Together, Reagan’s policies, rising stock prices, and deindustrialization resulted in a considerable rise in economic inequality. By the mid-1990s, the richest 1 percent of Americans owned 40 percent of the nation’s wealth, twice their share twenty years earlier. Most spent their income not on productive investments and charity as supply-side economists had promised, but on luxury goods, real-estate speculation, and corporate buyouts that often led to plant closings as operations were consolidated. The income of middle-class families, especially those with a wife who did not work outside the home, stagnated while that of the poorest one-fifth of the population declined. Because of falling investment in public housing, the release of mental patients from state hospitals, and cuts in welfare, homeless persons became a visible fixture on the streets of cities from New York to Los Angeles.
Deindustrialization and the decline of the labor movement had a particularly devastating impact on minority workers, who had only recently gained a foothold in better-paying manufacturing jobs. Thanks to the opening of colleges and professional schools to minority students as a result of the civil rights movement and affirmative action programs, the black middle class expanded considerably. But black workers, traditionally the last hired and first fired, were hard hit by economic changes.
A homeless Los Angeles family, forced to live in their car, photographed in 1983.
During the 1970s, Jim Crow had finally ended in many workplaces and unions. But just as decades of painful efforts to obtain better jobs bore fruit, hundreds of thousands of black workers lost their jobs when factories closed their doors. In South Gate, a working-class suburb of Los Angeles, for example, the giant Firestone tire factory shut down in 1980, only a few years after black and Latino workers had made their first breakthroughs in employment. When the national unemployment rate reached 8.9 percent at the end of 1981, the figure for blacks exceeded 20 percent. Nor did black workers share fully in the recovery that followed. Few had the education to take advantage of job openings in growing “knowledge-based” industries like technology and information services. Overall, during the 1980s black males fell farther than any other group in the population in terms of wages and jobs.