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December 30, 2004

ECONOMIC SCENE

The Consequences of the 1960's Race Riots Come Into View

By VIRGINIA POSTREL

As an economic historian, Robert A. Margo has long wanted to study the 1960's. But, he says, "for the longest time people would say, 'That's too close to the present.' "

Not so anymore. The 1960's are as distant from today as the Great Depression was from the 1960's, and economic historians, including Professor Margo, of Vanderbilt University, are examining the decade's long-term effects.

Consider the wave of race riots that swept the nation's cities. From 1964 to 1971, there were more than 750 riots, killing 228 people and injuring 12,741 others. After more than 15,000 separate incidents of arson, many black urban neighborhoods were in ruins.

As soon as the riots occurred, social scientists began collecting data and analyzing the possible causes. Until recently, however, few scholars looked at the riots' long-term economic consequences.

In two recent papers, Professor Margo and his Vanderbilt colleague, William J. Collins, do just that by estimating the impact on incomes and employment and on property values.

The riots not only destroyed many homes and businesses, resulting in about $50 million in property damage in Detroit alone, but far more significantly, they also depressed inner-city incomes and property values for decades.

(The papers, "The Labor Market Effects of the 1960's Riots" and "The Economic Aftermath of the 1960's Riots: Evidence from Property Values," are available at www.vanderbilt.edu/Econ/wparchive/working03.html and www.vanderbilt.edu/Econ/wparchive/working04.html.)
The economists start with sociologists' findings on the riots' causes: whether a city had a riot was essentially unpredictable, assuming the city was outside the South (where few riots occurred) and had a substantial African-American population. The sociologists' research, Professor Margo says, suggests that "there was so much racial tension in the air in the 1960's that a riot could happen almost anywhere, anytime."

That unpredictability is bad news for sociologists looking for causes but good news for economists analyzing consequences. It creates a natural experiment, dividing otherwise similar places into those that had riots and those that did not.

In cities with major riots, the economists find that the median black family income dropped by about 9 percent from 1960 to 1970, compared with similar cities without severe riots. This impact on the labor market may have actually been more severe in the long run.

From 1960 to 1980, male employment in cities with severe riots dropped four to seven percentage points, compared with otherwise similar cities.

The impact on property values is even more striking. In cities with severe riots, Professors Collins and Margo found, the median value of black-owned homes dropped 14 percent to 20 percent, compared with cities that experienced little or no rioting, from 1960 to 1970. The median value of all central-city homes, regardless of owner, dropped 6 percent, to 10 percent.

The racial difference is not surprising, because both riot damage and the perceived risk of future riots were concentrated in predominately black neighborhoods.

Again, these numbers reflect not just immediate property damage but long-term declines. If it is more expensive or less desirable to live or work in a particular neighborhood, property prices will drop.

"This effect," the economists write, "could work through any number of the channels that feed into the net benefit stream: personal and property risk might seem higher; insurance premiums might rise; taxes for redistribution or more police and fire protection might increase, and municipal bonds may be more difficult to place; retail outlets might close; businesses and employment opportunities might relocate; friends and family might move away; burned-out buildings might be an eyesore; and so on."

In a second statistical test, Professors Collins and Margo identify two factors that separate cities with riots from those without riots: whether the local government used a city manager (which lessened the chances of a riot) and how much rain fell in April 1968, the month that Martin Luther King Jr. was assassinated.

"If you have a lot of rain, people don't go out in the streets and riot," Professor Margo notes. So the same national event had different effects in cities that were otherwise similar. Here, too, the two economists find that cities without riots did significantly better economically over the long run.

These results help address an important economic puzzle. Since World War II, the incomes of black and white Americans have begun to converge. But racial differences in wealth, or net worth, have remained enormous, even for people with similar incomes and family configurations.

In 1998, the median income for African-American households was $20,000, or 54 percent of the median white household income of $37,000, according to calculations by Edward N. Wolff of the Jerome Levy Economics Institute. But the median net worth of black families was only $10,000, a mere 12 percent of the median white net worth of $81,700.

Wealth reflects history as well as current economics. And while there are many reasons for the wealth gap, it certainly does not help that the 1960's riots destroyed much of the accumulated wealth of many of the most prosperous African-Americans, those who had left the South for the greater economic opportunity of industrial cities.

A home is the most important asset for most American families, and home ownership is even more significant for African-Americans, who historically have had held little wealth in financial securities or business equity.

In 1940, black-owned homes were worth only 37 percent as much as white-owned homes, as against 62 percent in 1970 - still a significant gap, but a much smaller one. From then on, however, the gap barely budges, with the ratio reaching only 65 percent by 1990.

The riots help explain why. These numbers include all houses nationwide. In inner cities, the trend actually reversed, and the gap in home value began to widen instead of narrow.

From 1940 to 1970, the value of homes owned and occupied by blacks in central cities jumped to 69 percent of the value of urban homes owned and occupied by whites, from 51 percent. (Home values were rising over this period as well.) By 1990, however, the ratio was down to a mere 53 percent, nearly as low as in 1940.

"That's a really startling number," Professor Margo says.


Virginia Postrel (www.dynamist.com) is the author of"The Substance of Style: How the Rise of Aesthetic Value Is Remaking Commerce, Culture and Consciousness," just published in paperback by Perennial.

© MBM

Original Post

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quote:
Originally posted by Vox:
I need to chew on that a bit as well. One thing that occurs to me is that riots also fueled white flight. I wonder if the study includes places that are mostly black now that were mostly white before the riots started, and to what extent the findings differ in such places.

While I sort accept that as the limits of viewing this the way economist do, it is quite striking how they didn't stipulate plainly to the White Flight factor.

This is all useful information in terms of actual factual but it really doesn't help me in assessing what can be done.
Maybe I need to chew on it some more as well, but, as I see it and have witnessed during my lifetime, it is not necessarily race riots that caused the economic downfall of communities/cities, etc., but the white fight that actually was caused by supreme court decisions, civil rights movements and assertiveness, and for once in America Black and Brown people had the law on their side (for a while) as far as housing and job discrimination, --- it may be a two fold occurrence, but white flight was due more so to the fact that whites did not want to live with/around/close to Black and Brown people and used distance as one loop hole to continue to practice housing/employment discrimination---white flight was due to whites fleeing intergration more so than their fleeing potential race riots, besides, did most of the race riots in this country often happen maily in the predominately Black/minority communities in the north/west----(there is not need to pinpoint any particular area that they happened in the south, although, you want hear white race riots in the south referred to as that, --you know, all the lynching, rapes, house burning, murders, Blacks fleeing by the hundreds or sometimes thousands in one night form white violence and murder; i.e., Rosewood/Edgefield, South Carolina, to name a couple.
It is true, Sunnubian, white flight was caused white folks' waiting to escape integration. But it was also fanned by the riots. Remember, prior to the late 60's, most whites had very limited personal contact with Black folk. Their only personal knowledge of Black folk was the stories that they shared amongst themselves. All of this was reinforced by the riots.
quote:
Originally posted by sunnubian:

it may be a two fold occurrence, but white flight was due more so to the fact that whites did not want to live with/around/close to Black and Brown people and used distance as one loop hole to continue to practice housing/employment discrimination---white flight was due to whites fleeing intergration more so than their fleeing potential race riots, besides, did most of the race riots in this country often happen mainly in the predominately Black/minority communities...
I think the article point out where the Race Riots occurred. And I didn't look at it as if Race Riots in and of themselves caused White Flight. I think that painted a more vivid picture in urban Whites mind.... to run fast(er)... farther.... quicker.

Plus we have to understand that there was a new wave of Black Migration during that time (if I'm correct). So Whites felt further "encroached" upon... the flood gates were opening.

I think there's no denying the two-foldness or the impact race riots had in the way the article alluded to. It's just like any other war-torn place. Things are left in ruins. And of course we know there was no wholesale Rebuilding project like there supposedly is in Iraq, etc. The cities were left to deteriorate by design, IMO... White Flight further exasterbated or was part and parcel of this inattention.

I really can't say I have a problem with what the article puts forth. I just think it leaves a lot unsaid... not to mention that it's not told from a Black perspective. The detached curiousity role ("That's a really startling number") just doesn't set well with me. It really doesn't hint, IMO, of any real sense of "alarm" and, more importantly, Do-Something-About-It urgency.
quote:
Originally posted by ricardomath:
The question of whether, and to what degree, there is a coorelation between riots and white flight would seem to be an empericaly testable proposition, according to the article.

Seems the Race Riots were like Christians seeing "The Passion".

I say that to second KWELI's reinforcement point... and I agree with you Ricky... its something more than just a coincidence.

Those were the place where sh*t really went down. MLK was like "Damn!!" when he ran up against the racist in the North...
I am no social scientist, but I don't believe white flight was caused by the riots - Most, if not all, the riots were in areas the were predominently Black, so how would white fight have been an issue?

White fight, as I understand it, was fueled by Black neighbors, not riots.

As i have said before, I am no expert, so anyone, please feel free to correct...


As far as the riots are concerned, they, IMO, had a definite impact on the Black community because we burned up our own sh*t... leaving serious gaps in the economic self determination process.

Just as an aside, the riots in the D.C. area affected the subway system and how it routed. The plans for the metro system plans were already drawn aout and "set in stone" in 1965... they were then re-drawn so that they could go through those areas that were blighted by the riots - the intent being to gentrify those areas... fast fwd to 2004, and the gentrification process is in full effect and almost complete. They have moved lots of
Black and Hispanic people out, and white folks in. The only thing left is... the Mayor.
What does the actual location of Riots have to do with the White Flight of capital investment?

To a degree, it matters not if we were living side-by-side with Whites. I don't think that's the full definition of White Flight.

It seems that we are forgetting SEGREGATION here. And the fact that people could easily go across town or to another city for a fight.
Rosewood... Tulsa... Blacks and Whites weren't living side-by-side there, so to speak... but that didn't stop it all from going down where Blacks lived.


So, IMO, the fact that Race Riots happened in Black areas (sides of town, sections of cities, etc.) is of no consequence. And I do believe social scientist express the idea of White Flight in that sense - that as more and more Blacks populated cities... Whites moved when the first one of "them" started coming into "their" neighborhoods.

And public policy propped up and spurred on this White Flight by building suburbs just for Whites (then).

Am I missing something?
I don't understand what's at issue here?

Check out the PBS Race Illusion site and this may help.
http://www.eh.net/Clio/Publications/flight.shtml
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quote:
Originally posted by AudioGuy:

As far as the riots are concerned, they, IMO, had a definite impact on the Black community because we burned up our own sh*t... leaving serious gaps in the economic self determination process.



BTW - in the 60's, did we burn up our own shit, or shit - owned by others - that happened to be in our neighborhoods?
quote:
Originally posted by Nmaginate:

And public policy propped up and spurred on this White Flight by building suburbs just for Whites (then).



Actually contemplating the economic dynamics of White Flight is interesting. I'm sure white builders and realtors somehow spurred black folks to move into white neighborhoods (and then stirred up the whites to flee) just to create new demand for building new communities and selling homes.
quote:
Originally posted by MBM:

Actually contemplating the economic dynamics of White Flight is interesting. I'm sure white builders somehow (through bonusing realtors, for example)spurred black folks to move into white neighborhoods just to create new demand for building new communities in the 'burbs.
Well... the info. I've come across recently suggest that the process was already in full swing by that time. The process started well within Segregation and was well underway before it fell...


quote:
White Flight: The Effect of Minority Presence on Post World War II Suburbanization

Immediately following World War II, the United States underwent an urban transformation. Kenneth T. Jackson, citing a Bureau of Labor Statistics survey for home building in the six largest metropolitan areas for 1946-47, notes that over 62% of all home construction occurred in suburban areas. US Census data show that for the period 1950-1960, central city populations in the largest 25 SMSAs increased by just over 3%, while total suburban populations increased by well over 60%.1 While the total populations of the nation's largest central cities stagnated, the number of blacks in the central cities increased substantially, implying an urban depopulation by whites who migrated to the suburban fringes. The numbers for all the nation's metropolitan areas ar e somewhat less striking. However, even in this broadly based sample, the distribution of the population shifted: the suburbs remained largely white despite tremendous growth and the cities became increasingly nonwhite.
quote:
Originally posted by MBM:
BTW - in the 60's, did we burn up our own shit, or shit - owned by others - that happened to be in our neighborhoods?


I guess that would depend on what city you were in... I would say that it was mostly our own sh*t. If you think about it, prior to the late sixties we had thriving community infrastructures, that met the local demands of the community. The butcher, the baker, the candlestick maker all came from the community... white folks didn't want to serve black folks, so we had to have our own.
quote:
Originally posted by AudioGuy:

I guess that would depend on what city you were in... I would say that it was mostly our own sh*t. If you think about it, prior to the late sixties we had thriving community infrastructures, that met the local demands of the community. The butcher, the baker, the candlestick maker all came from the community... white folks didn't want to serve black folks, so we _had_ to have our own.


Point well taken, but I always thought of those "self contained" black communities more as smaller Southern cities, rather than the large metropolises like Detroit, DC, etc where I thought most of the rioting was. Of course, I could be very wrong on both counts. I know, for example, that Durham, NC was one of those cities where there was a thriving black entrepreneurial and professional community. Perhaps that example (Durham = smaller city) is skewing my over-all thoughts on this.

BTW - you can actually say "shit" here. I know the guy who runs the place and I'm pretty sure it's OK! brosmile
quote:
Originally posted by MBM:
Point well taken, but I always thought of those "self contained" black communities more as smaller Southern cities, rather than the large metropolises like Detroit, DC, etc where I thought most of the rioting was. Of course, I could be very wrong on both counts. I know, for example, that Durham, NC was one of those cities where there was a thriving black entrepreneurial and professional community. Perhaps that example (Durham = smaller city) is skewing my over-all thoughts on this.

BTW - you can actually say "shit" here. I know the guy who runs the place and I'm pretty sure it's OK! brosmile


Shit shit shit shit shit shit shit shit shit... brotongue

Although the cities where most of the rioting took place where larger, the communities are where most of the damage occurred.
Well, I was born during the 60's riots, but if they weren't showing it on Sesame Street, I didn't know nothin' about it! Razz

However, the one hardest question that kept coming to me and I never could come up with the answer to while I was watching Los Angeles lose its mind during the Rodney King riots with my own eyes was, "Why are they burning up their own community?"

Many Black owners were able to save their businesses with signs saying "Black-owned", but many lost theirs just by being too close to one that was owned by somebody else. People were burning their neighborhood stores, their laundromats, cleaners, grocery stores. I would guess the majority of those little businesses in South Central were not Black-owned, but they were access to food, clothes, furniture and work ... places you could walk to to get what you needed. Homes went up as well. They burned where they lived. And for the life of me, I couldn't understand why.

(What was even more astounding was how many people actually RETURNED some of the stuff they stole.!! And how many others felt bad they had done what they did.)

What was sad is that the majority of those who could not afford to rebuild were the Black-owned businesses. Promises by Magic Johnson and a couple of other concerned businesspersons with money resulted in a couple of movie theaters and StarBucks here and there, most outside of the "riot zone", though.

I'm not sure how other cities of the '92 riots have faired ... but it's been 12 years .. and I can see long-term effects happening from that riot as well.
Last edited {1}
Another related article:

Putting a Price on the 1960's Race Riots
Compiled by the DiversityInc staff
© 2004 DiversityInc.com
December 30, 2004


Analysis of today's diversity news from The Atlanta Journal-Constitution, The Miami Herald, The Wall Street Journal, The New York Times, The Economist and more:


Between 1964 and 1971, 228 people died and 12,741 were injured in more than 750 riots that ravaged many of the country's inner cities. Now, four decades later, economists are studying the financial impact (registration required).



Research has found that in cities with major riots, the median black family income dropped approximately 9 percent between 1960 and 1970, compared with similar cities without severe riots. Between 1960 and 1980, male employment dropped four to seven percentage points in the most affected cities.



Property values took the biggest hit. In cities with severe riots, the median value of black-owned homes plunged 14 percent to 20 percent, compared with cities with little or no rioting.



The findings of this research explain in part the continued wealth gap between blacks and whites in America.



"Wealth reflects history as well as current economics," writes The New York Times. "And while there are many reasons for the wealth gap, it certainly does not help that the 1960's riots destroyed mush of the accumulated wealth of many of the prosperous African-Americans, those who had left the South for greater economic opportunities of industrial cities."
I think this article says a whole lot without saying anything in particular. I believe they are searching for something to correlate with the riots. What would happen if they looked into the number of Marriages that happened in those cities with riots and those without riots, could the riots be responsible for the high or low differential.

Furthermore, this study is playing a game with the reader. The study appear to be focusing on the effects of the riots on Black folk in some parts and then the overall effects of the riots in others, which is mostly done when a point being sought after can not be proven using the data they have. Take for instance when the author writes

quote:
"From 1960 to 1980, male employment in cities with severe riots dropped four to seven percentage points, compared with otherwise similar cities."


What the hell does that mean? Is the author talking about Black men or men in general and did the employment for women increase? If so does this mean that the kind of jobs available caused the big difference in male employment versus that of female employment? If female employment increased, maybe the riots were good for women?

The author then writes;

quote:
The impact on property values is even more striking. In cities with severe riots, Professors Collins and Margo found, the median value of black-owned homes dropped 14 percent to 20 percent, compared with cities that experienced little or no rioting, from 1960 to 1970. The median value of all central-city homes, regardless of owner, dropped 6 percent, to 10 percent.



Uhh, what the hell does that mean? Now he is making a distinction between cities with severe riots versus that of those with little or no rioting. What made a riot severe versus that of a little riot and why were we not giving the names of cities with the varying degrees of riots? Then he states all central-city homes value dropped regardless of owner. Ok, what is a central-city home and what makes a central-city different from a regular city like Detroit?

Finally the author writes:

quote:
In 1940, black-owned homes were worth only 37 percent as much as white-owned homes, as against 62 percent in 1970 - still a significant gap, but a much smaller one. From then on, however, the gap barely budges, with the ratio reaching only 65 percent by 1990.



Sound like integration and Black flight is the cause of this more than anything. When our best lived amongst us they were the example and set the moral tone of the community but upon their departure new example arose and changed the moral tone to one created out of abject poverty and the will to escape it by any means necessary, couple that with a little self hatred and you got all the makings of hell in the Black communities.
Wealth reflects history as well as current economics.---Article

I was by this.

Historically, our opportunity for investment has been limited to areas destined for, assured of, decline. During that period, home ownership was limited to places least desired by European Americans.

More directly, African American-Americans were the least desired of all minorities in housing developments. Ownership,and certainly that involving new construction was constrained to old neighborhoods. This is not a formula for property appreciation.

I found it surprising that continuing and historic factor was not addressed.

It was a major factor for the period.


PEACE

Jim Chester

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