In 2020, Gov. Newsom signed into law the establishment of the first in the nation task force to propose recommendations to address the history of slavery in the U.S., despite the fact that California joined the union as a “free state.” We’ll save the discussion on the misguided policy of reparations for another time – here we’re just going to focus on the numbers.
The nine-member California Reparations Task Force originally proposed to give $360,000 to every African American California resident who is a descendent of a slave. According to the U.S. Census Bureau, in 2020 approximately 2.25 million African Americans lived in California, 1.8 million of whom had at least one ancestor who was a slave. This adds up to a total reparations costs of $640 billion according to FOX News — double the size of the entire California budget that Newsom proposed for the next fiscal year. In another recent analysis of the proposal, a group of economists estimated the total cost to be closer to $800 billion – 2 ½ times the size of the state budget.
For a state that generously rained thousands of dollars to residents over the last two years, even this is a non-starter. The current budget deficit is already at $22.5 billion and climbing.
Not to be outdone, San Francisco’s reparations advisory committee has recommended that African American city residents who qualify receive a whopping lump sum of $5 million. If that amount is not absurd enough, included in the more than 100 recommendations is the elimination of credit card debt, car and student loans; a string of tax breaks; and 250 years of special benefits for African Americans such as a guaranteed income of $97,000 a year (adjusted for inflation); and the ability to buy homes for $1. Think about it — African Americans who are going to be born in the next century will be receiving reparations from Americans who are yet to be born or may even be from another country. The Hoover Institution’s Lee Ohanian calculated that the proposal would cost non-Black families in San Francisco an estimate $600,000 each.
Moreover, the eligibility requirements encourage hundreds of thousands to move into San Francisco to receive the $5 million. Out of state African Americans may be able to collect $5 million if they had been born in San Francisco or had ever lived in the city. In addition, they may be able qualify if they had been incarcerated on a drug crime or were a direct descendent of someone who had been imprisoned for a drug crime. Imagine the moral hazards of incentivizing people to commit a drug offense, then move to San Francisco to collect $5 million.
The net effect will be a mass migration of African Americans to San Francisco and a mass exodus of families who need to come up with a check for $600,000.
While San Francisco’s absurd reparations proposals are making the headlines, there’s a growing number of cities that are attempting to establish their own reparations programs. Sacramento Mayor Darrell Steinberg is one of 11 mayors across the country who are also forming task forces. Already, the Evanston, Illinois city council voted to pay $25,000 to qualifying black households for payments on homes or make repairs. That city pledged to spend $10 million on the program over the next 10 years.
Recent years show a mass outmigration of Californians – half a million in the last two years alone. But for African Americans in California – this trend has been going on for much longer. The state went from a black population high of 7.7 percent in 1980 to about 6 percent today – a 22 percentage point drop.
Reparations, in the numbers these committees are talking about, are absurd and unaffordable to non-black residents. Indeed, the reparations plan has been criticized even by the San Francisco chapter of the NAACP, which has called for investments and opportunities for the black community instead of direct payments to black residents.
We may differ with the NAACP when it comes to the types of “investment and opportunities,” but we do agree that direct payments are not the answer. School vouchers for families with children in poor-performing inner-city schools, cutting red tape for budding entrepreneurs, reducing regulations that add to the high cost of living, and assistance programs that offer a hand up rather than a handout we believe are the most promising ways to help African Americans break the cycle of poverty.
Rowena Itchon is chief operating officer at the Pacific Research Institute.
