Blacks feel auto industry's pain; it was road to middle class

Gregory Baranco, a new car dealer in Atlanta for 30 years, and George McGregor, a longtime union shop steward in Detroit, don't know each other. But their lives have a shared theme.

The men, both African American, built and sustained lives of middle-class success in the nation's domestic automobile industry, and both took a route to prosperity increasingly unavailable to others.

The financial crisis in the auto industry has been more devastating for African Americans than any other community, threatening a half-century's economic gains by the black middle class. From blacks who left behind subsistence jobs in the South for high-paying factory jobs in the North during the Great Migration, to entrepreneurs who translated hard work and the gift of selling into their own businesses — they're all getting hammered.

"One of the engines of the black middle class has been the auto sector," says John Schmitt, an economist who studies the issue at the Center for Economic and Policy Research, a liberal Washington think tank. In the late 1970s, "one of every 50 African Americans in the U.S. was working in the auto sector. These jobs were the best jobs. Particularly for African Americans who had migrated from the South, these were the culmination of a long upward trajectory of economic mobility."

General Motors and Chrysler made it into the new year, however, only with $17.4 billion in federal loans and have asked for more after March. Whether to risk more taxpayer money or let them face bankruptcy filings now falls to the administration of President Obama.

From 1979 to 2007, black employment in the auto industry fell from about one in 50 African Americans to about one in 100, Schmitt says. The trend continued last year: He estimates that the number of African Americans in the auto industry fell from about 140,000 at the end of 2007 to about 110,000 at the end of 2008.

The auto sector job losses have hit blacks harder than whites or Hispanics because the percentage of African Americans in the industry — 14.2% — still is higher than their share of the labor force overall — 11.2% — says Robert E. Scott, senior international economist at the liberal Economic Policy Institute in Washington. "This is an industry that offers particularly good wages for workers, especially for those who do not have a college degree," a group with a higher proportion of African Americans, says Scott. He says 21.9% of black workers have four-year college degrees, vs. 33.7% of whites.

An Economic Policy Institute report last month said African Americans have been especially hard-hit in this recession, with a jobless rate that rose to 11.2% in November, up 2.8 percentage points from a year earlier. The national jobless rate that month rose 2 points, to 6.7%, from a year earlier. "The consequences of an auto industry collapse … would be nothing less than catastrophic for African Americans," the report said.

The impact goes far beyond factory workers and others employed in the industry, says Randi Payton, president and CEO of On Wheels media, which publishes magazines and produces websites about the auto industry for minority audiences.

"The Big Three are leaders in philanthropy in the African-American community," he says. "They are major contributors to education through historically black colleges and universities, and to non-profits such as the NAACP, National Urban League and National Council of Negro Women.

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