BlackEconomics.org®
Introduction
Black America has experienced substantial reverse migration to the Southern US over the past 40 years. Recently, this population shift was bolstered by noted New York Times op-ed columnist Charles Blow and by the COVID-19 Pandemic.(1) As push-back on this trend, BlackEconomics.org adopted a countervailing view—recommending migration to the north central portion of the US.(2) Moreover, a very important and recent publication to which BlackEconomics.org contributed offers a different and third proposition for Black America’s future—“developing independently in place on a distributed basis.”(3) This analysis brief does not revisit these three options for Black America’s future. However, it reissues a warning concerning our southern migration and provides supporting statistical evidence on current and likely future meteorological and economic conditions.
Global Warming
In a December 2023 report entitled, The Global Climate 2011-2020: A Decade of Accelerating Climate Change, the World Meteorological Organization (WMO) reported that our most recent decade was the hottest on record since at least the 1850s. Importantly, the South is one of the US areas that has experienced a 0.6 –to– 1.0 degree rise in temperature since 1981 (see Figure 1).
Figure 1. Source: World Meteorological Organization, Report No. 1338, Figure 7, p. 9
The WMO warns that there will be continued future increases in average temperatures unless there are broad, sizeable, and vigorous efforts to curb Global Warming.
If the foregoing proves true, then should not the meteorological implications be concerning for Black Americans, who are increasingly aggregating in the South where rising temperatures are expected to be most pronounced?
But the economic implications of the just-described scenario are even more puzzling than the meteorological implications. Given Black Americans’ relatively low level of earnings and wealth, why would we reverse migrate to the South where our meager financial and other resources stand to “evaporate” more rapidly than in other US regions due to Global Warming?(4)
Black Expenditures on Utilities
Did you know that evidence goes back to at least early part of this millennium concerning Black American households expending, on average, a significantly larger share of our income on Utilities (Natural gas, Electricity, Fuel oil, and Telephone services) each year than any other major racial/ethnic group in the US?(5) To comprehend the just described reality, consider Table 1, which reflects the most recently available (2022) statistics from the US Department of Labor (DOL), Bureau of Labor Statistics (BLS) Consumer Expenditure Survey (CEX).(6)
When queried concerning this consumer inequality, BLS directed us to a report authored by Mark Vandemia (2008) that argued the outcome could result from Black Americans residing increasingly in the South where more air conditioning is consumed in response to Global Warming.(7) We will return to this explanation shortly.
Table 1 shows that Black Americans expended about 7.7 percent (column E) of our after-tax income in 2022 on Utilities (Line 8), compared with about 6.2 percent (column C) for Whites and other Non-Black races/ethnicities. This is not as perplexing as it might first appear. Black Americans’ after-tax household income is about 79 percent of that available to White and other races/ethnicities households. Therefore, given inelastic income elasticity of demand for certain utilities and a limited opportunity to differentiate prices across all racial/ethnic groups for those utilities, it stands to reason that Black Americans would be required to spend a larger share of our income on utilities to enjoy the same physical wellbeing as Non-Black Americans. However, this explanation is clearly different from the one offered by Vandemia (2008).
Before returning to Vandemia’s (2008) explanation for Black Americans’ “disproportionate” spending on Utilities, consider line 7 and Column F of Table 1. Column F reveals that, if Black American households expended about 79% (the ratio of Black-to-White and other races/ethnicities after-tax income) of the amount expended by Whites and other racial/ethnic groups for Utilities, then Black households would enjoy an $836 annual saving. Such saving compounded daily over 30 years at 3.0% would yield over $40K; the amount would rise to well over $70K if compounded at 6.0%. The upshot of this is that Black Americans are penalized wealth-wise by the aforementioned amounts just because our consumption of Utilities is consistent with consumption by Non-Black Americans, but our household income is a fraction (79%) of that available to Non-Blacks.(8)
Two additional points are worth making before returning to Vandemia (2008). First, a more extensive analysis of the CEX (not shown here) reveals that Black Americans occupy residential housing units (owner-occupied and rentals) that are of significantly lower value than those occupied by other races/ethnicities. This difference in value likely signals a quality difference. In this case, the quality difference could include a lower level of energy efficiency of the housing units that we occupy. In other words, Black Americans may be forced to purchase more Natural gas, Fuel oil, and Electricity because the units we occupy are less well insulated than units occupied by other races/ethnicities.
Second, it is possible that the sizeable difference in expenditures for Telephone services by Black Americans versus other races/ethnicities could be attributable to a variety of factors (see lines 15 and 16 of Table 1). For example, Telephone services providers may price discriminate. Also, there may be differences in the Telephone services purchased. That is, Telephone services purchased by Black Americans may feature more “data” packages for Internet use (Blacks may access the Internet mainly using their telephones, not using desktop, laptop, or other computer devices) than Telephone services purchased by other races/ethnicities. Non-Blacks may access the Internet using plans connected to their residences for use with their non-telephone computer devices.(9) In addition, some combination of the just-given two reasons or other reasons could account for differences in the share of spending by Black versus Non-Black races/ethnicities for Telephone services.
Testing Vandemia’s Idea
Now to Vandemia (2008) thoughts about differences in Utilities expenditures by Blacks versus Non-Blacks. To test the conjecture that a higher proportion of spending by Blacks on Utilities could be attributed to our concentrated population in the Southern US, we compared Heating and Cooling Degree Days on a population weighted basis for Black versus Non-Black Americans for 2022.(10,11) Consider Table 2.
Proceeding rightward across columns A through F of Table 2, we observe Black versus Non-Black population weights/shares by Census divisions for 2022; Heating and Cooling Degree Days by division for 2022; and the result of combining the Heating and Cooling Degree Days and then applying divisional population weights. Columns A and B and line 11 of the table reveal that Black Americans do reside disproportionately in the South: 58.5% versus 36.9% for Non-Blacks. But the just-cited percentages cannot by themselves alone explain why Black Americans’ expenditures on Utilities are higher than those of Non-Blacks. To answer the question definitively, one must consider prevailing price differences in the South versus Non-South.
We explored the latter question by analyzing household energy prices (electricity per kilowatt hour and piped natural gas per thermal unit) by division using 2022 Consumer Price Index Average Price Data from the BLS.(12) We prepared estimates of unweighted South and Non-South divisional electricity and natural gas prices and used them to value population weighted Black versus Non-Black Heating and Cooling Degree Days by division. The resulting hypothetical dollar values appear in Table 3.(13) A check of column E and lines 4 and 5 of the table reveals that Blacks expended about 0.8% more to meet heating and cooling requirements than did Non-Blacks. This difference is attributable, as least in part, to the fact that natural gas prices were higher in the South (columns A and C and line 3), and hints at Vandemia’s (2008) explanation for higher Black versus Non-Black expenditures for Utilities. However, price statistics were required to come to this conclusion—not just differences in the population distribution of Black versus Non-Blacks.
Table 2.—Black and Non-Black Population Weighted Heating and Cooling Degree Days(14)
Table 3.—Hypothetical Valuation of Black and Non-Black Utility Expenditures
Conclusion
This analysis brief sought to gain greater clarity concerning Black versus Non-Black differences in the share of household income expended for Utilities. We concluded that the difference is due, at least in part, to the following two factors: (1) The Black Americans population is heavily concentrated in the Southern portion of the US; and (2) natural gas prices are higher in the Southern US. As a result of these two factors, it appears that Blacks spend more on energy to heat and cool our homes. This conclusion may be reinforced by the fact that Blacks occupy poorer quality housing (as signaled by value), and therefore may suffer the consequences of residing in energy inefficient homes.
It is also true that Blacks expend more on Telephone Services than do Non-Blacks. We explain this difference by noting that Blacks may purchase more “data services” with their cellular telephones to enable Internet access, while Non-Blacks may purchase Internet access through a separate subscription that is accounted for under Entertainment Services. The CEX may confirm this conjecture: Non-Blacks reflect a significantly higher level of expenditures for Entertainment Services than do Black Americans.
However, our most important conclusion is that Black Americans pay a higher proportion of our household incomes for Utilities largely because our income is smaller than Non-Blacks’ income. Yet the human condition is such that, it would not be favorable to undertake a lower level of expenditures for Utilities that is aligned with the difference in our incomes relative to that of Non-Blacks (79%) and expect to survive. If we attempted to follow that path, then we might freeze to death or die of heat exhaustion.
The follow-on realization is that, if household incomes were comparable for Blacks and Non-Blacks, then our expenditure shares for Utilities would likely be comparable, which could create an opportunity for Blacks to save more. We estimated that possible saving compounded over 30 years would amount to more than $40K at a 3.0% interest rate; it would amount to over $70K using a 6.0% interest rate.
Obviously, income and wealth inequality are interconnected. In this case, the higher share of household expenditures for Utilities by Black versus Non-Blacks reflects income inequality; which serves as an excellent example concerning Black Americans’ poor prospects for reducing wealth inequality.
The starting point for this analysis brief was to rationalize Black Americans’ reverse migration to the South. The evidence presented exposes adverse income and wealth inequality outcomes for Black Americans who reside in the South. This finding taken with the expected future adverse impacts of Global Warming on the Southern US would not be expected to yield a recommendation for continued Black American reverse migration to the South.
To reinforce this point, we conclude this analysis brief by providing two important statistics: (1) Results from the Census Bureau’s American Community Survey for 2022 show that Black American median household income for South divisions is nearly $7,000 lower than for Non-South divisions;(15) and (2) the BLS reports that the average 2022 annual Black unemployment rate for South divisions was 1.3% lower than for Non-South divisions.(16)
Considered jointly this analysis brief shows that, while Black Americans in the South experience higher rates of employment (lower rates of unemployment) than Blacks in the Non-South, the level of overall Black vs. Non-Black income inequality is greater for Blacks in the South (the same is likely to be true for wealth inequality). It is this income inequality, along with higher energy prices, that explains why Black Americans expend a significantly higher proportion of our income on Utilities.
This analysis infers that, although it is better to be employed than unemployed, Black Americans pouring back into the US South increases the pool of labor there and precipitates lower levels of compensation and, thereby, household income. Thus, our swelling population in the South places us at a greater income and wealth disadvantage than if our population were more evenly distributed across the nation. These outcomes point to a future where lower levels of income and wealth in the South are likely to trap us in a lower quality of life for strictly economic reasons. But the adverse results caused for purely economic reasons will likely be made substantially more adverse by what scientists are predicting for the South as Global Warming wreaks havoc on that part of the nation in the decades ahead. Therefore, it appears that Black America may be trading a not overly favorable short-term advantage (a lower level of unemployment with lower compensation) for what are likely to be severe long-term disadvantages (greater income and wealth inequality, an all-around poorer quality of life economically, and a potentially horrific climatological quality of life).
B Robinson
03/29/24
1 See Charles Blow (2021), The Devil You Know: A Black Power Manifesto, HarperCollins, New York. Also, the acceleration in the digitization of the US economy in response to COVID-19 enabled and stimulated Black and Non-Black Americans to relocate temporarily or permanently to warmer southern climes.
2 Brooks Robinson (2021). Exodus: A Book for Black Americans Suggesting a Way Out and Up. BlackEconomics.org. Honolulu. (See Chapter Five, “Future Black Independent Living in the US,” pp. 54-88; https://www.blackeconomics.org/BEAP/exodus.pdf (Ret. 031424).
3 Brooks Robinson, Laurence Tunsill, Sr., Amefika Geuka, Gale Frazier, Asinia Lukata Chikuyu, Sababu Shabaka, Margaret King, and Lindsey “Rob” Robinson (2023). Long-Term Strategic Plan for Black America. Long-Term Strategic Plan Panel. Honolulu. https://www.ltspfba.org/LTSP/fin_ltspfba_071223.pdf (Ret. 031424).
4 The most salient BlackEconomics.org explorations of the rationality and logic of Black America’s political economy appear in the following submissions: (1) “Are Black Americans Rational Economic Agents? The Case of General Sales and Property Taxes” (March 2022); (2) “Why Not a Black Political Party” (August 2015); and (3) 21st Century Protests (2016). If it is determined that it is economically unfavorable to reside in the Southern US due to future Global Warming, then our reverse migration seems irrational/illogical.
5 Mark Vandemia (2008), “Housing Expenditure by Race and Hispanic or Latino Origin.” Consumer Expenditure Survey Anthology, 2008, pp. 78-86; (Ret. 031224).
6 U.S. Department of Labor, Bureau of Labor Statistics (2023). “Table 2100. Race of reference person: Annual expenditure means, shares, standard errors, and relative standard errors, Consumer Expenditure Surveys, 2022.” Consumer Expenditure Survey (Ret. 031124).
7 Op cit. (Vandemia (2008)).
8 In other words, if Black Americans enjoyed average household income comparable to that earned by Non-Black Americans, then we could obtain the same physical wellbeing from spending on Utilities, but that spending would be a smaller share of our income—opening the door to a redirection of the difference to, inter alia, saving.
9 In this case, if Blacks enjoyed income comparable to Non-Blacks, they could afford to purchase the types of computers mentioned (above and beyond their telephones) and would likely obtain Internet access via a subscription. Accordingly, there might be no saving; just a shift of expenditure from Utilities to Entertainment services.
10 Heating and Cooling Degree Day Statistics are from the U.S. Department of Energy, Energy Information Administration (2024). Monthly Energy Review. January. Population statistics by State and Race/Ethnicity are from the US Census Bureau’s Quick Facts: https://www.census.gov/quickfacts/fact/table/US/PST045223. (Ret. 031324).
11 Given 65 degrees Fahrenheit as a temperature at which neither heating nor cooling is required, Heating and Cooling Degree Days are computed as 65 degrees minus the average daily air temperature. The Heating and Cooling Degree values appearing in Table 2 are for all of 2022. For example, if the average air temperature for a day is 60 degrees, which is below 65, then there would be 5 Heating Degree Days. Similarly, if the average air temperature is 70 degrees, which is above 65, then there would be 5 Cooling Degree Days. For a more formal explanation see the Notes to Tables 1.10 and 1.11 of the Monthly Energy Review cited in the previous footnote.
12 These average price statistics can be found here. (Retrieved 031424).
13 These values are purely hypothetical statistical constructs based on the notion that divisional Black and Non-Black households experience their population weighted Heating and Cooling Degree Days and purchase one unit of natural gas and one kilowatt hour for each Heating and Cooling Degree Day, respectively, that they experience.
14 States’ representation in the US Census Divisions are as follows: (1) Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont; (2) New Jersey, New York, and Pennsylvania; (3) Illinois, Indiana, Michigan, Ohio, and Wisconsin; (4) Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota; (5) Delaware, Florida, Georgia, Maryland, Washington, DC, North Carolina, South Carolina, Virginia, and West Virgnia; (6) Alabama Kentucky, Mississippi, and Tennessee; (7) Arkansas, Louisiana, Oklahoma, and Texas; (8) Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, and Wyoming; and (9) Alaska, California, Hawaii, Oregon, and Washington. The “South” Division is comprised of Divisions 5, 6, and 7. The Non-South Division is comprised of Divisions 1, 2, 3, 4, 8, and 9.
15 This ($7,000) estimate was prepared using Census Bureau population and American Community Survey (ACS) statistics. The state-wise median household income statistics are weighted by state populations to produce estimates for the nine Census divisions. The latter are averaged on an unweighted basis to produce South and Non-South measures. The ACS statistics are available at: https://data.census.gov/table/ACSST1Y2022.S1903?t=Income%20(Households,%20Families,%20Individuals)&g=040XX00US01,02,04,05,06,08,09,10,11,12,13,15,16,17,18,19,20,21,22,23,24,25,26,27,28,29,30,31,32,33,34,35,36,37,38,39,40,41,42,44,45,46,47,48,49,50,51,53,54,55,56. (Ret. 032624)
16 The difference is estimated using weighted (Census Bureau population estimates for 2022) 2022 annual average unemployment statistics for states from the BLS’s Geographic Profile of Employment and Unemployment, “Table 1. Census regions and divisions: employment status of the civilian noninstitutional population, by gender, age, race, Hispanic or Latino ethnicity, and marital status;” https://www.bls.gov/opub/geographic-profile/. (Ret. 032724).