Why Black Families Have Struggled Decades to Get Wealth

by Darrick Hamilton

Black History Month has become the time to reflect on all the progress black Americans have made, but the sobering reality is that when it comes to wealth the paramount indicator of economic security there has been virtually no progress in the last 50 years.

Struggling Against Economic Injustice and for Economic Power

Based on data from the Federal Reserve’s Survey of Consumer Finance, the typical black family has only 10 cents for every dollar held by the typical white family.

While there is no magic bullet for racism, access to wealth, and the security to pass it down from one generation to the next, would go a long way toward changing the economic trajectory for blacks.

As researchers who study historical and contemporary racial inequality, we mostly conceive of wealth as a maker of success, but its true value is functional: the independence and economic security that it provides.

Out of slavery

Until the end of legal slavery in the U.S., enslaved people were considered valuable assets and a form of wealth. In the South, entrepreneurs and slave owners took loans out against the collateral value of their property in the form of people to fund new businesses.

The U.S. government has a long history of facilitating wealth for white Americans. From at least the Land Act of 1785, Congress sought to transfer wealth to citizens on terms that were quite favorable. In some instances, land could be attained by the luck of the draw but only if you were a white man.

While the 1866 Homestead Act sought to include blacks specifically in the transfer of public lands to private farmers, discrimination and poor implementation doomed the policy. Black politicians during Reconstruction attempted to use tax policy to force land on the market, but this was met with violent resistance.

While blacks did make gains in wealth acquisition after chattel slavery ended, the pace was slow and started from a base of essentially nothing. Whites could use violence to force blacks from their property via the terrorism of white-capping, where blacks were literally run out of town and their possessions stolen. 

This includes the race riots, as in Memphis in 1866 and Tulsa in 1921, which systematically destroyed or stole the wealth blacks had acquired, and lowered the rate of black innovation. Black wealth was tenuous without the rule of law to prevent unlawful seizures.

By 1915, black property owners in the South had less than one-tenth of the wealth of white landowners.

This trend remained stable for the next 50 years. In 1965, 100 years after Emancipation, blacks were more than 10% of the population, but held less than 2% of the wealth in the U.S., and less than 0.1% of the wealth in stocks. Wealth had remained fundamentally unchanged and structurally out of reach of the vast majority of blacks.

Housing assistance and education

These racially exclusionary systems endured well into the 20th century. A complicit Federal Housing Administration permitted the use of restrictive covenants, which forbade home sales to blacks; redlining, which defined black communities as hazardous areas, directly reducing property values and increasing rates; and general housing and lending discrimination against African-Americans through the 20th and 21st centuries.

Moreover, blacks were largely excluded from the New Deal and World War II public policies, which were responsible for the asset creation of an American middle class.

The GI Bill is one example of several postwar policies in which the federal government invested heavily in the greatest growth of a white asset-based American middle class, to the exclusion of blacks. 

Historian Ira Katznelson documents that, by 1950, via the GI Bill, the American government spent more on education than the Marshall Plan that rebuilt Europe. But most American colleges and universities were closed to blacks, or open to only but a few in token numbers.

Meanwhile, GI benefits in education, employment, entrepreneurship and housing assistance were all distributed overwhelmingly toward whites. In the Jim Crow segregated South, there was a truncated housing supply. These factors limited the ability of historically black colleges and universities to accommodate the education and housing needs of black veterans.

It is important to note that it was never the case that a white asset-based middle class simply emerged. Rather, it was government policy, and to some extent literal government giveaways, that provided whites the finance, education, land and infrastructure to accumulate and pass down wealth. 

In contrast, blacks were largely excluded from these wealth generating benefits. When they were able to accumulate land and enterprise, it was often stolen, destroyed or seized by government complicit theft, fraud and terror.

Building new wealth

Nonetheless, blacks have still been able to overcome tremendous odds, particularly in acquiring education. Social science research indicates that blacks attain more years of schooling and education credentials than whites from families with comparable resources. In other words, blacks place a premium on education as a means of mobility.

Despite this investment, the racial wealth gap expands at higher levels of education. Black families where the head graduated from college have less wealth than white families where the head dropped out of high school.

Rather than education leading to wealth, it is wealth that facilitates the acquisition of an expensive education. The essential value of wealth is its functional role; the financial security to take risks and the financial agency that wealth affords is transformative.

In our view, education alone cannot address the centuries-long exclusion of blacks from the benefits of wealth-generating policies and the extraction of whatever wealth they may have. 

The most just approach would be a comprehensive reparation program that acknowledges these grievances and offers compensatory restitution, including ownership of land and other means of production.

For generations, many black activists have looked at America’s financial system and said, thanks, but no thanks. As an alternative, they’ve promoted self-sufficiency the creation of black wealth through black-owned banking and entrepreneurship, and patronage of black businesses. 

This idea resurfaces again and again, as it did recently in the #BankBlack movement and in Jay-Z’s “The Story of O.J.”: Black Americans ought to use their economic power to shore up their own community, instead of participating in a broader and more discriminatory system.

A New Emphasis On Building Black Economic Power

In the Post-Civil Rights era a period of '55 years' Blacks believed that electing Barak Obama as president and other Black politicians along with a good education and a decent paying job would level the racial economic playing field but it did not occur. 

Indeed the average white family today has 13 times the wealth as an average Black family. As Black folks there must be a new emphasis on economic empowerment.

The emphasis on building Black economic power has been put forth by Us Lifting Us Economic Development Cooperative whose developed a comprehensive 10-point plan. Us Lifting Us believes that the security and welfare of Black people depends on controlling our economics and practicing group economics. 

The 10-points reflect the desire to be free from chattel slavery, and an impulse that led Black people to form mutual aid societies and engage in group ownership once we were emancipated from slavery.

The Unfulfilled Promise of Black Capitalism

by Gillian B. White

In her new book, The Color of Money: Black Banks and the Racial Wealth Gap, Mehrsa Baradaran, a professor of law at the University of Georgia specializing in banking law, provides a deep accounting of how America got to a point where a median white family has 13 times more wealth than the median black family. 

Baradaran’s book covers the period of time spanning from Reconstruction with the promise and subsequent revocation of land, jobs, and economic independence for freed slaves to the present. 

Over this expanse of history, Baradaran finds that much of the economic turmoil black Americans have faced has been the direct result of negligence, discrimination, or broken bonds on the part of both government and private entities run mostly by white Americans.

With that history in mind, she interrogates the question of whether or not black Americans can fix the problem on their own, for instance by turning to black-owned banks to spur lending and wealth creation. 

Baradaran determines that, while theoretically promising, the movement in support of black economic self-sufficiency will falter without the type of powerful assistance that helped create white wealth, including government policies promoting jobs, home ownership, education, and access to loans. 

“The theory behind developing a separate black economy had been that economic power would lead to political power, but perhaps they had it backward,” Baradaran writes.

Worse yet, she argues, is that the spirit and main tenets of black self-sufficiency, as imagined by black activists to include reparations, control over financial infrastructure, and a mandate to support and grow black businesses, were corrupted and repurposed by the Nixon administration and anti-integrationists during the late 1960s.

Nixon and other Republicans, Baradaran writes, seized upon the idea of a separate black economy. They came up with a program“black capitalism,” they called it that they argued would promote black businesses and the creation of a thriving black economy, via policies such as affirmative-action requirements for private government contractors, bank-deposit transfers to black-owned institutions, and financial support for minority-owned businesses. 

President Nixon used Black capitalism as deceptive economic development

But, in reality, Baradaran writes, these efforts were more a way to mollify black activists and assure white voters that racial tension and upheaval would soon end than they were an actual effort to erase racial economic inequality. 

For example, in 1969, Nixon created the Office of Minority Business Enterprise (OMBE) in the Commerce Department, but didn’t allocate any funding to it. 

Instead, the office was to solicit funding from private sources and other government agencies in order to do the work of bolstering black businesses. The board that oversaw the OMBE was largely white, and, according to Baradaran’s account, indifferent to the outcome.

The head of the black-capitalism program, Maurice Stans, derided an early proposal by one of the highest-ranking black members at OMBE, Abe Venable, to invest $8.6 billion in the creation of 400,000 minority businesses, and then promptly shut it down. 

In 1979, the OMBE was rebranded as the Minority Business Development Agency by the Carter administration, and still exists with the mission of advancing minority-owned business operations.

Many similar efforts amounted to very little considering the scale of the challenge. By 1971, a Small Business Administration program had doled out $66 million to minority firms, but that accounted for one-tenth of 1 percent of the government contracts granted that year. 

And still, the programs that set aside contracts for minority businesses were deemed controversial by white business owners and conservatives, making it difficult to allocate any more funding to bridge the gap. 

Similarly, the OMBE founded the Minority Bank Capital Program in 1969, with the goal of encouraging federal agencies to deposit $100 million of their total account holdings into minority banks. By 1971, only $35 million had been transferred.

With little investment or enforcement, these so-called pro-black-capitalism programs and others were set up to fail. “All the black capitalism programs, including affirmative action, relied primarily on the voluntary participation of private firms and government agencies,” Baradaran writes. 

During his campaign, Nixon promoted the idea that blacks, especially poor blacks, need “a hand up,” not “a handout.” His policies put little money or political weight behind actually alleviating poverty and boosting the black economy. 

With weak incentives and little pressure to diversify business practices and customer bases, few companies, lenders, and agencies made anything more than the most meager of efforts to help black businesses thrive or to put black Americans in a more secure economic position.

Black capitalism came at a particularly dangerous time, in the aftermath of so many civil-rights victories. The promises made by the government regarding the advancement of black economic security through black capitalism created just enough of a diversion to what was ultimately halted progress toward real economic equality. 

“Particularly relevant are failed integration efforts and demands by black leaders for reparation both of which were being actively pursued in 1968. By 1970, the administration had scuttled each of these plans without fanfare,” she writes.

The effects of these policies are still felt by black families today. “Black capitalism delegated the responsibility to solve the racial wealth gap to the black community without the help of the white political establishment who had always held power and the purse strings, and who continued to do so,” Baradaran says. 

“If the roll-out of the black capitalism program had demonstrated anything, it was that economic power could not be achieved without government help.”

Median Wealth of Black Americans Will Fall to Zero by 2053

by Jamiles Lartey 

Growing up in the projects of Baltimore in the 1980s, things like savings accounts, stocks and bonds were completely foreign to Mysia Hamilton. Asked if her parents could have passed along some money to help her buy a car, go to school or put into a house, she can’t help but chuckle.

“No, that wasn’t there. There was no wealth. My mother was working, she was providing – we weren’t on the street begging – but there was no money in terms of ‘here you go’. No money to pass down.”

Three years from now, white US households are projected to own 86 times more wealth than black households. Now 48, Hamilton is on the path to a different reality. 

Working as a medical office manager and earning her college degree, the mother of five manages to squelch away $50 a month by furiously clipping coupons and being “extremely frugal”. “$50 is definitely not my goal, but it’s all I can do with the money that’s going out,” Hamilton said. And it’s working: a decade after she began working with a financial coach, she is on track to have a positive net worth by March 2018. “I’m so driven to do that. It’s important to me.”

But Hamilton is in the minority, in execution if not intention. A new report calculates that median wealth for black Americans will fall to $0 by 2053, if current trends continue. Latino-Americans, who are also experiencing a sustained downward wealth slide, will hit $0 about two decades later, according to the study by Prosperity Now and the Institute for Policy Studies.

“By 2020, median black and Latino households stand to lose nearly 18% and 12% of the wealth they held in 2013 respectively, while median white household wealth increases by 3%,” the report states. “At that point just three years from now white households are projected to own 86 times more wealth than black households, and 68 times more wealth than Latino households.”

With the US set to become “majority minority” by 2044, researchers say this spells major economic peril for the nation. “If the racial wealth divide continues to accelerate, the economic conditions of black and Latino households will have an increasingly adverse impact on the economy writ large, because the majority of US households will no longer have enough wealth to stake their claim in the middle class.”

The authors cite the legacy of discriminatory housing policies, an “upside down” tax system that helps the wealthiest households get wealthier, and the economic effects of mass incarceration as among the root causes for the discrepancy.

“The middle class didn’t just happen by market forces, and the whiteness of the middle class didn’t just happen by market forces. Both were intentional,” said Dedrick Asante-Muhammad, a senior fellow at Prosperity Now and one of the report’s authors.

Moreover Asante-Muhammad says African-American households are making ​​‘middle-income money’ but have the wealth of a white high-school dropout. Take homeownership, which has long been the primary means by which Americans of modest and middle-class income are able to build generational wealth. 

After the broken promise of “40 acres and a mule” to newly freed slaves, virtually nothing was done to endow black Americans with a share of the wealth generated by centuries of slave labor – the same labor that, directly or indirectly, helped to build most of the wealth enjoyed by white Americans.

So black Americans started off generations behind, only to encounter the redlining and racially restrictive housing covenants of the early-to-middle 20th century, which prevented the sale of many homes to black Americans, and isolated them together in communities that lost value as white residents fled to the suburbs.

“The majority of white Americans weren’t middle class until the 1930s or 40s,” Asante-Muhammad told the Guardian. “Then there was mass investment to create an American middle class but it was a white American middle class.”

Programs such as the GI bill, which offered returning WWII veterans generous lending terms to buy houses, helped turn the US into a home-owning middle class society – from which black Americans were functionally excluded. In his 2005 book When Affirmative Action was White, Ira Katznelson notes that of the first 67,000 mortgages insured by the GI Bill, fewer than 100 were taken out by non-white people. 

Recent economic crises have widened this wealth gap, according to the report, as communities of color took the brunt of the economic hit. Black median wealth has never recovered from the 2001 recession, nor Latino median wealth from the 2008 financial collapse. White median wealth, on the other hand, was left unaffected in 2002, and began rebounding just two years after the speculative housing bubble began to implode.

“Unfortunately home values don’t come back in the same way in black communities when things happen,” said Althea Saunders-Ranniar, a financial coach and advisor in Baltimore, Maryland, where about 95% of her clients are black.

One of the things Asante-Muhammad and his co-authors found extremely important was focusing on inequality of wealth as opposed to income, because they felt it was a more accurate test of middle-class status. 

“You find first-generation, even second-generation African-American and Latino households that have professional jobs and are making ‘middle-income money’ but they have the wealth of a white high-school dropout,” Asante-Muhammad said. “They’re not truly part of a middle class which would mean financial stability, money to weather challenging economic situations, or money to invest in the economic opportunities of their children.”

The solution, he said, is to “invest in a 21st-century American middle class. We need to make sure, for the first time, that we are investing in a middle class that includes communities of color. 

This generally hasn’t been done before.” Despite all the institutional and historical barriers, Hamilton remains determined to make the lift – even if those investments never come. “I’m mad because I didn’t start 20 years ago, but it’s OK. I dare not be selfish and not pass this knowledge down to my kids – ones who I know have a chance.”

She hopes to pass more than simply knowledge down, and is on track to come up with a down payment for a modest home by late 2018. “In 20-30 years, even if they still have to pay the mortgage, I can tell them: ‘It’s yours. This is yours.’”

The Retirement Crisis Facing African Americans

What's causing it and what could be done to address it

by Rodney Brooks

There’s a saying: When white America catches a cold, black America catches pneumonia. So, if there is an impending retirement crisis in America, what does that mean for African Americans? The answer to that question is discouraging.

There is a huge gap in retirement preparation of African Americans compared to white Americans, generally speaking. According to the Urban Institute’s Nine charts about wealth inequality in America:

*The average white family had more than $130,000 in liquid retirement savings (cash in accounts such as 401(k)s, 403(b)s and IRAs) vs. $19,000 for the average African American in 2013, the most recent data available.

*The wealth gap is growing. The average wealth of white families in 2013 was more than $500,000 higher than that of African American families ($95,000). *In 1963, the average wealth of white families was $117,000 higher than for black families.

*White families accumulate more wealth over their lives than African American families, on average, which widens the wealth gap as they age. In their 30s, whites have an average of $140,000 more in wealth than African Americans (three times as much). By their 60s, whites have over $1 million more in wealth than African Americans (11 times as much).

*According to the Federal Reserve, in 2013, the median white household had $13 in net wealth for every $1 in net wealth of the median black household.

“The American dream has not happened for African Americans and Hispanics,” says Signe-Mary McKernan, economist and co-director, opportunity and ownership initiative at the Urban Institute. “Retirement wealth is at the end of the cycle. A lot of things can happen along the way before you get there.”

The pay gap and the wealth gap are among the many reasons African Americans enter retirement in poor financial shape, says Maya Rockeymoore, President of Center for Global Policy Solutions in Washington, D.C. Other explanations include financial literacy and investing habits.

The Pay Gap

“There is a pay gap when it comes to what African Americans earn when it compares to whites, even when you control for education,” says Rockeymoore. “We are starting with less.”

The hourly pay gap has widened to the worst in 40 years, according to the Economic Policy Institute (EPI) - a roughly 27 percent difference in 2015. Whites earned an average of $25.22 an hour vs. $18.49 for blacks, the EPI says. Declining unionization, the failure to raise the minimum wage and lax enforcement of anti-discrimination laws have contributed to the growing black-white wage gap, according to the EPI.

“We need to be having forums addressing labor-market decisions,” Rockeymoore says. Blacks are earning less than whites and it is not a reflection of talents or skills, she notes. “It is a reflection of discrimination in the labor market. We talk about the gender-pay gap, but we need to talk about the racial-pay gap.”

The Wealth Gap

According to the Federal Reserve’s Survey of Consumer Finances, in 2013, the median white household had $13 in net wealth for every $1 in net wealth of the median black household. Also, according to a Pew Charitable Trusts report, What resources do families have for financial emergencies, the typical white household has slightly more than one month’s worth of income in liquid savings, compared with just five days for the typical African-American household.

The Federal Reserve report said that whites are five times more likely to receive large gifts and inheritances than blacks and the amounts tend to be much larger for whites. “That is one of the main issues,” says financial planner Nick Abrams of AJW Financial Partners in Columbia, Md. “We [African Americans] are starting at ground zero every generation. That is hurting us financially.”

Rockeymoore agrees. “The wealth gap is serious,” she says, pointing to disparities between blacks and whites regarding employer-sponsored retirement plans.

“A significant number of us [blacks] are in jobs where we do not have access to pre-tax preferred retirement vehicles like 401(k) or 403(b) accounts,” says Rockeymoore. Many blacks work in small businesses where such plans frequently are not offered.

“If we do work in jobs that offer tax-preferred vehicles, we tend to not contribute at rates that whites do. And we take out loans out at higher rate,” adds Rockeymoore. One solution, she notes, would be more access to such employer-sponsored plans.

Home ownership also plays a big part in the wealth gap. The typical white household aged 47 to 64 has housing wealth of $67,000; the typical household of color in this age group has zero home equity, according to the December 2016 report, Social Security and the Racial Gap in Retirement Wealth, from the National Academy of Social Insurance.

Debt can limit the ability to achieve other financial goals, especially retirement planning, too. “Among African American employees surveyed who are offered an employer-sponsored retirement account but contribute less than the employer match or do not contribute at all, 40 percent say that paying down debt is a higher priority for them than making retirement contributions, according to Prudential’s 2015-2016 African American Financial Experience.

Financial Literacy

There are also big differences in financial literacy between blacks and whites. Only one in 10 African Americans work with a financial professional compared with one in four white Americans, the Prudential report said.

“Many African Americans have had no history of someone who was a grandfather or someone who gave them some level of financial education in that household,” says James Brewer, president of Envision Wealth Planning in Chicago and president of the Association of African American Financial Advisors. “So, one of the challenges is around some level of financial education.”

Theodore Daniels, president of the Society for Financial Education and Professional Development agrees. “There has got to be more education. People have got to be willing to attend financial education workshops. Some people don’t know what they don’t know. Once they attend, they say ‘I can do this.’ If they are not educated, they are not comfortable making decisions, and they won’t do it,” Daniels notes.

African Americans Tend Not to Invest in Stocks

Some analysts also say that African Americans often shy away from investing in the stock market. “Whatever discretionary income we have, we tend not to invest in equities,” says Rockeymoore. “We don’t have a diversification.” This may be due to a lack of comfort with the stock market.

“African Americans are risk-averse,” says Deborah Owens, a former Fidelity Investments vice president who calls herself America’s Wealth Coach. “So, one of the major reasons they have less in retirement savings is they are ultra-conservative, particularly African Americans who work in the public sector and nonprofit organizations.”

Owens says black investors typically focus on guaranteed or fixed investments that are low-risk or no-risk. As a result, their retirement funds aren’t compounding at a high rate of return.

According to the Federal Reserve, the average balance of African Americans in 401(k)s is only $23,000. And Social Security and the Racial Gap in Retirement Wealth found the average balance for African Americans in pensions and IRAs was $10,300, vs. $105,600 for white Americans.

Owens believes many African American workers don’t take full advantage of all the choices in their employer-sponsored plans because they don’t understand them. “The tendency to be risk averse is directly correlated to their lack of knowledge,” she says.

What Employers and Policymakers Could Do to Help

Brewer believes employers could play a bigger educational role. “It is important for companies or organizations who have higher percentages of African American employees to realize that there are some differences, and they need to bring in people who have some cultural sensitivities to those differences, and come up with a plan to help those groups,” says Brewer.

He says African Americans need financial advice on issues such as having higher student loan debt than white counterparts and, often, a greater need to financially assist less affluent family members. Rockeymoore says African Americans, even in retirement, tend to support other family members, including children and adult children. Also, they are disproportionately taking care of grandchildren, making them unable to save more for retirement.

All in all, says Rockeymoore: “There needs to be a national campaign to encourage young African Americans to save and invest. Home ownership is the pathway to wealth. They [blacks] need to be educated in the homebuying process and also to diversify their investments to include stocks and bonds.”

McKernan believes policymakers also need to take action to close the racial retirement security gap. “This country is built on the premise that it provides economic opportunity,” she says. “But this country continues a history of discrimination and the result of that is passed from generation to generation.”

2016 Nielsen Report: Black Buying Power Has Reached Tipping Point, But How Will Black America Leverage it to Create Wealth?

by David Love

A new report from Nielsen, “The Increasingly Affluent, Educated and Diverse,” explores the “untold story” of African-American consumers, particularly Black households earning $75,000 or more per year. 

According to the report, Black people in this segment are growing faster in size and influence than whites in all income groups above $60,000. And as African-American incomes increase, their spending surpasses that of the total population in areas such as insurance policies, pensions and retirement savings.

“These larger incomes are attributed to a number of factors, including youthfulness, immigration, advanced educational attainment and increased digital acumen. As these factors change African-Americans’ decisions as brand loyalists and ambassadors, savvy marketers are taking notice,” according to Cheryl Pearson-McNeil, Senior Vice President U.S. Strategic Community Alliances and Consumer Engagement, and Saul Rosenberg, Chief Content Officer at Nielsen.

It is projected that by 2060, the Black population will increase from 45.7 million to 74.5 million, with 17.9 percent of the U.S. population. From 2000 to 2014, the rate of African-American population growth was more than double the white rate of 8.2 percent, and 35 percent faster than the U.S. population as a whole.

According to Nielsen, the “youthfulness and vitality” among Black consumers are being driven by a diverse influx of immigrants, who make up one in 11 African-Americans, or 8.7 percent. Further, there has been substantial education growth among Blacks, with high school graduation rates exceeding 70 percent, outpacing the growth for all students nationwide.

In addition, Blacks are making gains in STEM (science, technology, engineering and mathematics) careers, helping to fuel income gains. The largest increase for Black households was in the number of households making over $200,000, an increase of 138 percent compared to a total population increase of 74 percent.

 “The year 2015 represented a tipping point for African-Americans. As voracious media consumers, powerful cultural influencers experiencing burgeoning population growth create an unprecedented impact across a broad range of industries, particularly in television, music, social media and social issues,” according to the report.

Black consumers are digitally empowered and well-versed in social media, helping to shape and shift the national discourse. And Black people are youthful - with an average age of 31.4 as opposed to 39 for whites and 36.7 for the total population and rising in cultural influence, driving mainstream trends in music, television, music and other areas. Therefore, the report notes, those who market to Millennials and young people must reach Black youth.

Other results of the Nielsen report include evidence of strong Black growth among income earners above $100,000 in metro areas of the South, such as Augusta and Columbus, Georgia; Baton Rouge, Louisiana; and Aiken, South Carolina.

The report also found that gatherings, festivals, reunions and other social events are popular among African-Americans. Further, Black buying trends show an emphasis on family and cooking ingredients tied to cultural traditions, and an expectation that the brands they buy will support social causes.

According to Nielsen, “African-American households spend more on basic food ingredients and beverages and tend to value the food preparation process, spending more time than average preparing meals. Other popular buying categories include fragrances, personal health and beauty products, as well as family planning, household care and cleaning products.”

The authors of this report emphasize that as the social and cultural clout of the Black consumer is on the ascendancy, it is incumbent upon advertisers and marketers of consumer brands to develop a long-tern game with the Black community.

As The Atlantic notes, Black buying powers expected to reach $1.2 trillion this year, and $1.4 trillion by 2020, according to the University of Georgia’s Selig Center for Economic Growth. That is so much combined spending power that it would make Black America the 15th largest economy in the world in terms of Gross Domestic Product, the size of Mexico based on World Bank data. By comparison, in 1990, Black buying power was $320 billion. As the largest consumer group of color, in a nation that is becoming increasingly darker, this trend will only continue to have its impact on the U.S.

But in the end what does all of this really mean? We know that the Black community has much money at its disposal. What is the end goal for Black consumers, to merely buy more “stuff” that depletes in value and gets us nowhere, or rather to invest, own and build our wealth?

As corporate America and the business community vie for the patronage of the African-American community, Black dollars must serve as leverage. Black consumers must use their resources wisely - reward friends and punish foes accordingly, support Black-owned business and those brands who are in sync with our interests, values and aspirations.

People and forces outside of our community want our business, but many will do little to nothing for it, or more importantly, for us, with no investments in our community and no jobs for Black people. Consider that companies spend $75 billion a year on advertising, but only three percent of that goes to Black publications, Black TV and radio stations and the casting of Black actors, as Pearson-McNeil told Marketplace.  

And yet, Black folks don’t have jobs because they are creating so many jobs for other communities. For all of this wealth, we don’t feel wealthy because we are sending all of our money outside the Black community. 

Dr. Boyce Watkins notes that we need to harness this wealth. Watkins said that with over $1 trillion, one can buy: 1,000 NFL teams; 3,000 predominantly white universities; the annual budget of 1.4 million charter schools across the nation; pay the tuition at Howard University for 50 million students for an entire year; buy 854,000 community centers; purchase NBC, ESPN and CBS and still have $1 trillion left over.

“When you look at Black unemployment, you see that Black unemployment is typically twice as high as white unemployment,” Watkins said. “Ask yourself this: Why is it that we give away $1.1 trillion in spending power when that $1.1 trillion could, according to most economists, create 12.2 million jobs in the Black community?” He added: “So, the point of all of this, the reason I’m telling you all of this, is because you have to understand one important, fundamental fact.  Your money is your power, and you cannot give your power away.”

Further, as Black consumers are not respected, they continue to face institutional racism, policies that undermine their families, brutal police harassment tactics and mass incarceration. If #BlackLivesMatter, it also means that they must matter to Black people and that we can no longer pay good money to finance our own oppression.  

Martin Luther King and others had the right idea with the Montgomery Bus Boycott, as Black people were disrespected and forced to sit in the back of the bus. Similarly, Adam Clayton Powell led his own bus boycott in New York because the Transit Authority did not hire African-Americans, and he was involved in struggles against Harlem Hospital, Harlem drug stores, and other businesses that refused to hire Black employees. This is what economic boycotts and disinvestment in apartheid-era South Africa was all about.

As the Philadelphia Tribune reported last month, there is a new movement to economically empower the Black community throughout the country. LetsBuyBlack365 is a national grassroots movement that utilizes the online community and local networking to harness Black buying power, with a goal to create jobs and resources to help Black people. The organization’s video tells us all we need to know:

Nataki Kambon, a spokeswoman for the group, told the Tribune that this is a critical time for their efforts, as Black people watch with dismay as Black people are killed by police and the offending officers are not indicted. “What stands out most is that these things don’t happen in communities where they have political power.

Political power comes from having economic power, through having businesses that can lobby and represent their interests,” Kambon said. “It puts empowerment on the individual to say, ‘What can I do right now? I can’t do anything about Sandra Bland, I can’t do anything about some of these other people but I can do something about political power in order to have some sort of social justice for the future,’” she added.

“If our communities are to change economically, it is going to be up to the African-American community and business leaders lead the charge. We can help win the war on poverty in our communities,” said Chet Riddick, head of the Alpha Enterprise Group.

Riddick told the Tribune that Alpha has formed a purchasing agreement with Let’s Buy Black LLC. “It is important for our African-American businesses to figure out how to grow to scale because if we grow to capacity, we can then hire more people from out of own communities. We would be able to train and hire people from our own community so they would be able to lead productive lives,” he added.

Meanwhile, the Prosperity Foundation is creating a philanthropic vehicle to sustain and improve the state of Black America. “Leveraging our money to create any and everything to move our agenda and people forward - that’s the goal,” Prosperity Foundation founder and President Howard K. Hill told the New Haven Register. “We want to help as many of our people as possible, not just on the granting side, but as well as job creation.”

The foundation plans to create a statewide African-American community foundation in Connecticut, which they hope to duplicate nationwide.  “In many areas of our community there are often times layers of distrust which prevent us from moving forward as a collective unit. It’s a result of living in America, where we’ve been systematically oppressed and encouraged not to be a unit,” Hill added.  

“We have a lot to heal from and creating something for ourselves for future generations is going to be a very difficult process,” he said. “It’s a process we need to continue to work at in order to change the outcomes for our community.”

Black Politics Without Economics - Some Voting no Financing

by Kenny Anderson

With Black elected officials on every level of American government the past 40 years economic progress for Blacks largely stalled out in the 2000's, and it went sharply into reverse during the Great Recession of 2007-2009, when all Americans experienced big drops in wealth, income, and jobs.

The election of Barak Obama as the first Black president in 2008 at the height of the subprime mortgage crisis, Black home ownership had dropped back to 46 percent. As defaults and foreclosures continue to take a heavy toll in Black communities, it has fallen further to 43 percent today.

As in all previous periods of recession, Blacks were set back further than whites during the Great Recession, with Black unemployment soaring to a peak of 16.7 percent and reaching nearly 50 percent for Black youths. Reflecting the historic disparities with whites, Blacks also have had to struggle harder to get back to break-even since the recovery began in June 2009.

By some measures, in fact, the latest so-called Obama economic recovery has been perhaps the harshest ever on Blacks. Median income for Black households has dropped 10.9 percent since the recovery began, compared with a 3.6 percent fall for white households, according to Sentier Research, an economic consulting firm.

White Americans now have 22 times more wealth than Black Americans, a figure that has nearly doubled during the recession. According to the Census, in 2010, media household net worth for whites totaled $110,729. For Blacks, the figure was $4,995.

According to Kevin Gray author of ‘The Decline of Black Politics: From Malcolm X to Barak Obama’ notes that “Obama hasn’t done much of substance or impact to ease, let alone end, the depression in the Black community; he’s been on the side of the banks and Wall Street.”

Black Purchasing Power and the Failure to Create Black Businesses

Blacks in America have undeniable buying power that will reach a whopping 1.4 trillion by 2019. But even with incredible purchasing power African Americans aren’t spending it with Black-owned companies.

A recent report by Nielson and Essence, only a small part of Black America’s buying power is spent at Black-owned businesses. In fact, “Blacks spend less money in Black-owned businesses than other racial and ethnic groups spend in businesses owned by members of their groups, including Hispanics and Asians,” studies have shown.

This buying gap has wide-ranging ramifications. If more Black dollars were spent on Black businesses it would create much-needed jobs in the African-American community. 

According to a study by the Kellogg School of Management at Northwestern University, “between half a million and a million jobs could be created if higher-income black households spent only $1 of every $10 at Black-owned stores and other enterprises.”

Amos Wilson excerpt from Blueprint for Black Power:

"Black politics and activism without Black ownership of and control over primary forms and bases of power such as property, wealth, organization, etc., is the recipe for Black political and non-political powerlessness. The rather obtuse pursuit of political office and the ballot box as primary sources of power by the Black Community and its politicians without its concomitant ownership of and control over important economic resources has actually hindered the development of real Black Power in America.”

“More ominously, there appears to be a paradoxical and positive correlation between the number of Blacks elected and appointed to high office and retrogressions in the civil and human rights extended to Black Americans during the past twenty years. Increases in homelessness, poverty, unemployment, criminality and violence in the Black community; disorganization of the traditional Black family, inadequacies in education, increases in health problems of all types, and host of other social and political ills have all attended increases in the number of Black elected and appointed officials."

“That is, the more elected and appointed Black politicians, the more socio-economic problems the Black community has suffered. While we are not implying a causal relationship between the increase of the number of Black appointed and elected officials and the increased misery indices of the Black community, we are implying or asserting that their increase obscures those things which are responsible for and do little to ameliorate or uproot the increasing prevalence of social and economic problems in the Black community. The activities of Black politicians, given the current inadequacy of social organization and economic resources, harmfully distract the Black community’s attention from recognizing and eradicating the true causes of its problems and the remediation of its sense of powerlessness."