For release: March 5, 2003

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St. Louis Fed's Poole Cites Disadvantaged Workers' Progress Over Last 25 Years

PINE BLUFF, Ark. — Labor market trends over the past 25 years suggest two main findings, according to William Poole, president of the Federal Reserve Bank of St. Louis. "First, disadvantaged workers have made great strides over the past quarter century," he said. "Second, improvements in education and earnings have been particularly marked for black women."

Poole's comments were included in a speech to business and management faculty and students at the University of Arkansas at Pine Bluff.

Poole noted that recent decades have seen significant improvements in the well being of historically disadvantaged groups, particularly women and blacks. "By the broadest measure of well being—income—these groups have made advances in
absolute and relative terms," Poole said. "Between 1970 and 2001, the real median income of black men rose by 27 percent, or nearly three times the growth for white men. Over the same period, real median income for all women rose by 60 percent and for black women by 70 percent. Average income growth for white and black women was, respectively, six and seven times the growth seen by the median white man."

For black men, said Poole, the rise in relative income over the last 30 years or so was not nearly as dramatic as it was for women. In 1970, the median yearly income of black men was 59 percent of what it was for white men. By 2001, that figure had grown to 71 percent. "Although this indicates some progress," he said, "there is obviously a long way to go."

Poole also noted the considerable role education has had as a key to economic success. For example, he said, in 1970 a black male aged 25 or older was only about 30 percent as likely to have a college degree as a white male in the same age group. By 2000, black males were nearly 60 percent as likely to have a college degree.

Poole said that recessions and other economic turbulence in past decades have also slowed the progress of disadvantaged groups. "In particular," he said, "although white and black women didn't have dramatically different average incomes in 1970 or in 2001, black women actually lost ground relative to white women throughout the 1980s. Although the rise in the income of white women relative to white men was fairly continuous and recession-proof, the dramatic improvement in black women's income did not begin until 1989. For black men, most of the income gain occurred in the 1990s.

From the Federal Reserve's viewpoint, Poole said, a key to improving the relative status of disadvantaged groups is for the economy to maintain steady and sustained economic growth. "We at the Fed are convinced that the critical contribution we can make toward maximum sustainable economic growth is to maintain low and stable inflation—price stability, for short. Price stability was a necessary ingredient of the 1990s expansion. If inflation hadn't been kept in check, the result would have most certainly been slower growth and slower progress for disadvantaged groups."

Poole ended by noting that at the same time we acknowledge the disproportionate impact of the current slack labor market, "We should also celebrate the tremendous progress the nation has made over the last quarter century. Income and educational disparities by sex and race have been declining. The job is far from over, but we have a good start."

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