The Southern economy was indeed in bad shape for years following the Civil War. To be sure, emancipation was a factor, but not because of an increase in labor prices. Emancipation was a major blow to the southern economy because slaves were collectively worth a huge amount of money. With the destruction of the slave system, many affluent families lost much of their wealth. Landowners could no longer use slaves as collateral, which had been the standard practice before the war whenever a plantation owner needed to raise capital. Emancipation therefore contributed to a credit crisis in the postwar South. Credit is essential for any market economy, and the lack of it can mean economic stagnation. To buy equipment and other supplies, farmers (particularly in the Deep South) had to deal with local merchants and Northern banks, generally using liens on next year's crop as collateral. Doing so meant that they had to focus on growing cotton, which remained a cash crop after the war. Indeed, many local merchants demanded that they be paid in cotton. That, in turn, meant that farmers did not diversify their crops, leaving them more vulnerable to downturns in the cotton market. But while conditions were bad for white farmers, they were often just as bad or worse for blacks.

Many freed blacks were ill-prepared for freedom, having had little to no experience with negotiating wages or obtaining credit. Also, freedom was all they got after the war; the federal government allocated insufficient resources to protecting freedmen against racist whites and did not parcel out any land for ex-slaves. Racial animus remained high, and many white farmers sought to reduce blacks to a state as close to slavery as possible. Sharecropping, in which tenant farmers could work a parcel of land in return for paying the landowner a share of the crops produced, was effective in carrying out this goal. Because the land fees were generally established before the harvest, a sharecropper had no protection in case of a bad year. Many white farmers became sharecroppers as well, but blacks were often charged higher interest rates.

A more egregious way in which many Southern states reduced blacks to a state of near slavery was convict leasing, whereby anyone convicted of a crime could be leased out to do manual labor (think chain gangs). The Thirteenth Amendment states, in part:

Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction.

Emphasis mine. What this meant was that any convict could be treated much like a slave, although there were two major differences. First, such treatment was (usually) temporary; convicts only had to do such labor for as long as their sentence lasted, rather than their entire lives. Second, the labor was often even more brutal than slave labor had been. Because the international slave trade had been banned in the early 1800s, there was a finite supply of slaves in the US before the Civil War. Slaves were therefore expensive, particularly when cotton prices spiked in the 1850s. As a result, slaveowners generally tried to recoup their investments by making sure that their slaves remained healthy enough to work. But convicts were cheap. It was not difficult for whites to have black people arrested and convicted of crimes such as vagrancy, owing money, or petty larceny. Often, the only evidence required was a mere accusation that the black person in question had committed a crime. Once they were convicts, blacks could be worked to death with no repercussions. Much of the work that convicts had to do was related to rebuilding the infrastructure that had been destroyed in the war and also industrializing the South - tasks like coal mining and road construction. These are very difficult jobs that free men would not do at the price that most industrialists were willing to pay. As one Southern businessman put it in an 1883 letter:

Before the war, we owned the negroes. If a man had a good negro, he could afford to take care of him; if he was sick get him a doctor. He might even put gold plugs in his teeth. But these convicts, we don't own 'em. One dies, get another.

Convict leasing and sharecropping both represent Southern whites circumventing higher labor prices for blacks in order to rebuild the prewar labor system. But doing this came at a heavy price. Despite industrializing, large parts of the South remained desperately poor for decades following the war. Racism did not only hurt blacks - it hurt poor whites too, because so many of them were likewise forced into a dead-end life of sharecropping and debt peonage. Few saw any real benefit in pursuing education, since there were not many opportunities for skilled laborers outside of the big cities. This combination of lack of education and massive debt kept many blacks in the South until advancements in the cotton gin and a wave of boll weevil infestations that devastated cotton crops left many black farmers out of work, and free to move North.

Sources:

Blackmon, Douglas, Slavery By Another Name: The Re-enslavement of African Americans from the Civil War to World War II. Anchor, 2009.

Foner, Eric. Reconstruction: America's Unfinished Revolution, 1863-1877. Harper, 1989.

Lichtenstein, Alex. Twice The Work of Free Labor: The Political Economy of Convict Labor in the New South. Verso, 1996.

Ransom, Roger and Sutch, Richard. One Kind Of Freedom. Cambridge, 1977.