Some economic history for Martin Luther King Jr. Day

Today is Martin Luther King, Jr., Day, a time to celebrate not only Dr. King’s life but the broader Civil Rights movement of which he was a leader.  The Birmingham Bus Boycott, the Freedom Riders, the March on Washington, the Civil Rights Act of 1964, Bloody Sunday at the Edmund Pettis Bridge, and the Voting Rights Act of 1965, are just a few of the milestones we recognize and commemorate.

Back in 2013, I wrote a piece for MinnPost on the economic effects of same-sex marriage. I tried to connect the then recently-passed legislation in Minnesota that opened civil marriage to same-sex couples with the economic effects of the Civil Rights movement and the Women’s movement.  I used Gavin Wright’s book, Sharing the Prize: The Economics of the Civil Rights Revolution in the American South, as a focal point for the Civil Rights section of the piece, and here I’d like to elaborate a bit on Wright’s work using his presidential address to the Economic History Association as a guide.

Wright starts with a point we often forget today: “As we saw it on the ground in 1963, significant social and political change was no more than a remote prospect for some distant future date.”  That is, “I did not recognize its historic importance at the time, just as I had no appreciation for how rapid the changes in the South would be over the next three to five years. My own naive views had no particular significance of course, but I do not think I was the only one.”

Yet, when Wright returned to North Carolina in 1966, “the place was utterly transformed, the revolution all but complete.” Once begun, the Civil Rights movement changed America, in general, and the south, in particular, far faster than anyone anticipated at the time.

Wright then asks an important question, namely, “If the pace of Civil Rights legislation surprised many people, did the movement taken as a whole constitute an economic revolution?” He answers yes, but notes that it wasn’t a foregone conclusion.  That is,

Only in retrospect does it seem obvious that the New South would participate in this new adventure so wholeheartedly. Not all countries and regions of the world have done so. The South might have followed the example of Quebec, choosing isolation over economic progress. Or it might have gone the way of Northern Ireland: two hostile peoples occupying the same geographic space, so suspicious of each other that compromise arrangements are painfully difficult to negotiate and even more difficult to maintain. Instead, the South has followed the American road of boosterism and racial inclusion, and on the whole we can be thankful for that.

Wright demonstrates, in his book Old South, New South: Revolutions in the Southern Economy since the Civil War, that from the 1880s through the 1930s southern businesses and governments tried to create an isolated, or at a minimum separate, economy with segregated, low-wage labor markets that drew manufacturing plants from the northern US to the south, especially in the textile industry.

Starting in the late 1930s, however, the New Deal, in general, and the Fair Labor Standards Act, in particular, started chipping away at this economic enclave by extending labor standards and minimum wages across the entire country.  Ironically, as Wright points out, this lead at first to southern industry discriminating even more against African-American workers.  Minimum wage laws pushed up wages and created labor surpluses, and Wright notes that, “Southern employers could be highly selective in their employment decisions, and in that historical era, the obvious basis for selection was race.”

The Civil Rights movement removed this barrier to African-American employment and the results were dramatic.  The percentage of African-Americans in southern textile factories went from around 5 percent of total employment in 1960 to 15 percent by 1970.  Further, white-owned businesses before 1965 feared that any gains they made by serving African-Americans in department stores or hiring them as employees would be overwhelmed by lost sales to whites and racial tensions among workers.

They were wrong. “This was a revolution in which almost all parties gained,” according to Wright.  Incomes for southern whites and blacks, men and women, and rural and urban families all rose more than would have been expected had Jim Crow remained the law of the South.

We should celebrate these gains on Martin Luther King Jr. Day along with the political triumphs of the Civil Rights movement. As our recent election demonstrated, the fight to continue this progress still has a long way to go.