds to assist continued white flight from the inner city. Suburbs rapidly developed with federal tax revenues---secured in the name of---you know it--- impoverished urban areas where African Americans make up the majority of residents. Conversely, the inner city continued to deteriorate, while being credited with the receipt of federal funds hand over fist to fight unemployment and poverty and yes, crime. Unfortunately, the Memphis African American business and entertainment Mecca, Beale Street, became an urban renewal casualty. For years, Beale Street was totally barricaded, a condition that helped to destroy African American commerce in the area. Real estate and property values continued declining while financial institutions aggressively practiced urban redlining. Predictably, African American businesses were forced to close, many declaring bankruptcy. Beale Street, Home of the Blues, and center of African American commerce died.

With a new generation of tax revenues for Urban Revitalization or some such, the street was revived. Only now, the former African American business and entertainment hub has been converted into a cheap white tourist trap immortalizing Elvis Presley, usurper of Memphis Blues fame. Instead of W.C. Handy, Elvis symbolizes the street Handy's blues made famous. But, that's okay for "real" Americans. So, it's not fair, a real travesty. Who said life is fair, right? We all know that in America even African American heritage get usurped in the process of implementing the nation's public policy.

With this as our historical backdrop, we formally question the current urban renewal expenditures to combat poverty and unemployment. Because African American communities qualify for the economic assistance in the majority of the urban programs funded under Title XIII of the Omnibus Budget Reconciliation Act of 1993, which authorized Empowerment Zones and Enterprise Communities, we request a full investigation and accounting of these expenditures under 24 CFR Part 597. Specifically, we request a full audit and accounting of all expenditures undertaken to date by the Atlanta and Memphis Empowerment Zones and Enterprise Communities. Frankly, we see Memphis' history repeating itself in Atlanta. If not stopped, Sweet Auburn Avenue could end up a "real" American tourist Mecca where curious sightseers can walk down Coke Street and marvel at edifices erected in honor of Ted Turner. Rev. Hosea Williams, long time Civil Rights activists, knows Sweet Auburn's real history and, like Atlanta's other African American residents, would like to see it preserved for and by African Americans.

Given the language contained in Subchapter C, Part I: the "EZ/EC program is a key step in rebuilding communities in America's poverty-stricken inner cities and rural heartland. It is designed to empower people and communities across the nation in developing and implementing strategic plans to create job opportunities and sustainable community development. ...."We believe the Atlanta Empowerment Zone Corporation and its Memphis counterpart are not heading in the right direction to achieve these lofty goals. According to the Atlanta Executive Summary Performance Report 1995-1996, "significant activities underway include commercial revitalization, public safety improvements and housing construction and rehabilitation. Progress has been slower on human services activities." An August 24, 1997 editorial in the Atlanta Journal Constitution written by Jim Wooten criticized the city's handling of tax dollars, questioning the assertion of "significant activities." According to Wooten, Atlanta's mayor, Bill Campbell "announced ...that nearly all of its (the Empowerment Zone Board) two dozen employees would be terminated." Firing employees is a drastic first step. Will it improve the Board's delivery of economic opportunity, provide sustainable community development, and aid in the creation of a community-based partnership involving all segments of the community? If not, what will replace the board, and what role will the affected citizens play in the board's makeup? What is the "real" strategic vision for change in Atlanta and Memphis? We do not know these answers, but we require enlightenment. What we do know is: investing in burglar bars, smoke alarms and ultra-sophisticated police cars will not eliminate widespread poverty, unemployment and the general distress of the communities designated to receive the Empowerment Zone and Enterprise Community funds.

We formally request an investigation of Atlanta's use of Social Service Block Grants (SSBG) and the allocation of these funds "to promote economic independence of low-income residents." How will giving Fulton Bag and Cotton Mill a million dollars work in the eradication of poverty and unemployment? How will the $47 million earmarked for safe communities and affordable housing be spent? Given the dual nature of EZ/EC program administration, we are asking for a full investigation of the program by the Departments of Housing and Urban Development and Agriculture. In addition, we bring this matter before the Senate and House Banking/Housing and Urban Affairs, Agriculture, Appropriations and Ways and Means Committees for a long overdue review and repudiation of business as usual in urban renovation. We are asking that HUD under its authority to " suspend the flow of funds" do so until compliance can be established, and the views of the citizens making up the census designated impoverished area can be heard. We demand a full accounting. Because we know the money never gets to impoverished urban communities justifying the funding, we demand you tell us: Where is the money?

Email: thedish@ga.net