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Without wealth advantage, Detroiters ‘not celebrating’ economic recovery

mural of two men walking
A mural near the corner of Randolph Street and Gratiot Avenue was photographed on Thursday, Sept. 29, 2022 in Detroit, Mich. (BridgeDetroit Photo by Malachi Barrett)

Black and Hispanic Detroiters are missing out on the benefits of the region’s post-pandemic economic recovery, with fewer job opportunities and lower pay than their white counterparts, according to new research from a coalition of policy advocacy groups. 

A report released Thursday by the Detroit Area Workforce Funders Collaborative is part of a $30 billion commitment by global investment firm JPMorgan Chase to advance racial equity across the country. It shows people of color make up a large share of Metro Detroit’s workforce but they are not benefiting equitably from the region’s economic prosperity. Racial gaps in wages and employment are costing the region an estimated $28 billion in lost economic activity per year, according to the report. 

 

“As the workforce grows more diverse, racial inequity carries mounting economic costs,” the report states.

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Hedi Alcock, co-chair of the Detroit Area Workforce Collaborative and director of grant development at the McGregor Fund, said the report gives perspective to the public and private partners trying to improve workforce equity. 

“We’ve got to understand the people behind the data,” Alcock said. “We, as a community, know we have to do a better job of listening to workers of color.”

People of color make up 33% of the Metro Detroit workforce and more than 40% of the “emerging workforce” under the age of 25. However, Black, Hispanic, and indigenous people are paid significantly less on average than white workers. Detroit, the report notes, is ranked 32nd in income inequality among the 150 largest metro regions across the country.

The median wage for workers of color in Metro Detroit is $19 per hour, according to the report, compared to $25 per hour for white workers. Average annual incomes would need to increase by 79% for Black adults and 47% for Hispanic adults to achieve racial equity in income, the report adds. 

Workers of color across Michigan are twice as likely as white workers to experience working poverty – defined as working full-time and having a family income below 200% of the federal poverty level. A single person earning under $12,880 and a family of four earning under $26,500 are considered under the poverty guideline set by The U.S. Department of Health and Human Services.

Census estimates show a third of Detroiters are living in poverty and 37% of city households are earning less than $25,000. 

“Without access to a good job that pays a living wage, families find themselves facing housing instability, they find themselves not able to meet their own basic needs,” Alcock said. “One health issue or transportation setback exacerbates the problem.”

Job opportunities remain deeply segregated, according to the report. Workers of color tend to be crowded in lower-paying and lower-opportunity jobs, while white workers are overrepresented in higher-paying professions that require more education. 

“It’s not the first time we’ve seen data like this,” Alcock stressed. “Every (new) research report just reminds us how far we have to go in the region. We’re asking questions amongst ourselves, like ‘what is it really going to take to change this trend, this trajectory?’”

Detroit Future City, a nonprofit policy advocacy group, released a report in July that suggested middle-class jobs are hard to come by for Detroiters. The DFC report found Detroit’s labor market is becoming more polarized – with more opportunities that pay either very well or poorly, and fewer jobs that afford a middle-class lifestyle. 

DFC held its annual equity forum Thursday with a discussion focused on how a reparative policy mindset can reverse the outcomes of systemic racism. Anika Goss, chief executive officer for DFC, said many in Detroit are “locked out” of good-paying jobs while the city is losing its Black middle-class population.

“We’re not celebrating job growth in Detroit until Detroiters themselves are seeing an increase in wages and an increase in median income,” Goss said during the forum. “If the wages in Detroit for professionals living outside Detroit are double the average wage in Detroit, we’re not celebrating new jobs until we see that median income increase for Detroit.”

Goss said policy-makers should focus on building opportunities for Detroiters who live in the city.

“When we think about public and private investment, the purpose of that doesn’t have to be so that people come to Detroit, the intention is to make a better Detroit for Detroiters that are here, at every single level,” Goss said. “If we change the narrative that we are investing in Detroit for Detroiters, we can change the investment for what this looks like for Detroit as the anchor for the state.”

The cost of housing is another major stressor for many Detroit residents, regardless of race. An estimated 56% of Black renter households face unaffordable rents, along with 45% of white renters and 42% of Hispanic renters. 

Detroit was hit particularly hard by the COVID-19 pandemic, with the Black unemployment rate rising to 40% and the permanent closure of many businesses. Throughout 2020, the average unemployment rate for Black workers in the Detroit region was roughly twice that of their white counterparts. 

Two years later, the regional economy is showing signs of recovery. Jobs typically held by Black workers have returned faster than jobs typically held by white workers, but those employment opportunities are largely concentrated in jobs that require minimal education, the report notes. 

Only 29% of the region’s workers hold stable jobs with family-sustaining wages. That drops to 5% for jobs that require a high school diploma or less.

According to the Detroit Regional Chamber’s 2021 State of Education report, just 10% of high school students in Detroit are ready for college. 

White workers earn more than people or color at every level of education, according to the report. White workers with only a high school diploma are earning 12% more in wages than Black workers who have an associate’s degree. The median hourly wage is 30% percent higher for white workers who have a bachelor’s degree compared to their Black counterparts.

Transportation is another issue highlighted in the report. Black Detroiters who use public transit to commute to work spend an average of 59 minutes traveling each way – which is double the length of the regional average. 

“What we hear from workers is that they can’t succeed in the labor market until we solve for transportation, childcare and housing – this keeps the most disconnected workers out of the labor market,” Alcock said. “We assume it’s about training, but if we listen to workers they can’t even get to the training because the transportation barriers make it impossible.”

Since 2014, JPMorgan Chase has spent $200 million to support the regional economy in Metro Detroit, including $29 million for workforce development initiatives in Detroit. Chase also has supported job training programs like Detroit at Work and Grow Detroit’s Young Talent.

The Detroit Area Workforce Funders Collaborative is supported by private foundations seeking to focus philanthropic resources and influence on workforce inequities in Detroit.

“Our group of workforce funders already understood that the Detroit region’s current labor market is racially inequitable. This report affirms that, and it lays bare the human and economic costs,” Alcock added. “Now is the time to align the efforts of government, business, nonprofits, and philanthropy, and elevate the voices and expertise of workers of color, for solutions that work.”

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