Opinion: The injustice of a Memphis economy built on low-wage jobs

Tom Jones, principal at Smart City Consulting and primary writer of the blog Smart City Memphis, writes that the present Memphis regional economy would be $22.2 billion larger if there was no disparity between workers as a result of their race.


“Our advantage is the Negro…and there is no race problem at all.”

That comment was made in 1900 when The Commercial Appeal was assessing the state of a new century’s economy in Memphis, and the Business Men’s Club an all-white group that would become the Chamber of Commerce boasted how low wages paid to African Americans was a competitive advantage for the city. The club even managed to update the meme of the happy slave for the dawning 20th century.

While no one would be mindless enough to say it that way today, it’s no less true that the Memphis economy is still based heavily on low-wage, low-skill jobs. It’s easy to draw a straight line from century-old attitudes to modern economic policies that continue to exploit African American labor.

Tourism, warehousing, distribution as job priorities

Fast forward from the turn of the century to the late 1970s. Reeling from a languishing economy, then Tennessee Gov. Lamar Alexander issued his first executive order, which convened the Memphis Jobs Conference, a gathering that has since been hailed as one of city’s proudest milestones.

The Jobs Conference brought together a broad cross-section of Memphians in 1979 to acknowledge the crisis and agree on an agenda to revive the local economy. By 1981, the Jobs Conference brought in national motivational speakers who urged Memphis to take risks, think bigger and aim higher. And yet, the new economic agenda produced by the meetings reflected the influence of the powers-that-be that benefited most from cheap labor. Tourism, warehouses and distribution, and new agricultural methods were set as top priorities although university economists warned that low wages characterized all three sectors.

About six years later, cheap wages were built into the thinking of the modern PILOT (payment-in-lieu-of-taxes) program that waives taxes for companies recruited to Memphis. For years, these tax holidays were given to companies that paid so little in salaries that many employees qualified for food stamps and public health care. It’s marginally better today but tax breaks are still given to companies that do not pay living wages

Jobs “not worth having"
It’s a strange paradox: while local government does not have enough money to make investments that improve job opportunities education, jobs training, public transit and minority business, to name a few Memphis and Shelby County governments waive around $750 million every 10 years in subsidies for big corporations. As a result, the costs of public services for these companies are shifted to small business owners and homeowners, particularly low-income taxpayers who pay twice as much of their earnings in taxes as high-income taxpayers (Tennessee’s regressive tax structure is one of the worst in the U.S.)

These generous corporate subsidies and incentives have not improved the lives of a significant number of African Americans, because while Memphis “has, relative to its population, a lot of jobs, but many were really not worth having,” according to a 2016 report by economist David Ciscel and historian Michael Honey.

From 1990 to 2012, the number of low-wage jobs in the Memphis region increased by 40 percent, middle-income jobs rose by 10 percent and high-income jobs went up 19 percent.

Closing region’s racial income gap worth $22 billion
When the 1979 Jobs Conference was held, the average income for whites in Memphis was twice that of African Americans, and nagging disparities remain today. The Memphis metro economy is the 47th largest in the U.S. at more than $70 billion. In other words, a per capita slice of that GDP is about $50,000; however, 20 percent of Memphians subsist today on less than $13,000 a year and the average per capita income in Memphis is just over $22,000.

Meanwhile, Memphis has dropped in the rankings of the largest 50 regions in critical economic indicators like educational attainment, income growth, poverty rate, and percentage of income spent on transportation, and median wage for workers of color (who earn $7 less than hour than white workers).

Today, the Memphis regional economy would be $22.2 billion larger if there was no disparity between workers as a result of their race.

Closing that gap is our region’s single largest economic development opportunity, but it is never mentioned. It’s a startling oversight, considering that by 2040, 66 percent of the region’s population will be people of color, largely African American. Strictly speaking, breaking the link between race and inequality is a matter of self-preservation.

Adopt economic justice as a core principle
At its essence, it is all about economic justice. For more than a century, the absence of economic justice has been a drag on the Memphis economy and has cost significant numbers of Memphians the opportunities to move into the middle class and above. The absence of economic justice also creates a culture that grinds down too many Memphians until they are fatalists about their own futures and leads them to conclude that their own city does not really care about them
Here’s the thing: Memphis is #1 among the 50 largest metros in the number of nonprofit organizations per 10,000 population and 60 percent of them are working with low-income people. Today, there is an array of programs and projects on almost every subject, dealing with every age group, a growing number of anti-poverty initiatives, and focused on all parts of people’s lives.

What is missing is the thread holding all of these programs together economic justice and the will to create it by government, nonprofit, and business leadership unified by it. It is by adopting and living economic justice as a core principle that we can create the scaffolding that allows us to create opportunity for every person every person to live a productive, creative life with dignity and self-determination.

In this way, the power of economic justice is not that it is aimed at individuals who deserve better choices and opportunities. As important, it is aimed at ourselves as a people, because we have to design our institutions and our economy to eliminate discrimination, racism, privilege, inequality, and a culture that often assigns children’s futures at birth.

It’s a tall order for Memphis, and we’ll know that we are making progress with policies like a $15 minimum wage so that work and poverty cannot be used in the same sentence, when we focus on minority entrepreneurship because African Americans are three times more likely to create their own businesses than whites, when we develop a pre-k-16 program, when we reform criminal justice system, and when we focus on better lives for mothers because they largely determine the status of their children.

No meaningful justice without good jobs
It is often said that Memphis doesn’t have a vision. While there is much that we can and should do to commemorate the 50th anniversary of Dr. Martin Luther King Jr.’s murder in 2018, the greatest monument of all would be for Memphis to set economic justice as its vision, purpose, and aspiration and then relentlessly pursue it to deal once and for all with the structural problems that Dr. King described as “socialism for the rich, rugged individualism for the poor.”

There is no question that economic justice had become a central part of Dr. King’s message: the “struggle for genuine equality, which means economic equality.” He talked about “the other America” that “transforms the buoyancy and hope into the fatigue of despair,” and he knew that we cannot address race while ignoring inequality and that there is not meaningful justice without meaningful jobs and a level playing field of opportunity.

His words are just as true today as they were then. Economic justice is the test of our times, and there’s no one more than Dr. King who should inspire us to pass it.

"
The injustice of a Memphis economy built on low-wage jobs" was originally published by MLK50 on June 1. 

Signup for Email Alerts