Living in the Red

Introduction

If any black man should have been able to make it in Chicago in the late 1950s, it should have been Sterling Powell. As a blast furnace laborer at Republic Steel, he made $92 a week, about $757 by 2015 standards, which put him well above the poverty line and not far below the median family income at that time (In re Powell 1960). ¹ He had held his job for nine years, which meant he had steadier income and more security than most. As a member of United Steelworkers of America (USWA), he also had health benefits and was protected by union work rules that guaranteed breaks, vacation, and a pension once he was vested. But on January 27, 1960, Powell filed bankruptcy in U.S. District Court for Northern Illinois. This husband and father of one lived in Chicago’s Black Belt in a neighborhood called Grand Boulevard ² and was caught in a national steel strike that lasted four months until President Dwight Eisenhower invoked the Taft-Hartley Act in November 1959 and called all workers back on the job.

Bankruptcy records indicate Powell had trouble keeping up with his bills before the strike, and four months without pay was enough to push him over a precipice. He owed $2,639, held no assets like a house or car, but he did have personal property such as clothing, furniture, and appliances worth about $540 in total. He had $5 in savings in the Republic Steel Employees Credit Union, but they held a $550 lien on his account from an unpaid loan. ³ Indeed, he was in a financial vice. On its face, Powell’s income alone would seem to suggest he had no business in bankruptcy court.

It would be easy to blame his circumstance on a strike that left him without pay for four months. But how he ended up in this clutch stems less from the financial impact of the strike than his entanglement in an economic web that would encumber his and other black Chicagoans’ social mobility and ability to pass on wealth to their children. That Powell’s earnings reflected the region’s postwar economic prosperity meant little for his chances to start again after his debts were discharged March 18. In fact, the probability of his building new wealth with a fresh financial start was just as dim as before the 1959 steel strike. ⁴

U.S. bankruptcy records from 1959 and 1960 reveal just how economically oppressed black steelworkers were during this time. I came upon these records in search of information about discrimination in postwar American steel mills after learning my grandfather, Robert Elkins, who worked for U.S. Steel in Chicago from 1942 to 1976, had been blocked for decades from a promotion to journeyman status as a boilermaker until the later years of his career in the mills. This, despite his training white ethnic workers whom he watched rise above him.

An archivist from the National Archives and Records Administration alerted me to a set of records they had just acquired. In his quick review of the docket, he noticed how many steelworkers had filed for bankruptcy around the time of the 1959 strike. Here began an exploration that took me far beyond my grandfather’s personal story and plunged me into a broader and systemic understanding of black disenfranchisement in the mills.

I built a database from these bankruptcy records and found that African-American steelworkers compared with white steelworkers were disproportionately represented as bankruptcy petitioners. Initially, the data seemed to show that the national strike had taken a heavy toll on black steelworkers. Deeper analysis suggests a more complex and devastating set of financial constraints for blacks who were often the targets of fraudulent and discriminatory lending practices (Satter 2009). ⁵

African-American and other minority workers living in Chicago faced several barriers to accumulating wealth, affecting their ability to leave a financial legacy for future generations. Black steelworkers, although they were ostensibly protected by the union, had no greater chance of overcoming those barriers. The first barrier they had difficulty climbing was segregated hiring practices that kept them in jobs that were the dirtiest, unhealthiest, dangerous, and the lowest paying in steel production (Hill 2002; Needleman 2003; Nelson 2001; Rodiger 1991). ⁶ Segregated job lines and seniority rules also blocked blacks from promotion, training, and higher paying jobs.

The second barrier black steelworkers had to overcome was the lack of agency within the union, the USWA (Frymer 2008, 44-69; Gellman 2012; Nelson 2001). ⁷ Such agency would have given them leverage to push management to create more opportunities for blacks for promotion in the plants.

The third barrier black steelworkers had to scale was limited housing in the city (Hirsch 1998; Lumpkin 1999; Satter 2009). Federal Housing Administration (FHA) policies provided the blueprint for redlining, which blocked blacks from conventional bank mortgages and kept them out of what were delineated as white neighborhoods (Massey and Denton 1993). Blacks were then relegated to specific neighborhoods, causing overcrowding and added stress on buildings. In Chicago, these practices were intensified by urban renewal, violently racist resistance from whites, and real estate speculators who preyed on white fears of a black invasion of their neighborhoods. All the while, blacks were limited to living in neighborhoods where buildings were less likely to be maintained and repaired (Hirsch 1998).

The fourth barrier was the dual economy—one for whites, the other for blacks—created in large part by banking and credit policies that kept African-Americans paying higher interest rates and with unfavorable terms (Satter 2009; Wille 1965). Such grievous credit policies kept many black petitioners shackled in debt.

An analysis of the database built from bankruptcy records from October 1, 1959 (four months after the strike began) to July 30, 1960 (seven months after workers were forced back on the job) shows just how debilitating Chicago’s—and ultimately other Northern cities’—economic policies were for African-Americans, even those with good jobs in the steel industry.

French demographer Jean Fourastié called the postwar years between 1945 and 1975 the Glorious 30, a period when increases in productivity, wages, and consumption signified great social and economic prosperity. The white median family income in the United States in 1949 was $20,445 (real dollars) and tripled to $64,330 (real dollars) by 1969. African-Americans were also buoyed as median incomes for them rose from $9,570 (real dollars) in 1949 to $39,182 (real dollars) in 1969. ⁸ But even as wages for blacks were going up, they continued to lag far behind their white counterparts. African-American workers, steelworkers included, faced a myriad of discriminatory policies inside and outside of the workplace that also gave whites the upper hand and allowed them to move easily into the middle class. Ira Katznelson (2005) in his book When Affirmative Action Was White: An Untold History of Racial Inequality in Twentieth Century America talks extensively about U.S. policies that advantaged whites, starting with the New Deal. Work, housing, and banking policies at the regional, local, and institutional levels often simulated and reproduced these national policies.

The result of those policies will be examined here. While the national steel strike was not the root cause of these black steelworkers’ bankruptcy, the 1959 strike provides a lens by which to see in stark terms the constrained financial lives of black workers who were believed to be living well on a job defined in the popular mind as prosperous.

Literature Review

There is extensive study of the discrimination black steelworkers faced in the union and the mills. Ruth Needleman’s (2003) collection of oral histories from black pioneers in the steelworkers union not only demonstrates the barriers these men faced in the workplace and in the union, but it also provides an important narrative of how some African-Americans successfully navigated a system that benefited whites. However, Bruce Nelson’s (2001) scholarship around union workers’ push for civil rights in the workplace offers insight and detail on how a series of critical decisions from national union leaders left African-Americans with little agency to effect change within their mills. Much of Nelson’s discussion on steelworkers is bolstered by the work of Herbert Hill, the director of labor for the National Association for the Advancement of Colored People (NAACP), who ultimately left that post for a professorship at University of Wisconsin.

The study of the state of blacks living in Chicago starts with St. Clair Drake and Horace Cayton ([1945] 1970) in their famous Black Metropolis, but Arnold Hirsch (1998) advances that work in an important study into the mechanisms and policy decisions that dictated where black Chicagoans could and could not live, and he demonstrates the intent of white officials to block the social mobility of African-Americans. Beryl Satter (2009), in turn, shows how Chicago housing policies provided fertile ground for financial predators to feed on the hopes and dreams of working-class African-Americans who wanted a sound home for their families and good schools for their kids. This body of work has advanced our understanding of how policy and practice disenfranchised steelworkers in the workplace, housing, and financial sectors of society.

This article shows the cumulative impact of these divestments in the black community and, hence, generations to come. The bankruptcy records studied here provide a glimpse into the financial lives of black steelworkers. And although these records are not representative of all, the disproportionate presence of black steelworkers on the rolls offers a view into the precariousness of their financial health and their inability to pull their families up the economic ladder. These records provide a space to explore the combined impact of negative opportunity—what Michael Brown et al. (2003) call disaccumulation.

The Records

The bankruptcy docket from the U.S. District Court housed at the National Archives and Records Administration’s Chicago office identifies petitioners’ names, addresses, occupations, and employers, helpful identifiers when building a database.

I reviewed all case numbers related to steelworkers four months after the strike and seven months after workers were forced to return to steel plants. This time period was to allow for any lag time of the effects of the strike. All petitioners working in steel plants where USWA had locals—about 4 percent of all bankruptcies in that period—were pulled for the database, reaching a total of 390 cases of petitioners living in the Chicago area. I extracted the suburban cases, leaving 353 to analyze. Additionally, 1960 U.S. Census figures for Chicago were used to identify the neighborhood of each petitioner. Chicago’s racially stratified housing patterns allowed me to determine the likely race of the petitioner based on his neighborhood.

For further analysis of petitioner details, such as the size of the family, itemized assets, and a list of creditors, I then pulled every second file from the docket to review during the period from January 1, 1960 to July 30, 1960 (N = 102). The only files available for detailed review were from 1960 bankruptcies.

While, nationally, black steelworkers made up about 30 percent of USWA members (Hill 2002), in Illinois, African-American workers in steel made up 17.8 percent of those working in the industry, regardless of their union affiliation. ⁹

Yet, this analysis found that 78 percent of bankruptcy cases from the steelworker pool were of petitioners who lived in neighborhoods with an African-American population density of 50 percent or higher. And 61 percent of petitioners lived in neighborhoods with a black population of 84 percent or higher (Very High). Moreover, 53 percent of the petitioners came from five neighborhoods: Woodlawn, Englewood, Grand Boulevard, Kenwood, and Washington Park. See Table 1.

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Table 1.

Proportion of Cases by African-American Neighborhoods.

African-American density	Number of cases	Percent of total
Very High	214	61
High	61	17
Medium	18	5
Low	60	17
Total	353	100

There were further signs of economic distress in these five neighborhoods. Although the median income of all five was $4,806 ($38,746 in 2015 purchasing power)—an average annual wage for working-class folks then—the male unemployment rate ranged between 8.4 percent and 12 percent. Chicago’s overall unemployment rate was 5 percent. In four of the neighborhoods, homeownership was less than 10 percent. ¹⁰

The largest majority of steelworker petitioners, 46 percent, worked for United States Steel, which is not surprising since U.S. Steel was the largest employer among steel companies in the region. In each company, petitioners who lived in very high or high, black-populated neighborhoods made up most of the cases, between 61 percent and 88 percent (see Table 2; for more detail, see Appendix A).

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Table 2.

Top Seven Companies Employing Petitioners. See full list in Appendix A.

Company/black density	No. of cases	Percent of company cases
United States Steel	179
Very high and high	141	78
Republic Steel	49
Very high and high	30	61
Youngstown Sheet & Tube	32
Very high and high	28	87.5
Inland Steel	27
Very high and high	24	88
National Steel	15
Very high and high	12	80
Interlake	14
Very high and high	12	85.7
ACME Steel	13
Very high and high	10	76.9

Most steelworkers who filed for bankruptcy worked at the lowest rung in unskilled or semiskilled positions. Laborers made up 51 percent of petitioners, and of those laborers, 83 percent lived in neighborhoods with 50 percent or greater black population. Semiskilled steelworkers made up an additional 19 percent, with 82 percent of them living in largely African-American neighborhoods. Hence, the lowest paid steelworkers were most susceptible to financial vulnerability (see Table 3).

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Table 3.

Proportion of Cases by Skill Type.

Occupation	No. of cases	% of total	% high and very high
Laborer	189	51	83
Semiskilled	69	19	82
Skilled	68	18	62
Uncategorized	45	12	77

Several finance companies repeatedly appeared as creditors in the petitioners’ case files. Of the 462 creditors mentioned in the cohort of 102 bankruptcy petitions, 108 filed for remuneration on multiple petitions. In total, 21 of them filed six or more times (see Appendix B).

Most of these finance companies charged usurious interest rates for poor quality merchandise, personal loans, or car loans. One of the creditors, Associates Discount Corporation, a finance company largely used to finance car purchases, was involved in a 1959 Nebraska case alleging it had unlawfully financed car loans in collusion with car dealerships at high interest rates without a license to do so in that state. ¹¹

In 22 percent of the cohort, medical expenses added to petitioners’ financial woes, an example of the vagaries of life that can leave families penniless. But in the case of African-American workers, the tools available to them to climb out of penury never really worked.

Steel Strike of 1959

On July 15, five hundred thousand steelworkers left their posts in steel mills across the country, putting a halt to production. Related industries shuddered in the wake of the work stoppage, leaving the Defense Department and workers in auto manufacturing jittery about the reality of supply shortages. Despite initial pressure from AFL-CIO President George Meany and United Automobile Workers President Walter Reuther, USWA President David McDonald was not willing to back down (Shils 1997, 56-71).

Steel companies and the USWA had been negotiating for months to come to an agreement. McDonald and other union officials were upset that the steel industry had made record profits (USWA 1959a), but more than that, they were concerned that all the gains the union had made with working conditions were in jeopardy. These protections were outlined in Section 2b of the contract. From the perspective of management, Section 2b prevented them from asserting greater control of work flow, assignment of tasks, and the implementation of new technology that could possibly replace workers. The steelworkers union also wanted to improve the benefit structure for workers (Metzgar 2000, 85-93).

Selling this position to the public was no easy task, so much of the union’s campaign revolved around the industry’s profit gains and its unwillingness to share those gains with its workers (Metzgar 2000; USWA 1959a). When workers walked out, they loyally stuck to the party line, a feat that cannot be underestimated. USWA General Counsel Arthur Goldberg and steel magnate Edgar Kaiser were friends, and Goldberg used that relationship to urge Kaiser to the table. Independently of the other steel companies, Kaiser Steel reached an agreement with USWA to slightly raise wages and to establish a nine-member commission of management, the union, and the public to study work rules outlined in Section 2b.

In the meantime, the other steel companies refused to back down from their demands. Workers of all races believed their union was protecting their interests, and they remained on strike for 116 days until November 7 when the U.S. Supreme Court ruled in favor of the Department of Justice that the Taft-Hartley Act could be invoked to force workers back on the job. Although the strike was officially over, the company slowly called back workers based on union rules of seniority. Those with high seniority—primarily white workers ¹² —were called back first, and those who were called back made sure to keep production moving slowly until the union got the contract it wanted. The 1959 strike helped secure a series of stable contract negotiations that would preserve the forward movement of increased wages and benefits for workers for the next decade. Between the 1950s and 1960s alone, workers experienced a 45 percent increase in wages (Metzgar 2000, 138).

Despite these gains over time, striking for four months without pay was a significant commitment for the average worker, and African-American workers were at a disadvantage. The USWA did not have a strike fund that helped workers get through these months nor did it provide other means of financial support, though union officials would refer workers to city social services. Some workers went on welfare (Canty 2013; USWA 1959b), ¹³ others found jobs on their own. One black worker, Wiley Canty, who was a second helper in the open hearth at U.S. Steel at the time, said he and his twin brother painted houses on the North Side. Still others relied on the income of their wives to get them through. Even the previous month-long strike in 1956 presented challenges for African-American workers. While white workers were able to invest their savings into other sources of income such as rental property and small businesses, black steelworkers had few economic resources to build wealth (Nelson 2001, 228).

Several weeks after companies began to call back workers, Vice President Richard Nixon urged steel companies to agree to terms similarly laid out in the Kaiser Steel deal. It only took Nixon warning the steel companies that they would garner the support of neither the Republican nor Democratic parties, which were about to enter election season, if the production slowdown in steel led to a recession. On January 20, the union got a twenty-month contract, which gave workers thirty-nine cents more an hour, including improved health and pension benefits, automatic cost-of-living increases, and the preservation of Section 2b (Metzgar 2000, 81).

While the union declared victory, the low-wage workers among the membership would have had a difficult time saying they won. Four months was a long time to live without benefits and pay. And if the worker had low seniority, the strike might have lasted longer than four months. Take the situation of Robert Clay Jr., a scarfer ¹⁴ for Republic Steel. According to the bankruptcy petition he filed on January 15, he had only been on the job forty-five days, ¹⁵ which meant he had very low seniority and would have been one of the last people to return to work after President Eisenhower ordered workers back to the mills.

The petition also shows that Clay, a married man with two children, failed to get a toehold on his finances. In six years, he and his family had six different addresses, having lived in the Greater Grand Crossing neighborhood, Chatham, Washington Park, and at the time the petition was filed, Riverdale. In 1958, he experienced a period of unemployment, and that year, he brought home a total of $1,500. His income improved significantly in 1959 when it rose to $2,700, the purchasing power of about $22,064 by 2015 standards. Still, it was not a lot to live on for a family of four. To make matters worse, his wife required medical treatment in 1957, for which he owed $435. He was in collections by the time he filed for bankruptcy. Clay owned a 1953 Chrysler valued at $150, but to further his troubles, he got into a car accident in the summer of 1959. He filed a personal injury suit against Interstate Bakery, but as of January 1960 had no word on the standing of his suit. ¹⁶

Clay seemed to grasp at every opportunity to pull himself and his family out of this situation. One of his creditors was the Radio-Television training school for a correspondence course, a program he signed up for in mid-November right after workers were ordered back on the job. He owed the company $235.

The Workplace Structure of the Mills

The impact of the four-month strike on workers varied depending on the worker’s ability to sock money away before the strike, and such ability depended on the worker’s seniority standing in the mill. Both of these variables were influenced by race.

Steel companies maintained segregated hiring practices, which allowed them to control their workers (Needleman 2003, 47-48). Companies organized jobs by sequence and by department. The prevailing wisdom among employers was that blacks could stand the heat better than whites and, therefore, were better suited for jobs in the coke plant, open hearth, and blast furnaces, representing the hottest and most dangerous stages of steel production. If black workers were assigned to relatively white departments—those that were labeled clean departments like finishing and production lines—they were at the bottom of the skill hierarchy working in labor gangs (47-48).

Where the company assigned a worker determined that worker’s promotion opportunities, and blacks were often assigned to sequences that provided few chances to move up. Union rules allowed worker promotion only within his assigned sequence. As an example, one sequence in the blast furnace department involved maintaining heat in the furnaces: the stove tender and the keeper held the higher classifications at 14, the keeper helper and the gas washer had a Class 9, the clayman held a Class 4, and the gas washer helper had a Class 3 (USWA 1968). In this case, the gas washer helper had five opportunities for promotion. Some sequences only had one position, in which case, there were no opportunities for promotion.

Blacks were often assigned to sequences that provided few promotion opportunities (Canty 2013; Needleman 2003, 47-48). ¹⁷ Seniority, which was based on the number of years a worker had in his sequence and department, also played a role in a worker’s opportunity for promotion, but a foreman had substantial discretion to grant a promotional opportunity to a white worker over a black worker, despite the number of years served.

If a black worker complained to the union, a griever could challenge the promotion, but this often presented a quandary for the union leaders, who worried white workers would perceive that their efforts on behalf of black workers were putting the interests of black workers over white. Union leaders had to walk a fine line knowing they needed white support to keep their positions (Dowdell 2014; Needleman 2003, 106). ¹⁸ The responses of a griever to a complaint were as individualized as the people who served in those positions. Some grievers saw their position as one of equalizer, others saw it as a position that would help fulfill their political ambitions, while still others were not philosophically prone to fight for racial equity. Additionally, a single griever held little sway in the final decision of a case. In the end, grievers as a class could do little to effect large-scale change of systemic disparities in the mills (USWA n.d.-b). ¹⁹

Companies based wages on standing in the hierarchy of the sequence and on the department. The lower a worker’s standing in the hierarchy, the lower his pay, as was the case for those working in the early stages of steel production. The pay differential between third helper (the lowest rank of semiskilled workers) and first helper in the blast furnace department was nearly a dollar per hour (USWA 1960). For a full-time worker putting in forty hours a week, that is a differential of $2,000 a year, which in today’s standards is about $16,400, an amount that could make the difference between being able to save for a home or your kids’ college or not. A worker with a Class 16 position (generally a craftsmen) made 97 percent more than a worker in a Class 1 position (generally a laborer; USWA 1968).

Blacks held little sway to get the union to address the companies’ workplace segregation. While blacks held positions within local union leadership, those positions were not ones that gave them a bully pulpit or even any authority to direct change at the district or national level (EEOC 1961; Hill 2002; Needleman 2003, 253-54; Nelson 2001, 203-6). ²⁰

In 1948, the USWA created a permanent Committee on Civil Rights, but that arm of the union directed most of its energy to race relations outside of the union. Despite pressure from African-American members to choose a black executive director for the committee, then President Phillip Murray chose a white man, Frank Shane, the brother of one of his close associates out of Detroit. Shane served as executive secretary for nearly twenty years and in that post focused much of his attention outward to support the work and efforts of civil rights organizations such as the Urban League, the Leadership Conference on Civil Rights, and the National Committee against Discrimination (USWA n.d.-a).

This approach was also evident at the district and local levels. Scores of correspondence between Joe Germano, director of District 31, which included Chicago, and civil rights organizations in the region, seem to reveal a superficial engagement with social change (Germano Files). Even still, these relationships helped USWA widen its strategic alliance with liberal organizations. These connections might have also demonstrated to members of color that the union, indeed, had their interests at heart, even if it was focused outside the doors of the mills.

While these efforts created strong ties with the larger community, it did little to address racial stratification within the mills. Additionally, many of the civil rights organizations the USWA worked with had limitations, often because they were financially beholden to white power interests at the national and local levels (Satter 2009, 166-217). Consequently, their work to fight against racist social policies in housing and employment were often thwarted by the white power structure in place.

The rhetorical principle of color blindness also drove the policies and actions of this committee during Shane’s tenure. It was a principle that made it difficult to critically assess the systemic and institutionalized practices that reinforced racial hierarchies in its own house and in the mills (Needleman 2003, 7-8). In February 1950, the Civil Rights Committee by way of Thomas Shane, Francis Shane’s (1950) brother and the chairman of the committee, sought to defend union actions to improve race relations through a survey he sent to local presidents asking each to answer two questions:

What is the range of jobs now open to minority groups, as compared with jobs open to them before your particular plant was organized? If your Local Union was at one time confronted with a racial discrimination problem, what steps did the local take to overcome the problem?

The answers varied across the country. Some stated that the doors for African-Americans opened during the manpower shortage in World War II and that since then, there was no evidence of discrimination. Others replied that when black workers complained, they were heard out, even when the outcome did not go their way. Still other locals stated that there were no problems with racial discrimination because there were no black workers in their shop. ²¹ Of course, the problem with this survey is that it was highly subjective and the people responding, who were primarily white, were the least equipped to provide insight into racial segregation in the mills.

African-American union members and leaders tried to subvert formal channels to pressure the local leadership to address equity concerns of black workers. For example, Local 1010 at Inland Steel had a reputation for being especially radical in the 1930s through World War II. White radicals and blacks serving as grievers created a strategy wherein they supported promotion of African-Americans within departments. This tact helped black workers if they were in integrated departments, but if a department was primarily white, workers often resisted (Needleman 2003, 47).

Also at U.S. Steel Gary Works during the war, black workers, with the help of white progressives, organized and were able to break down some of the barriers to promotion, particularly in the departments where most blacks worked: coke plants, open hearth, and the furnaces. And after the war, other African-American workers asserted their rights to fight for promotions. But these were isolated rather than concerted efforts around Chicago and across the country (pp. 78-81).

Without formal channels to affect change within the mills nationally, African-Americans were left with fewer opportunities for personal financial growth through employment in the mills. But barriers to promotion and training made up only one broken rung that kept black steelworkers at the bottom of the wealth ladder. Chicago’s public policies on housing served as the next busted step up.

Residential Segregation

Since the early 1900s, with the start of the first wave of the Great Migration, African-Americans were relegated to living in a narrow area known as the Black Belt, from Twenty-Second to Thirty-First Streets along State Street. As the decades progressed, the borders slowly extended into what were known as white neighborhoods. By 1940, the borders had extended south to Sixty-Third Street and by 1957, they had gone as far as Seventy-First Street (Drake and Cayton [1945] 1970, 817). As the borders of the Black Belt extended west and further south, whites either fled or fought back through violence.

The reasons for this violence started with the Home Owners’ Loan Corporation (HOLC) policy of the 1930s and 1940s, which denied loans to neighborhoods deemed ethnically or racially mixed and, hence, too risky to back mortgage loans (Hirsch 1998, 10; Massey and Denton, 41-55). Throughout the 1950s and 1960s, FHA adopted policies mirroring the HOLC. These redlining policies made it near impossible for blacks to secure mortgages, virtually locking them out of a pathway to the middle class.

Additionally, these policies fortified the color line making it unprofitable for whites to live in proximity to blacks. When whites got word that blacks were moving into a white neighborhood, or even if rumors emerged that a house was about to sell to blacks, violent white mobs would appear (Hirsch 1998, 10). Disturbances, such as the ones in Park Manor in 1949 and later in Englewood, were both planned and spontaneous (pp. 40-67). But violent responses also erupted when blacks began to integrate public housing, as was the case of the Airport Homes in 1946 and the Fernwood Homes in 1947—both of which were used as temporary housing for veterans returning from World War II—and the Trumball Park housing project in 1953 (pp. 40-67). In the mechanics of the housing market, blacks not only drove prices down for whites, but their mere existence in relation to whites held negative value.

At the same time, the restricted housing market for African-Americans limited supply, thus driving up the prices blacks had to pay to buy homes in white neighborhoods whose property values had just plummeted. So blacks paid more for homes of lesser value.

This policy environment also set the stage for predatory lending aimed at the black working class. Real estate agents and speculators drove the phenomenon of white flight, using fear of deflated housing values as their greatest weapon. White speculators would buy a home in a white neighborhood in proximity to a black one. Residents in these neighborhoods would try to hold the line and promise their neighbors that if they had to sell their homes, they would not sell to a “Negro.” But some speculators would play dirty tricks to induce psychological fear, such as paying a black woman to regularly walk down the street with several of her kids, or pay someone to call a home on the block at random and ask for “Johnnie Mae,” presumably a black sounding name (Balk 1962, 16).

The first house white speculators purchased in a block they were about to bust was bought at close to its value, but always less. Once the black family moved in, the remaining white families were in such fear that they were willing to sell their homes at close to any price. And because speculators often offered cash for the property at well less than the property was worth, whites were willing to get out while they could (p. 17). When they sold the homes to black families, it was always at inflated prices, which they could command given the lack of available housing to African-Americans in this segregated market. These policies accelerated the basic principles of supply and demand.

In some neighborhoods, speculators, after buying a property, would offer to sell it to black families well above its value, then offer financing at exorbitant interest rates. The practice known as contract buying happened in neighborhoods throughout Chicago but gained special prominence in the Greater Lawndale area of Chicago’s West Side. Because blacks did not have access to mortgage financing, contract buying was a viable option for many families. The terms of contract buying, however, made it very difficult for families to either increase or maintain value in their homes.

Speculators financing the contract required the homebuyers to pay high monthly payments with little money down. Although the buyer was paying as much as $110 per month, they were never given title to the property until the contract was paid off (Satter 2009, 38). If they missed a payment, they lost the property and all their investment in repairs. Most homebuyers did not earn equity in their homes, primarily since they did not have title to the home, and because the homes were bought at inflated prices. More often than not, the value of these buildings dropped because they were in black neighborhoods, seen as having less value, and the buildings were often in poor structural condition, needing basic repairs. The high monthly payments sometimes meant buyers had to bring in extra income by renting out a room or converting the home into multiple units. This led to overcrowding. The high monthly payments also made it difficult for families to maintain their properties. The whole practice resulted in residential dilapidation and frequent turnover in already overcrowded neighborhoods (Satter, Hirsch 1998).

Many homebuyers also took on extra shifts to keep their heads above water financially with the demands of the contract and to put food on the table (Hirsch 1998). ²² More time at work meant less time at home, leading to more unsupervised children and less community cohesion.

The U.S. government understood that homeownership was a reliable road to wealth-building for families. Yet, federal policies and banking practices blocked most African-Americans from that path. Even when an African-American family managed to buy and maintain a home in one of Chicago’s racially transforming neighborhoods, the low market value set on their home meant they had very little wealth to pass onto their children. Yet the apartheid mortgage system represented only one part of a larger dual financial system that blocked African-Americans’ access to capital, making them easy targets of usurious lending practices and further undermining their possibilities to accumulate wealth for their families’ future for generations to come.

Snared

On Friday, February 5, 1960, a distraught William Rodriguez, 24, walked into a drug store in Chicago’s East Garfield neighborhood and bought rat poison. He began eating it on his walk home about four blocks away. When he arrived at his door about 2:30 a.m., Rodriguez began convulsing violently. As his wife, Alva, came to his aid, he told her what he had done.

He was at his rope’s end. Rodriguez, who was Puerto Rican, was beset with debts, creditors were hounding him, and wages from his job as an order filer at Sears, Roebuck and Company were being garnisheed, now for the third time. He had four kids to feed and did not know how he would continue to provide for his family. An unconscious Rodriguez was rushed to Bethany Hospital, his stomach pumped, and sent home an hour later in a conscious state. But by 4 a.m., he had become ill again and was returned to the hospital. He died there two hours later (“Father Beset by Debts, Eats Poison, Dies” 1960; Schaudt 1960, 12; Shuman 1960, 1). Beryl Satter recounts this story in her book, but I tell it here because it illustrates the constraining web of financial insecurity that many minority workers—black, Mexican, and Puerto Rican—lived.

Rodriguez’s death spurred consumer advocates and politicians to deeply scrutinize the credit and wage garnishment racket. In 1961, the municipal court in Chicago appointed a special commissioner, John King, to investigate credit abuses. King’s commission employed two detectives—one black, one Latino—to work undercover and expose some of these abuses.

Presumably, Chicago’s steelworkers were in a much better position than Rodriguez, who was not in a union, had fewer resources to his avail, and likely did not have access to low-interest loans provided by some of the company credit unions. Republic Steel and U.S. Steel housed credit unions, which were nonprofit financial institutions charged with serving their members rather than making a profit. Other large steel companies housed them as well, including Inland Steel. But even access to these resources could not keep African-American steelworkers from falling into the abyss of credit abuse.

Commissioner King’s investigative team found a wide range of credit practices designed to snare those who believed credit was a way to provide for their families. Some creditors and vendors would stand at factory gates and peddle cheap and poor quality goods for little money down. In reality, the vendors were not selling merchandise as much as they were collecting signatures on blank wage assignment forms. This was much more lucrative to them, because the unsuspecting person would sign the form giving the creditor rights to a percentage of his paycheck (Satter 2009, 101). King’s team also found that these wage assignment forms were often illegal because they lacked key information such as the date of the purchase, the terms of repayment, and interest (Shuman 1961a, 36). Nonetheless, these forms were essential documentation that allowed creditors to garnish employees’ wages.

Once employers received wage assignment notices, they rarely challenged them. Not wanting to be bothered with the extra work of garnishing a worker’s wages, the employer sometimes fired the worker. When the worker was not fired, the employer did little to verify the repayment terms and amount owed to the creditor. In these cases, the employer could garnish as much as 25 percent of a worker’s paycheck (Shuman 1961a, 36).

Most steelworkers who relied heavily on credit were in low-wage positions within the mills and believed credit was the only way they could provide for their families’ needs. In the case of Rudolph Haraway, a laborer at Youngstown Sheet & Tube, his purchases seemed in no way extravagant. Most of his creditors provided furniture, clothing, tires, and medical services for his wife.

He held his creditors at bay as soon as he filed for bankruptcy on March 28, 1960. Once that happened, creditors could no longer garnish his wages. According to his petition, there were two wage assignments that offer insight into the practices of lenders: one from Liberty Loan and the other from John M. Smyth Company. With the Liberty Loan money, he purchased a baby tenda—baby high chair or playing table—worth $40 in January 1959, but by the time he filed bankruptcy, he owed $145 on the item. In March 1957, three years before he filed, he purchased a three-piece bedroom set from John M. Smyth, worth $75, but at the time of filing, he still owed $271 on it. Likely he had managed to pay the value of each purchase, but fees and high interest meant that workers like Haraway would have paid for an item three or four times over. Haraway had other debts as well, most made with wage assignments, totaling $1,822, yet in 1959, he made $2,000 and was only on the job at Youngstown for ten months. The previous year, he made $4,500, indicating he had experienced a substantial loss in pay in a year’s time. ²³

Some steel companies looked after their employees and tried to protect them from shady credit practices. An Inland Steel clerk, Dorothy Lascoe, developed a system to verify what workers owed. She started using the system in 1956, when she discovered that a creditor nearly doubled the amount an employee owed. She found that, all too often, lenders did not credit what the worker had already paid (Inland News 1960). In one case, an employee signed a note to pay $446 for household furnishings. The employee still owed $254 after paying on it for two years. When he defaulted on a payment, his wages were garnished for the next two years, even though by that time, his debt should have been paid in full. Court costs were sometimes tacked on, pumping up the total amount due. Lascoe said her work saved employees an average of $200 per debt. Yet even for all of Lascoe’s work, forty thousand wage deductions were made in one year at Inland Steel from a total of twenty-two thousand employees (p. 3).

There is no evidence that the union participated in the call for credit reforms in Springfield, yet even those who worked toward reform were no match for creditors who lobbied against change. By 1962, the call for credit reforms had reached fever pitch in the state. Illinois Governor Otto Kerner created a sixty-four-member panel to examine possible reforms. But the deck was stacked against any meaningful reforms. Most of the members on the panel were representatives from financing companies. There were many elements to review, such as the maximum percentage a creditor could garnish from an employee; laws that allowed a third party to “confess” that a worker owed a debt; use of the assignment form, which allowed creditors to garnish an employee’s wages without going through the courts. In the end, the panel established new laws that favored creditors above debtors. By 1965, creditors could charge more interest and were allowed to further trap creditors in a financial bind (Wille 1965, 13). Commissioner King’s investigative team was then dismantled, and much of the push for change came in the form of an educational campaign against the lure of easy credit.

In New York, laws were established to protect debtors—for example, 90 percent of an employee’s wages were exempt from garnishment—whereas under Illinois law, anything over $45 was available for garnishment (Shuman 1961a).

This predatory financing led to high bankruptcy rates among minorities, and steelworkers were not exempt. In the fiscal year ending July 1959, wage earners made up 9,935, about 97 percent of all bankruptcies in Chicago (Shuman 1960). The following year, 11,173 wage earners declared bankruptcy (Shuman 1961b). By the fiscal year ending in 1964, that number dropped slightly to 10,800 bankruptcies (Wille 1965).

Bankruptcies were not necessarily the path to financial freedom that they were advertised to be. In fact, bankruptcy petitioners were still strapped and reliant on finance companies to extend them credit. While most would see bankrupts as a high credit risk, some finance companies saw an opportunity to bilk further since the creditor knew that the bankrupt could not file for another seven years, and he would have to pay what he owed (Shuman 1961b). There were also concerns among credit reformers that bankruptcy attorneys were taking advantage of people caught in a credit crunch, telling them that bankruptcy would give them a fresh start, while also charging high fees (Shuman 1961b).

In some ways, bankruptcy did provide people with a way to stay employed since workers with large debts lived under the threat of being fired (“Lawyer Urges State Repeal Creditors’ Garnishee Law” 1960, 13). Yet, bankruptcies were also disruptive, as families were forced to downsize their lives, moving to smaller units in poorer neighborhoods. Yet another broken rung.

False Narratives of Credit Spending

Stereotypes were and continue to be ever present of blacks who cannot keep their financial houses in order. On the surface, these bankruptcy records seem to substantiate that stereotype and illustrate how easy it might have been for steelworkers to fall into middle-class trappings of jewelry, fine clothes, and cars. Indeed, most of the creditors listed in these petitions were jewelry stores, clothing stores, general merchandise stores, and car dealerships or car financing companies. Several studies examining consumer behavior have attributed the penchant for running up consumer credit to a lack of impulse control, an inability to delay gratification, and compulsive spending, each of these characteristics pointing to a culture of poverty (Lea, Webley and Walker 1995). But this explanation is far too simplistic. Income levels are unrelated to a buyer’s penchant for consumer debt (Livingstone 1992).

While the role of consumer debt in middle-class upward mobility solidified by the 1970s, use of consumer credit to purchase household goods, clothing, and cars was not uncommon in the 1950s and 1960s (Ledger, Federal Reserve Bank of Boston Education Program n.d.). It was an especially useful tool for wage earners whose steady incomes fostered a feeling of security that they would be able to pay later. In short, it allowed wage earners’ families to stretch their dollars and their hopes further.

The most popular understanding of the plight of bankruptcy petitioners is that they lacked financial sophistication. After Rodriguez’s suicide, the local news media jumped on the story, exposing unethical, albeit legal, business practices of finance companies and retailers that suckered unsuspecting consumers into the web of credit (Shuman 1960, 1961b).

True enough, unscrupulous retailers would sell poor-quality products and milk as much money as possible through fees, interest, and extra charges. But the misleading narrative that was so prominent in these stories—that many of these credit victims were migrants from the south or Spanish speakers from Puerto Rico or Mexico, and they did not know any better—undercuts the reality of the financial bind these workers were in.

The reality was that blacks, and to some degree Latinos, did not have access to many financial resources. Buying on credit was the most accessible financial resource available to them to clothe their families, furnish their homes, and get to work and around the city with a car. The car was essential for many minority workers because they lived in neighborhoods where public transportation was less reliable. Most of these items purchased were not worth the inflated prices they paid. Some black steelworkers might have had added financial resources from their company credit union, but not all steel plants had them. That finance companies, car dealerships, and retailers took advantage of these workers’ financially limited options is quite another story. Public officials and advocates believed the remedy was to educate consumers about the pitfalls of credit, ²⁴ given the failure to get consumer-friendly credit reforms through the state and municipal governments. But those remedies only went so far.

Another narrative that tried to explain the phenomenon of black overrepresentation among bankruptcy petitioners was cultural. Blacks were often painted as poor savers who were too fiscally liberal because they engaged in escapist pursuits like shopping. They were extremely fashion conscious, so the story went, and because of their oppressed state resorted to consumerism to create an identity (Conley 1999, 29). But research finds that blacks and whites save at similar rates. African-Americans save about 11 percent of their annual income, while whites save about 10 percent (p. 29). The real culprit, we find, was in banking practices that limited blacks’ access to capital.

The Bigger Story—The Wealth Gap for Black Workers

Even though Sterling Powell and his black peers in steel who filed for bankruptcy made up a small percentage of workers in Chicago who could not survive financially, they were the canaries in the coalmine, the early indicator that the system would mean peril for many more to come. If a black steelworker was hampered, imagine the black worker with a much lower wage and no union protections.

Each one of the steps that guided more white workers into the middle class—the ability to buy a home in a neighborhood with good schools, a home that held its value, the ability to secure a fixed-rate mortgage and to secure employment that opened up opportunity to move up the job classification ladder—did not work for African-Americans. The cumulative impact of discriminatory housing, banking, financing, and workplace practices on black workers led to a major wealth gap whose legacy can be seen today.

In Being Black, and Living in the Red, Dalton Conley analyzes data from the Panel Study of Income Dynamics (PSID), a University of Michigan longitudinal survey that began in 1968 of income, socioeconomic status, employment, and wealth. His analysis attempts to determine the source of the wealth gap between blacks and whites. He factors out a variety of options that could explain the gap, such as race and family structure, to hone in on the root cause. Ultimately, he finds that the net worth of parents is the largest predictor of wealth accumulation, or in the case of black steelworkers and black workers overall, disaccumulation over time. While Conley finds that race is not a direct factor in explaining the wealth gap, he makes a strong case that the interplay of race and class influence this gap.

Durable inequality is the outcome of years of disaccumulation, the term Michael Brown et al. (2003) coin in their book Whitewashing Race (22-25). They explain that just as an investment of money in a savings account or in a home or in a business grows over time, the lack of economic opportunity in a racial/ethnic community or a geographic neighborhood grows negatively over generations. A debt that grows exponentially with high interest becomes a hardship sucking out potential resources that could go toward buying or maintaining a home. A lack of access to home mortgages becomes a lack of access to building home equity. Residential segregation leads to negative growth that locks racial and ethnic groups into poorer quality housing with less valuation and higher costs, which means less money to maintain housing structures. Residential segregation also determines educational opportunity, which is also passed on generationally.

In 1959, it was popular to ascribe faltering personal and racial characteristics to the poor state of black neighborhoods, which in turn fueled some of the violent reactions to blacks moving into what were seen as white neighborhoods (Hirsch 1998; Massey and Denton 1993; Satter 2009). Whites saw their hard-earned investments losing value, and they fled. Whiteness literally added value to homes and schools. Whiteness was wealth, while nonwhiteness in real economic terms was blight, a negative that subtracted value (Rodiger 1991).

Black steelworkers, though they were part of an elite group in the working class, were not exempt from the ravages of disaccumulation. The above database illustrates the impact of disparate income levels and limited access to promotions for black workers in the steel mills. The higher incomes among white workers meant they could invest their wages in other moneymaking ventures, be they small businesses or real estate. African-Americans were not only limited in the amount of income they had to invest, but they were also limited in access to capital through bank loans. White workers, however, not only had greater upward mobility in the mills, but also in society, with access to mortgages, small business loans, and other credit on reasonable terms, and to neighborhoods with better schools and more valuable housing. As a result, black steelworkers had much less money to pass onto their children. As Conley points out, black workers’ lower net worth hampers their children’s upward mobility (Conley 1999, 51).

From 1959 to the 1970s, we see a significant narrowing of the gap in the 1960s as a result of federal antidiscrimination policies (Conley 1999, pp. 25-46). This was an important period for black steelworkers because the push for equity in the mills started to gain traction. In 1964, union activist Rayfield Mooty helped spearhead the formation of the Ad Hoc Committee, which asserted the concerns of black union members at the national level. Armed with the cudgel of the 1964 Civil Rights Act, black steelworkers filed 408 complaints with the Equal Employment Opportunity Commission against steel companies. And, in 1971, the federal government followed by filing a discrimination suit against Bethlehem Steel Corporation (Lackawanna Plant), which led to the 1974 Consent Decree that enjoined seven additional steel companies and USWA. The agreement demanded new seniority and promotion policies within the mills, opening up opportunities for blacks (Hill 2002; Nelson 2001). As a labor scholar at University of Wisconsin, Herbert Hill, the former director of NAACP’s Labor division, would later critique this agreement, making the keen observation that black workers were never consulted about the terms of the agreement. The Ad Hoc Committee opposed the terms of the consent decree, saying it did not go far enough.

Even still, the remedies of the decree came too late, because less than a decade later, mills around the country began to shutter their doors. In all, black steelworkers had five or so years to seek redress for the accumulation of decades of lost opportunities within the mills. The practices that led to the disaccumulation of wealth had consequences that would affect the lives of black steelworkers and their progeny on into the 1990s and beyond.

By 1985, successive plant closures in the Chicago area had devastated workers across race, but the promise of economic opportunity for African-Americans represented a significant setback. Neighborhoods surrounding Chicago mills took economic hits that ripped through layers of community cohesion. Black neighborhoods took the brunt of the damage. U.S. Census figures show that by 1990, the minority neighborhoods surrounding the mills had suffered significant decline. In South Chicago and South Shore, for example, 22 percent and 25 percent, respectively, lived below the poverty line, while in the white neighborhoods near the dismantled mills, Hegewisch and East Side, 6 percent and 11 percent, respectively, lived below the poverty line. ²⁵ Even through the worst of the mill closures, Hegewisch and East Side maintained high levels of homeownership, with 81 percent and 73 percent, respectively. In contrast, in South Chicago, 44 percent owned their homes, and in South Shore, it was 23 percent.

Delving deeper into the profile of these neighborhoods helps explain the resilience of Hegewisch and East Side. Residents of Hegewisch were not only white steelworkers but also white municipal workers, such as policemen and firemen. By 1990, the neighborhood lost ten thousand inhabitants, mostly as a result of the loss of steel jobs (Wichert, Hogan, and Corey 1990, 165). That these former steelworkers had the ability to leave and start anew is testament to their privileged position in the mills, having years of accumulated transferable skills and opportunities often not made available to African-American steelworkers until the 1970s. In East Side, the Hispanic population began to bloom in the late 1960s and by 1990, they made up two-fifths of residents. This shift also has its locus in the demise of the steel industry (W. and Quinn 1990, 159). When whites in East Side lost their jobs and left, housing opportunities for Latinos opened up.

Black steelworkers in South Chicago and South Shore did not fare as well. In South Chicago, many families were dependent on the mills and had little recourse or opportunities for other jobs when the mills closed (Dietterle and Lockette 1995, 146). What used to be a vibrant commercial center, around Seventy-Ninth Street and Exchange Avenue, fell into deep decline, as businesses that relied on activity from the mills lost customers. A similar story unfolded in South Shore. Although by the 1970s, it was predominately black, it held a socioeconomically diverse population. Yet, 40 percent of the homes in South Shore were multifamily units, contributing to the low rate of homeownership. A combination of white flight, not just in housing, but also in the business district, in the 1970s, began a slow decline of the neighborhood. By the time U.S. Steel shut its South Works plant in 1985, the door to opportunity was closed for South Shore residents (Neufeld 1990, 140).

The story of these two black neighborhoods demonstrates how disaccumulation leads to a long-term decline in stability of neighborhoods, as investments leave. The negative cumulative effect of high unemployment, lower home values, and lower rates of homeownership on a neighborhood means businesses are less likely to be attracted, which leads to less investment in the community from local merchants and the city, fewer employment opportunities for residents, and less transference of soft skills (Brown et al., 2003, 5-33). The final rung on this economic ladder has all but disappeared.

Conclusion

Even though the wealth gap began to narrow for African-Americans during the Glorious 30 from a 53 percent difference in 1949 to a 38 percent difference in 1969, that was cold comfort to African-American steelworkers. They had not only less pay than their white counterparts but also fewer opportunities for training and promotion, little access to capital to buy homes and invest, and less access to modest homes of strong value in good neighborhoods and with good schools.

The 1959 strike did result in greater benefits for steelworkers, and the United Steelworkers union was to thank for those gains. But the union lacked sensitivity to and awareness of the impact segregation in the mills had in conjunction with segregation in housing, banking, and finance—a combined effect that hurt black workers’ ability to build wealth as their white counterparts had. It was a form of benign neglect, a turning away, if you will, that allowed the union to remain blind. This is evident in the causes that the national and district office in the Chicago region participated in. At the time of the strike, the national union seemed to have a passing affiliation with some civil rights causes, but it was never fully engaged in the fight for integration. After a 1965 political shakeup in the union, Frank Shane was pushed out of his position and replaced with Alex Fuller, an African-American steelman from Detroit. It was then that the national office’s focus appeared to shift some. In the meantime, Chicago’s hypersegregation intensified, and the local unions did little to combat it.

My grandfather, Papa, when working for U.S. Steel, managed to find an apartment to rent in an up-and-coming black neighborhood in the late 1950s. He put two of his three kids in a decent high school, which a few years before was majority white, but had quickly turned black. This was the only legacy of steel he could hand off to his children, and, in the end, it would help. There was little else he could pass on, except the hope that their lives would be better than his. Many black workers had no wealth to pass on, let alone hope.

The 1959 and 1960s bankruptcies show us just how vulnerable these men were, teetering on the edge, hoping to raise their families up the economic ladder, only in the end to fall. It was not just the loss of four months of wages during the strike that gave the final push. It was that second parallel ladder, the unsteady one that led to black economic free fall, which gave little regard to the black men in steel.