President Wilson and the Progressive movement in the early 1900’s focused on economic and social regulations, created the Federal Reserve and introduced the Federal  income tax. The second wave of the KKK was formed under Wilsons presidency and the white house segregated their bathrooms. It was Wilson that said “that federal segregation was an act of kindness” and Jim Crow became the law of the land.

The economic reforms the progressives pushed were political movements that created economic rents for the benefit of white people specifically. Occupational licensing reduced the number of people who could do certain business and this was used to restrict the number of blacks from competing against whites. The minimum wage was used against blacks as a way to keep “undesirable groups” from gaining employment. “A minimum wage was seen to operate eugenically through two channels: by deterring prospective immigrants and also by removing from employment the “unemployable” who, thus identified, could be, segregated in rural communities or sterilized.” (Sindny Webb, Journal of Political economy, 1912) Something called the Flexner Standard was implemented in 1910 “for better trained Doctors, who would be educated at University’s instead of for profit medical schools”. Funds for public education were funneled to white schools with minimal funding for schools in black area’s.

The early Knights of Labor actively accepted and organized black workers at a time when racism in America was finding itself after the civil war. The AFL also started out in the 1880s with a nondiscrimination policy, but founder Samuel Gompers later came to see blacks as a “convenient whip placed in the hands of the employers to cow the white man.” Fear that black workers would take whites’ jobs haunted the labor movement for generations.

Employers did capitalize on racial divisions by recruiting black workers as strikebreakers. In a 1917 incident, employers in East St. Louis, Illinois, recruited southern blacks to take jobs for low pay to drive wages down. White workers organized a whites-only union in response. Racial tensions mounted and in July an attempt to drive blacks from their neighborhoods led to a riot in which 40 blacks and 9 whites were killed.

The AFL craft unions became solidly racist. In 1902  W. E. B. Du Bois the influential black spokesman and historian, found that 43 national unions had no black members, and 27 others barred black apprentices, keeping membership to a minimum. Du Bois spoke against both “the practice among employers of importing ignorant Negro-American laborers in emergencies” and “the practice of labor unions of proscribing and boycotting and oppressing thousands of their fellow toilers.”

Whites in the private sector were just as racist as the State.

Here’s an excerpt from Douglas A. Blackmon, book “Slavery by Another Name”.

…” But it was business that policed adherence to America’s racial customs more than any other actor in U.S. society. American banks maintained ubiquitous discriminatory lending practices throughout the country that until the 60’s prevented millions of working-class African Americans from obtaining the lines of credit that millions of white families used to accumulate wealth and move from lower to middle-class status. Indeed, the opportunity for blacks to pursue the most basic American formula for achieving middle-class status -buying a home in desirable neighborhoods where real estate values were likely to appreciate over time – was openly barred by legions of real estate agents in every city and region. Until the 1950s, rules of the National Association of Realtors made it a violation of the organization’s code of ethics for an agent to sell a home in a white neighborhood to an African American, or vice versa. It was the hundreds of thousands of individual businesses that refused to give blacks jobs, equal pay, or promotions. It was wealthy men in Wall Street and in the executive suites of southern banks that financed the organized opposition to passage of the Civil Rights Act of 1964.”

I have pasted part of a PDF below that is called “Retrospectives Eugenics and Economics in the Progressive Era.” By Thomas C. Leonard.

“During the second half of the Progressive Era, beginning roughly in 1908, progressive economists and their reform allies achieved many statutory victories, including state laws that regulated working conditions, banned child labor, instituted mothers’ pensions,” capped working hours and, the sine qua non, fixed minimum wages.”

In using eugenics to justify exclusionary immigration legislation, the race-suicide theorists offered a model to economists advocating labor reforms, notably those affiliated with the American Association for Labor Legislation, the organization of academic economists that Orloff and Skocpol (1984, p. 726) call the “leading association of U.S. social reform advocates in the Progressive Era.”

Progressive economists, like their neoclassical critics, believed that binding minimum wages would cause job losses. However, the progressive economists also believed that the job loss induced by minimum wages was a social benefit, as performed the eugenic service ridding the labor force of the “unemployable.” Sidney and Beatrice Webb (1897 [1920], p. 785) put it plainly: “With regard to certain sections of the population [the “unemployable”], this unemployment is not a mark of social disease, but actually of social health.” “Of all ways of dealing with these unfortunate parasites,” Sidney Webb (1912, p. 992) opined in the Journal of Political Economy, “the most ruinous to the community is to allow them to unrestrainedly compete as wage earners.” A minimum wage was seen to operate eugenically through two channels: by deterring prospective immigrants (Henderson, 1900) and also by removing from employment the “unemployable,” who, thus identified, could be, for example, segregated in rural communities or sterilized.

“Columbia’s Henry Rogers Seager, a leading progressive economist who served as president of the AEA in 1922, provides an example. Worthy wage-earners, Seager (1913a, p. 12) argued, need protection from the “wearing competition of the casual worker and the drifter” and from the other “unemployable” who unfairly drag down the wages of more deserving workers (1913b, pp. 82–83). The minimum wage protects deserving workers from the competition of the unfit by making it illegal to work for less. Seager (1913a, p. 9) wrote: “The operation of the minimum wage requirement would merely extend the definition of defectives to embrace all individuals, who even after having received special training, remain incapable of adequate self-support.” Seager (p. 10) made clear what should happen to those who, even after remedial training, could not earn the legal minimum: “If we are to maintain a race that is to be made of up of capable, efficient and independent individuals and family groups we must courageously cut off lines of heredity that have been proved to be undesirable by isolation or sterilization . . . .”

For progressives, a legal minimum wage had the useful property of sorting the unfit, who would lose their jobs, from the deserving workers, who would retain their s U.S. Commissioner of Labor, opposed a proposal to subsidize the wages of poor workers for this reason. Meeker preferred a wage floor because it would disemploy unfit It is much better to argue Meeker (1910, p. 554). “Better that the state should support the inefficient wholly and prevent the multiplication of the breed than subsidize incompetence and unthrift, enabling them to bring forth more of their kind.” A. B. Wolfe (1917, p. 278), an American progressive economist who would later become president of the AEA in 1943, also argued for the eugenic virtues of removing from employment those who “are a burden on society.”

In his Races and Immigrants, the University of Wisconsin economist and social reformer John R. Commons argued that wage competition not only lowers wages, it also selects for the unfit races. “The competition has no respect for the superior races,” said Commons (1907, p. 151), “the race with lowest necessities displaces others.” Because race rather than productivity determined living standards, Commons could populate his low-wage-races category with the industrious and lazy alike. African Americans were, for Commons (p. 136), “indolent and fickle,” which explained why, Commons argued, slavery was required: “The negro could not possibly have found a place in American industry had he come as a free man . . .”

“It was a scholarly fashion, circa 1890, to declare the U.S. frontier “closed” and to sound a Malthusian alarm about excess American population growth. But the professional economists who wrote on immigration increasingly emphasized not the quantity of immigrants, but their quality. “If we could leave out of account the question of race and eugenics,” Irving Fisher (1921, pp. 226–227) said in his presidential address to the Eugenics Research Association, “I should, as an econo- mist, be inclined to the view that unrestricted immigration . . . is economically advantageous to the country as a whole….”But ,cautioned Fisher, “the core of the problem of immigration is . . . one of race and eugenics,” the problem of the Anglo-Saxon racial stock being overwhelmed by racially inferior “defectives, delinquents and dependents.”

“Fear and dislike of immigrants certainly were not new in the Progressive Era. But leading professional economists were among the first to provide scientific respectability for immigration restriction on racial grounds.2 They justified race- based immigration restriction as a remedy for “race suicide,” a Progressive Era term for the process by which racially superior stock (“natives”) is outbred by a more prolific, but racially inferior stock (immigrants). ”

“The term “race suicide” is often attributed to Edward A. Ross (1901a, p. 88), who believed that “the higher race quietly and unmurmuringly eliminates itself rather than endure individually the bitter competition it has failed to ward off by collective action.” Ross was no outlier. He was a founding member of the American Economic Association, a pioneering sociologist and a leading public intellectual who boasted that his books sold in the hundreds of thousands.3 Ross’s coinage gained enough currency to be used by Theodore Roosevelt (1907, p. 550), who called race suicide the “greatest problem of civilization,” and regularly returned to the theme of “the elimination instead of the survival of the fittest.” In that same year, more than 40 years after the American Civil War, Ross (1907, p. 715) wrote: “The theory that races are virtually equal in capacity leads to such monumental follies as lining the valleys of the South with the bones of half a million picked whites in order to improve the conditions of four million unpicked blacks.”

“For these progressives, race determined the standard of living, and the standard of living determined the wage. Thus were immigration restriction and labor legislation, especially minimum wages, justified for their eugenic effects. Invidious
distinction, whether founded on the putatively greater fertility of the unfit, or upon their putatively greater predisposition to low wages, lay at the heart of the reforms we today see as the Progressive Era.”

http://search.yahoo.com/r/_ylt=A0SO8y_ZLNtSYEUAX29XNyoA;_ylu=X3oDMTEzaWwzdDA4BHNlYwNzcgRwb3MDMQRjb2xvA2dxMQR2dGlkA1ZJUDM0M18x/SIG=12k1hmm0i/EXP=1390124377/**http%3a//www.princeton.edu/%257Etleonard/papers/retrospectives.pdf

http://www.princeton.edu/~tleonard/research.htm

Some information I got from  The Independent Review. “Rents and Race: Legacy of Progressive Policies”. Vol. 18,Number 1. Summer 2013.