Economic inequality has continued increasing in the Capital Region and across the United States, fresh data show, and the trend toward a widening gap between the highest and lowest earners that began four decades ago is unlikely to reverse in the foreseeable future.
Despite the United States’ current record-low unemployment and robust job growth, the lion’s share of the benefits have gone to the top earners, while wages for the bottom 50 percent of American workers have lagged behind the pace economists would expect in a healthy, low-unemployment economy.
Indicators that suggest a booming economy tell a different story for black, Hispanic and female workers. In the Capital Region, minority groups have actually seen their median household incomes decline since 1990, even as households at the top of the distribution have experienced strong gains.
“The middle class share of the overall prosperity of the region is shrinking in a number of ways,” said Mark Castiglione, executive director of the Capital District Regional Planning Commission.
A report by the Economic Policy Institute shows that U.S. productivity — the total output of goods and services — grew 103 percent from 1948 to 1979, while worker compensation, which includes wages and benefits, grew by 93 percent in that same time.
But since then, while the economy has continued to grow, the workers who power that growth have seen their wages slow significantly.
Output grew by 70 percent from 1979 to 2017, but worker compensation grew just 11 percent.
“We’ve been in a period recently with low wage growth, and particularly low wage growth for the least educated workers,” said Erica Groshen, former commissioner of the U.S. Bureau of Labor Statistics and currently a visiting senior scholar at Cornell University.
“Maybe this isn’t so surprising given that we’ve been in such a low wage growth regime for quite a while,” she said.
Between 1979 and 2018, hourly wages for the median U.S. worker grew by 14 percent. Over that same time, wages for workers at the 95th percentile — meaning those who earned more than 95 percent of all workers — grew 56 percent.
“A lot of that is due to the increased concentration of economic clout at the top among large companies and the continued maldistribution of income,” said James Parrott, the director of economic and fiscal policies at the Center for New York City Affairs.
Education has long been considered the key to unlocking economic opportunity for U.S. citizens, and workers do earn more, the higher their level of educational attainment.
But the wage gap between white workers and black and Hispanic workers at any education level has only increased over the last two decades. In 2000, a black worker with a high school diploma earned on average about 85 percent of what a white worker with a high school diploma earned.
In 2018, a black high school graduate made just 79 percent what their white counterpart made on average, according to EPI data.
That applies to highly educated workers as well.
A black worker in 2000 with an advanced college degree — a master’s or doctorate — earned 87.5 percent what a white worker with the same degree earned. In 2018, that black worker made 81.5 percent of what the white worker earned.
In 2007, a Hispanic worker with a bachelor’s degree would have earned on average 86 percent what a white worker with a bachelor’s earned. By 2018, that rate fell to 82 percent, according to the EPI.
Amy Jones is a community organizer with the progressive advocacy group Citizen Action of New York, and her story is emblematic of the lack of opportunity many in the region’s minority communities face.
Jones said she was born addicted to heroin, was put up for adoption, and raised in a sexually abusive foster home. Immediately after graduating from Guilderland High School in 1989, her foster parents dropped her off at Equinox Youth Shelter, which helps homeless or runaway teens.
Jones said her finances meant college was never a consideration, and she fell into a cyclical life of crime, drug use and stints in jail and rehab through the 1990s.
“I started meeting people and learning survival,” Jones said. “It was an underground economy.”
Jones was arrested a total of 23 times, but after being released from Albany County Correctional Facility in 2002, she used the motivation of her two young children and her experience of abandonment to reform her life and become an advocate for those in her situation.
“You still don’t have money, and you still have to survive,” Jones says of life after release from prison, and the reason many people return to crime. “The world doesn’t stop turning…selling drugs is about survival.”
She credits social service programs that helped her gain employment after her release and ultimately allowed her to become involved in advocacy. But, without social programs that can help lift ex-offenders out of poverty and into the labor force, the cycle is difficult to break, she added.
“How could I care about anything outside of eating and not going to jail and not using drugs? I couldn’t, I was living in a bubble of chaos,” Jones said. “It wasn’t until my life got some traction that I could look outside of myself.”
Economists agree that the racial wage gap is a result of high incarceration rates, particularly among African-American men. When wide swaths of the minority population have a criminal record or have been incarcerated, it’s difficult for those men and women to ever find a good-paying job later in life, Groshen said.
“We know that African-Americans, particularly men, are disproportionately represented in people who have criminal records and who have been incarcerated, and that employers do a lot of screening on that,” she said. “This problem has only been getting worse up until now.”
Data from the Capital District Regional Planning Commission also show that, since 1990, household incomes in the four Capital Region counties have decreased in black, Asian and Hispanic households, and increased modestly in white households.
Outside of Saratoga County, median income in all households has been mostly flat since 1990, and many Capital Region households have even seen declines in median household income, according to the CDRPC.
Additionally, 2017 U.S. Census data, the most recent available, showed the black unemployment rate in the Albany metro area was 14.6 percent, while the Hispanic unemployment rate was 11.4 percent. The white unemployment rate was 4.4 percent.
Rahleek Coleman, 32, was released last August from state prison after serving 11 months on drug charges.
He also holds an associate’s and a bachelor’s degree he earned from Bryant and Stratton College, and has even interned with the New York State Assembly.
Coleman was raised in Hudson, and became homeless his senior year at Hudson High School, when both of his parents went to prison on their own drug-related offenses. Coleman eventually graduated from high school, and earned his bachelor’s in 2015 after years spent without a permanent home.
Following his release, Coleman worked at a Wendy’s and as a security guard, and now has his own apartment in Albany. But because of his felony, Coleman has had difficulty finding gainful employment, and after working for six months, had his security guard license renewal denied by the state of New York because of his conviction.
A letter from the state deemed Coleman “an unreasonable risk to property or to safety of the welfare” in denying his security guard license renewal.
“I knew I was up against a lot because, without flat-out saying it, I was being judged as a second-class citizen due to the fact that I’ve been incarcerated, I have a criminal record,” Coleman said. “I knew, just because a job doesn’t tell me ‘we’re not hiring you because of your felony,’ they are not hiring me because of my felony.”
He said his decision to sell drugs was a “poor choice,” but he was driven to offend by an inability to find a job that could pay him enough, even with a college degree.
“I was young and struggling to provide income, to find employment,” he said. “During that time, when I started making choices to (sell drugs), I was literally struggling…I was like ‘my family’s still struggling to pay rent, to bring some food into the house.”
But now, he hopes to break the cycle his own family has experienced, and potentially open a private security firm or another business to provide an avenue of employment for felons in the Capital Region.
Coleman hopes to go back to school in 2020 — either at University of Albany or the College of St. Rose — and ultimately earn his master’s degree in business administration, and then a PhD after that, he said.
“There’s so much more I’ve discovered I’m capable of doing,” Coleman said.
Regionally, Albany and most other upstate metro areas are considered relatively equal compared to the majority of U.S. metropolitan areas, New York Federal Reserve data shows.
Even so, the gap between what workers in Albany at the 90th percentile made and what workers at the 10th percentile made has grown by 23 percent since 1980.
In 1980, a 90th percentile worker earned 3.8 times what a 10th percentile worker made. By 2015, that 90th percentile worker earned 4.7 times what their 10th percentile counterparts earned.
How can inequality be addressed?
While the data from the EPI, as well as the New York Federal Reserve, show the vast majority of wealth has accumulated among the wealthiest American workers, minimum wage hikes, like the one that New York first implemented in 2016, have helped raise wages among the bottom 10 percent of earners.
Within the 26 states that increased minimum wage at some point between 2013 and 2018, like New York, wages among the 10th percentile of earners grew 13 percent. In states that did not increase the minimum wage in that time span, wages among that same group of earners rose 8.4 percent, according to the EPI’s report.
“Clearly, some part of the wage gains we’ve seen for lower wage workers are due to increases in the minimum wage,” Groshen said.
Opponents of a higher minimum wage, like the Empire Center for Public Policy, have argued that a gradual minimum wage increase would increase employer overhead and cost the state up to 200,000 jobs — and at least 11,000 in the Capital Region alone.
Two polls conducted by the New York Fed earlier this year, though, found that the majority of business leaders and manufacturers in the state say they’ve not been significantly impacted by the wage hike, which increased in upstate from $10.40 an hour to $11.10 at the start of this year.
The gains made from increasing the minimum wage are a positive step towards reducing economic inequality, Parrott said. But he said that an overhaul of U.S. tax policy at the federal level is the key to addressing the vast accumulation of wealth at the very top.
“Proponents of (the 2017 tax cut) say ‘this is going to be to the benefit of workers, higher wages will come as a result,” Parrott said.
“We know those things have not happened,” he added. “The benefits of the unprecedented tax cut have mainly gone to corporations to use for stock buybacks. That’s benefiting the people who own stocks. Very little has gone into new investments in productive equipment or structures. It certainly hasn’t gone to increased wages for workers.”
Other things, like the decline of labor union organizations, have also led to sluggish wage growth among the majority of workers, Groshen said.
Locally, Castiglione said things like investment in programs targeting job opportunity expansion in minority communities is part of addressing ethnic inequality.
“Perhaps getting people access to programs that teach them a trade, push them on a pathway for a job in the new economy,” Castiglione said.
“Also, it’s re-calibrating educational institutions to producing workers that have the skills needed by those businesses, and in that way we can increase opportunities for workers across the board while helping to serve the business community and satisfying their needs,” he said.
Criminal justice reform is another avenue that could help reduce inequality, economists and social justice advocates said.
But for Coleman, the stigma of his criminal record has felt like discrimination on its own. He hopes to affect change for offenders after their release from prison, and perhaps eventually remove barriers minority communities face in reducing inequality.
One day, he said, he may even run for Albany Common Council.
“We can’t change our past, but we can reshape our future, and that’s the road I’m on,” he said. “I want progress, I want change.”
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