W hat is the economic state of black America?
That is the question radio and television hosts Tavis Smiley and Tom Joyner will be addressing in Houston on Feb. 25. The two men, who have the ears of millions, are hosting a symposium called “State of the Black Union 2006: Economic Empowerment – Building and Leveraging Wealth in the African American Community.”
Smiley invited me to join the panel of black educators, commentators, authors, business owners and policymakers to find out why blacks did not generally benefit from the stock market boom in the 1990s or the recent housing market explosion.
With the recent deaths of two great civil right leaders, Rosa Parks and Coretta Scott King, some in the black community have been bemoaning the economic state of black America.
Why is it that many African Americans have not experienced the same prosperity of many other consumers who took advantage of low mortgage rates to significantly increase their wealth?
When I look at some statistics, it’s easy to see why some black leaders are concerned that too many blacks are bling-bling broke.
According to Target Market News, which specializes in tracking marketing, media and consumer behavior, blacks spend more per capita than whites on many food, clothing and entertainment products and services.
Many point to the company’s survey to criticize black spending. For example, blacks spend about $22 billion of their income on apparel products and services and almost $29 billion on automobiles.
Black households had $679 billion in earned income in 2004, an increase of 3.5 percent over the $656 billion earned in 2003.
If you use the overall earned income figure, it doesn’t appear as if blacks are spending wisely. But on a household basis, the annual median income of blacks in 2004 was just $30,134, according to the U.S. Census Bureau. Asian households had the highest median income: $57,518. The median income for non-Hispanic white households was $48,977. For Hispanic households, it was $34,241.
So the fact is that a great deal of black spending is on necessary things such as health care. The uninsured rate in 2004 was 11.3 percent for non-Hispanic whites, but almost 20 percent for blacks. African Americans, several studies have shown, also are unfairly charged higher interest rates for big-ticket consumer items such as cars.
One of the keys, though, to prosperity is through homeownership.
While blacks spend $110 billion on housing, only 48 percent of black households own their own home compared with 75.7 percent for white households, according to the most recent Census Bureau figures. In fact, African American homeownership has declined one percentage point from the fourth quarter of 2004. That number should be going up, not down.
Own a home and you have an asset that can boost your net worth. You can – as many people do – also use that home’s equity to bail yourself out of debt trouble or borrow to send your children to college or pay for a wedding or help them with a down payment on their first home.
Another equalizer in this race to prosperity is a college education.
And here the news on this front is good for the black community.
The number of black college students in fall 2004 was 2.3 million, roughly double the number 15 years earlier. Education does pay off.
According to U.S. Census Bureau statistics, people with a bachelor’s degree earn 62 percent more on average than those with only a high school diploma. Over a lifetime, the gap in earning potential between someone with a high school diploma and someone with a bachelor’s degree or higher is more than $1 million.
It’s also imperative that blacks invest.
According to the latest survey of black investors by Ariel Capital Management and Charles Schwab, many higher-income African Americans are retreating from the stock market.
After five straight years of steady increases in the percentages of African Americans who own stocks, only 61 percent of blacks surveyed had money in the stock market in 2004, down 74 percent and approaching the 1998 level of 57 percent. White stock ownership, meanwhile, is at 79 percent, virtually unchanged over the last six years.
No question that black households have to do better, as do many households. But I cringe when those in my own community talk as if blacks are genetically predisposed to spending on cars and clothes. I have the opportunity to communicate with hundreds of consumers of all ages, race and economic backgrounds and America – not just black America – is a nation of conspicuous consumers.
I hope we frame the Houston discussion with that in mind. C-SPAN will have live coverage of the event. So tune in.
My answer to how blacks can achieve prosperity is to follow the advice of my grandmother, Big Mama. She always told me that it doesn’t matter how much you make but how you make do with what you have. This from a woman who retired with more savings and financial strength than folks I know – black, white, Hispanic or Asian – who make more in a few months than she made in an entire year.
Washington Post Writers Group
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