December 19, 2013
By Jazelle Hunt
NNPA Washington Correspondent
WASHINGTON (NNPA) —Still reeling from the Great Recession, middle class Blacks are maintaining their status by using credit to help cover their basic living expenses, according to a report from the NAACP and public policy research organization, Demos.
In the Recession’s aftermath, 79 percent of middle class African American households carry credit card debt. And although they have less debt than before the Recession, the credit crunch continues as Black households spend an average $368 on credit to make ends meet.
“The report highlights the need to look at how much credit is serving middle class Americans and how much it’s giving a false illusion,” says Dedrick Asante-Muhammad, senior director of the NAACP Economic Department and co-author of the study. “Everybody needs credit but it should be a tool to help your economic life. Now we see it as a drain on African Americans trying to gain a middle class life.”
Released earlier this month, the report, “The Challenge of Credit Card Debt for the African American Middle Class,” is an outgrowth of a larger national study on middle class credit card debt since 2010. It found that although African Americans owe less than they did in 2008, 42 percent of households are relying on their cards for basic living expenses when their incomes and savings fall short, a trend that persists across the entire middle class. Black families are also building their futures on credit, using cards to support higher education, entrepreneurship, and medical expenses.
“Use of credit in long term investments for the future is a specific African American problem, largely because of the historical impact of racism in wealth building, and current racial bias in lending,” says Demos policy analyst, Catherine Ruethschlin, who co-authored the study. “Hypothetically, if [an African American] family was in America during the ‘60s but excluded from the same wealth-building that White families had, [they] don’t have the same financial assets to fall back on.”
The seeds for economic dispartities seen today have been sown over 50 years of redlining, blockbusting, and predatory lending. Today Black Americans have $1 in assets for every $20 owned by White Americans, and, according to the study, more than half of it is tied to homeownership.
Enter the Great Recession, when the housing bubble inflated by predatory lending practices bursts, dragging the global economy and hope for long-term Black wealth down with it. Only 55 percent of the study’s Black respondents own their home, compared to the 72 percent of White respondents.
If homeownership has been considered the cornerstone of the American Dream, then education has been considered the bulldozer that clears the way. According to the report, 80 percent of Black college grads took out some amount of loans in order to attain a higher education, compared to 65 percent of Whites.
Credit debt as a result of student loans can then affect career outcomes, as credit checks are sometimes part of the hiring process. Those with poor credit are often relegated to low-paying jobs due to this dubious but legal practice.
For this and other reasons, entrepreneurship has also been considered a path to the good life. In the study, an overwhelming 99 percent of indebted moderate-income African American households who had expenses related to starting or running a business in the past three years still carry that expense on their credit card bill.
Ruethschlin explains, “If you don’t have access to small business loans because the market went dry during the Recession, those with the worst credit history are going to be the last to get back into the system. It shifts an additional financial burden. It could be those additional challenged that make it harder to run a successful business.”
Interestingly, Black and White households reported different reasons for poor credit: 44 percent of White respondents cited late mortgage payments and using all or nearly all of their credit lines while 40 percent of Black households cited late student loan payments and credit report errors.
However varied the causes, middle class credit use and debt levels are similar across race—it’s the consequences that raise eyebrows.
“I’d assume before this report that there would be greater disparities [in card use], but even the amount of debt we have is not that different,” Asante-Muhammad says. “What is different is that we have worse credit scored and receive stronger collection tactics.”
The report found that African Americans and Whites had similar rates of card default, late payments, bankruptcy, eviction, and repossession. However, 71 percent of African American households had been called by bill collectors, compared to 50 percent of White households. African Americans in the report were also more likely to report card cancellations, limit reductions, or credit rejections in the last three years (53 percent of Black respondents compared to 36 percent of Whites).
Even if credit score isn’t a problem, indebted African American households face higher interest rates, reporting an average APR of 17.7 percent on the card where they carry the greatest balance. For White households it’s 15.8 percent.
Despite this, African American respondents were less likely to moderate their card use as a result of higher rates, which suggested to the authors that Black households have less of a choice in staying afloat.
“It’s not surprising that the middle class relies on credit cards to get their expenses met,” says Nikitra Bailey, executive vice president of the Center for Responsible Lending. “When we think of the catastrophe caused by the Recession, most families didn’t have wealth resources necessary to fall back on. Our own reports show that the typical household only has about $100 left over every month after needs are met.”
The government stepped in in 2008 with the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act, which has helped at least a third of the African American respondents in the study pursue financial freedom. The CARD Act attempts to create a more equitable and less predatory credit climate for all Americans through billing transparency and plain-language credit terms and conditions.
“The CARD Act has been really useful and is working in the manner intended,” Bailey says. “What’s unique about the Act is that it provides transparency around credit bills without the bait-and-switch we saw before the act. Late fees have dropped more than half, and credit delinquency is the lowest it’s been since 1994.”
In its first year alone, the CARD Act halved the amount of late fees Americans paid, according to the Consumer Financial Protection Bureau. Most Americans have noticed a warning on their bill about the consequences of making a late payment (77 percent of Americans), or only paying the minimum (70 percent).
Bailey believes that with support, these trends in greater credit debt management will result in restored homeownership, stronger communities, and a strong economy overall. The report makes similar assertions and offers both state and federal policy recommendations for fostering fairness in the credit industry, including an expansion of the CARD Act’s success.
“Too often people fall into the false narrative of African Americans that the wealth disparity is due to undisciplined spending habits, but if you look at the report you see that they’re using credit for basic living expenses,” Asante-Muhammad points out. “The problem isn’t around spending, the problem is income inequality, wealth inequality, and a decline in opportunity for middle class African Americans as a whole.”
December 12, 2013
By Freddie Allen
WASHINGTON (NNPA) – In-home workers, 90 percent of them women, often live in poverty, earn low wages and work grueling hours without many of the protections enjoyed by most workers, according to a recent study by the Economic Policy Institute, a non-profit think tank focused on public policy that affects low- and middle-income families.
These are the workers who cook meals, clean homes and care for the elderly, the disabled and children. Nearly 20 percent of all in-home workers are Black even though Blacks account for less than 11 percent (10.9 percent) of workers in other jobs.
The EPI study looked at economic impact that low wages and thin benefits earned by in-home workers has on their lives.
According to the report, The Occupational Safety and Health Act doesn’t apply to people who hire domestic workers their own homes.
Unlike autoworkers, teachers and even professional athletes, in-home workers can’t organize to achieve better benefits and contracts. The fact that they often work alone contributes to their marginalization.
“Federal antidiscrimination laws, such as the Civil Rights Act, the Americans with Disabilities Act, and the Age Discrimination in Employment Act, all generally only cover employers with multiple employees, meaning most in-home workers are excluded from these protections. This is also true of the Family and Medical Leave Act,” stated the report.
In-home workers make about six dollars less than workers in other occupations and roughly 12 percent of in-home workers receive health benefits from their employers. More than 23 percent of in-home workers live below the poverty line, compared to just 6.5 percent of other workers.
“More than half—51.4 percent—of in-home workers live below twice the poverty line, compared with 20.8 percent of workers in other occupations, stated the report, earning less than what it takes to make ends meet.
Despite low wages and subpar benefits, researchers estimate that the in-home worker industry will grow at a rate that’s 40 percent faster than other occupations by 2020, due largely to the incredible growth among strong personal care aides and home health aides.
According to the Bureau of Labor Statistics, “Employment of home health aides is expected to grow by 69 percent from 2010 to 2020, much faster than the average for all occupations. Employment of personal care aides is expected to grow by 70 percent from 2010 to 2020, much faster than the average for all occupations.”
As the industry grows, employing more minorities that will be responsible in funding entitlement programs like Social Security, it will become increasingly more important to ensure that they earn fair wages.
“Though individual employers of in-home workers can and should improve their employees’ wages and benefits, policy changes at the state and federal level are needed to rectify the exclusion of many in-home workers from employment and labor laws,” stated the report.
The EPI report noted that New York, Hawaii, and California have already started to develop protection programs for domestic workers.
The report also recommended establishing paid sick days, a stronger safety net and raising the minimum wage which would help to buoy the pay earned by in-home workers.
In a press release on the EPI report, economist Heidi Shierholz said that in-home workers are “a critical and growing part of the economy, yet, they are grievously underpaid and lack the benefits that similar workers receive in other sectors.”
Shierholz continued: “Our country is wealthy enough so that workers who play such vital caretaking roles should be able to earn a decent wage. We need policies to protect these workers and help ensure they’re paid what they deserve.
November 28, 2013
LAWT News Service
SAN FRANCISCO – Attorney General Kamala D. Harris today issued the following statement in response to the U.S. Supreme Court’s announcement that it will hear Kathleen Sebelius v. Hobby Lobby Stores, Inc.:
“Under the Affordable Care Act, all Americans have the right to access affordable, quality healthcare, including contraception,” Attorney General Harris said. “For profit companies should not be able to deny women access to healthcare based on the religious beliefs of the company’s owners. The 10th circuit ruling should be reversed by the U.S. Supreme Court.”
In October, Attorney General Harris filed a friend-of-the-court brief in the U.S. Supreme Court asking the court to take up this case and was joined by ten states including Connecticut, Hawaii, Illinois, Iowa, Maine, Maryland, New York, Oregon, Vermont, and Washington.
December 05, 2013
Jerome E. Horton, Chairman of the California State Board of Equalization (BOE), and his board colleagues, recently acted to help preserve some low-income housing projects across California. The Board approved legal annotation which clarifies that low-income housing properties subject to “payment in lieu of taxes” (PILOT) agreements may still be able to qualify for a property tax exemption. PILOT agreements are made between developers of low-income housing and local governments.
“Hundreds of low income developments were at risk of losing their finances and millions in back property taxes.” Chairman Horton said. “Without the welfare exemption, affordable housing would virtually be halted in California. Our action will preserve affordable housing for seniors and others who need the help the most.”
The Board concluded that the developers can enter into a PILOT agreement as long as the fees associated with the Pilot agreement serves to further the intended purpose of the affordable housing program. Chairman Horton added “If this fee is found to be a tax and not benefiting the Affordable Housing community and residents, the welfare exemption can be revoked.”
The Board of Equalization is responsible for determining if the nonprofit organization is eligible under one of the four qualifying purposes (religious, scientific, hospital, or charitable) to receive an Organizational Clearance Certificate. This certificate allows the nonprofit to apply for property tax exemption. Then, a county assessor decides if that organization’s property qualifies for the exemption based on the property’s specific use.
California is among the nation's most expensive, especially due to the high cost of housing, which trails only Hawaii and New York. While California's poverty rate was just 18th highest among the 50 states, poverty remains an issue. When extending poverty measures to take into account families and individuals that are not reflected in standard poverty rates, California had the nation's highest "supplemental poverty measure" from 2010 and 2012, at 23.8% versus 16% nationally, according to a recent report from the Census Bureau.
“Protecting low-income housing for qualified California’s residents is ultimately beneficial for all of us.” Horton concluded.
November 21, 2013
As the Dec. 3 special election nears for the 54th Assembly District, leading candidate Sebastain Ridley-Thomas has increased his support base by adding community faith based leaders this week.
Pastor Xavier L. Thompson, president of the Baptist Ministers Conference of Los Angeles and Southern California hailed Ridley-Thomas as, “The new face of leadership for residents of the 54th Assembly District. He has energy, intelligence and brings a wealth of new ideas to politics that he gained at important places such as working for Marian Wright Edelman at the Children Defense Fund and serving as policy director in the State Capitol for former state Senator and current L.A. City Councilmember Curren Price.”
The Rev. Thompson continued, “We know the Ridley-Thomas name. It’s a name we trust and respect for good reason. Avis and Mark Ridley Thomas have done their work well in raising both of their twin sons – Sebastian and Sinclair – but it is Sebastian who has answered the Ridley-Thomas call to public service and performed the foundational work needed to prepare himself for a position of leadership.”
“My experience working on policy issues at the state level and working on affordable healthcare issues in Washington, D.C. have helped form my commitment to help people striving to get through tough times and simply do better than they did yesterday,” said Sebastian Ridley-Thomas.
“But my parents imbued in me, and my brother, the dedication to our community, an inner strength borne from faith and a willingness to work hard to serve the public good.
“People want someone who will fight for them, be they unskilled workers seeking job training for a career as a tradesperson in construction or a small business owner toiling day-in and day-out to meet the needs of their customers. People want to be successful. They want to see positive results from their efforts. They want the opportunity to succeed. That is why it is so important for our state representatives to create new jobs and contracting opportunities for small businesses in our community.”
Rev. Norman Johnson, pastor of First New Christian Fellowship Missionary Baptist Church, also said he will also support the young Ridley-Thomas.
“With high unemployment still staggering residents of our community and foreclosures still threatening our homeowners, this is a time for new leadership that will be in our corner to fight for jobs and economic development that will lift our community and put our residents to work,” he said.
“I believe strongly that the new leader we need is Sebastian Ridley-Thomas.”
Thompson and Johnson join other prominent faith based leaders such as Bishop Charles E. Blake of West Angeles Church of God in Christ; Bishop Kenneth C. Ulmer, Ph.D., Faithful Central Bible Church; Rev. LeSean Tarkington, St. James African Methodist Episcopal Church; Rev. J. Benjamin Hardwick, president, Western Baptist Church; Rev. Robert Habersham, Hamilton United Methodist Church; and Rev. J. Edgar Boyd, senior pastor at First AME Church in their approval of the candidacy of Sebastian Ridley-Thomas.
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