Repositioning Race: Prophetic Research in a Postracial Obama Age

4. Race, the Great Recession,and the Foreclosure Crisis

4 • Race, the Great Recession, and the Foreclosure Crisis From American Dream to Nightmare CEDRIC HERRING University of Illinois at Chicago LOREN HENDERSON Wright College HAYWARD DERRICK HORTON State University at New York at Albany Research suggests that between 2007 and 2010, the United States experienced one of the worst economic crises since the Great Depression. This period is often referred to as the Great Recession. Although most Americans directly or indirectly experienced implications of this nationwide economic precariousness, the consequences of the economic crisis were not evenly distributed. Based on analyses of secondary data from 95 96 • Cedric Herring, Loren Henderson, Hayward Derrick Horton the General Social Survey (GSS), this study considers how the recent economic recession affected foreclosure rates and other economics indices for the Black and Latino communities. Specifically, we ask, were racial and ethnic groups such as Blacks and Latinos disproportionately affected by the recent recession and if so, how? What types of factors exacerbated their negative experiences? What types of strategies and solutions can be forwarded to help Americans in general and racial and ethnic minorities in particular bounce back? This largely applied research project considers why, in light of singular changes such as the election and reelection of the country’s first African American president, growing segments of the Black community continue to face chronic economic challenges. Moreover, we consider implications for social policy and practical suggestions based on the growing belief that the United States is now experiencing a postracial Obama age. By empirically examining some of the economic inequalities that continue to persist across various racial groups, we endeavor to add to a prophetic query that focuses on pragmatic issues that impact the daily lives of people of color in particular and the larger society in general. Furthermore, our findings will inform a more comprehensive dialogue that includes qualitative, quantitative, and theoretical work on the subject of race and racial matters in the United States. From Recession to Depression? A “recession” is a slowing of the economy for an extended period. According to the National Bureau of Economic Research, the United States began experiencing a recession in December 2007 (National Bureau of Economic Research 2012). When an economic downturn is sustained and severe, economists often refer to it as an economic depression . For many Americans of color, the economic downturn has been more severe than a recession. Indeed, some have argued that Americans of color are already experiencing “a silent economic depression that, in terms of unemployment, equals or exceeds the Great Depression of 1929” (Rivera et al. 2009:iii). Considered a rare and extreme form of recession, a depression is characterized by its length and abnormal increases in unemployment, scant availability of credit, shrinking output and investment, high bankruptcy rates, and reduced amounts of trade and commerce. By all these criteria, one could argue that Blacks and Latinos are in the midst of an economic depression. Rather than debate the appropriate term to use, we focus an empirical lens on some of the Race, the Great Recession, and the Foreclosure Crisis • 97 economic indices and implications for Blacks and Latinos of what we are calling the Great Recession. The unemployment rate is a key indicator of economic well-being. Long periods of high unemployment indicate economic weakness and distress. The Great Recession has increased unemployment rates for all racial and ethnic groups. Since the start of the recession, an estimated 8.1 million jobs have been lost. But because higher unemployment rates for people of color than those for Whites are an enduring part of the U.S. economy, people of color normally face catastrophic recession levels of unemployment. We know that even during periods of economic growth and expansion, the unemployment rates for Blacks and Latinos are consistently higher than those for Whites. During periods of economic downturn, the gaps between Whites and other groups increase even greater. For example, GSS data from 1980 to 2010 suggest that during times of national economic hardship, Blacks and Latinos experience a disproportionate increase in unemployment. Moreover, the highest point for annual unemployment among Whites of 8.6% was still lower than the lowest unemployment rates for Blacks in all but three years since 1980 (Romer 2009). Furthermore, as of the first quarter of 2010, the official unemployment rate for Blacks of 16.3% was more than 85% higher than the 8.7% rate for Whites. Latinos had an unemployment rate...