A recent report by the Heartland Alliance confirms what much of Black America already knows: Black America is in serious trouble economically, and many Black people are living in deep poverty. Black people in America are not just poor by American standards; many of us are third-world poor. While some economists praise the American economy with talk of low unemployment, record housing starts, and a booming gross national product, none of this tells the real story of a quickly declining Black economy within America. For instance, 30% of Black Americans in Illinois live in poverty compared to only 8% of Whites.
According to the Children's Defense Fund, nearly one million Black children in the United States are living in extreme poverty. With the official national unemployment rate at 4.4%, the official unemployment rate for Blacks is 10%. Of course, the official unemployment rate does not include people who have given up looking for work and those who are underemployed. In 2003 in New York City, 48.2% of Black men ages 16 to 64 were officially unemployed! As American cities become more expensive to live in, Black people, with our declining wealth, are forced by economics to leave these cities. Although things might be good economically in America, the majority of Black people are living through their worst economic depression since slavery.
Ironically, even as Black people earn more money in the United States, the wealth gap between Blacks and Whites grows dramatically. The indices that catalogue the misery in the Black community--poor and useless educational preparation, mass unemployment, low-quality housing stock, disintegrating communities, and failing families--are rising. According to a 2004 study by the Pew Hispanic Trust, between 1996 and 2002, the median net worth of Blacks dropped by 16%. Black net worth declined to a paltry $5,998 per household while the net worth for White households grew by 17% during the same period to $88,651. Twenty percent of Black median net worth was in cash, approximately $1,200, with the balance comprised of home equity.
"Black families lost 25% of their wealth during the jobless recovery from the recent recession," said Thomas Shapiro, a Brandeis University professor of law and social policy. This means that more Black people are struggling in 2006 with such basic conditions as securing employment, paying rent or a mortgage, paying utilities and insurance, obtaining affordable health coverage, and buying food. Shapiro also stated that only 26% of Black families could survive more than three months after a major income interruption. The other 74% would be forced to seek government assistance, dip deep into savings, sell off assets, relocate with a friend or relative, file bankruptcy, or become homeless.
In this economic depression, college is an unaffordable luxury for many Black people. Higher education, once the reliable key to moving from low-income to middle-income status, is no longer an option. The portals that lead away from poverty, crime, and despair are closing or have already closed. Generational poverty is inextricably intertwined with race. Hope for breaking the poverty cycle diminishes and another generation of the impoverished is born. Many Blacks in America are slipping from poverty to deep poverty into a third-world status.
We as Black American families cannot wait for the government to save us. Annually, Black Americans generate about $700 billion within the American economy. However, a 2005 report by the Target Market Group shows that we don't use our dollars wisely to improve our plight in America. For example, in 2004, we had collective purchases that included $22 billion for clothes, $10.7 billion for furniture, $28.7 billion for cars, $14 billion for phone service, $3.7 billion for consumer electronics (not computers) and 2.3 billion on alcoholic beverages. Unfortunately, the only area where we showed restraint in our spending was on books where we spent only $257 million, down from $303 million in 2002. We spent more on our finger nails and our hair, $6.3 billion on personal care, than on books and reading materials.
We must take control of our economic destiny. As a way to improve Black personal finances, our family wealth, and our community economies, and to help lift many Blacks out of deep poverty, please consider:
Ten Key Solutions for Black Economic Well-Being:
- Start your own business. Few people acquired wealth working for someone else. By starting your own business, you can hire family, friends, and community members. Additionally, you build the economy of your community. Finally, you will also be able to pass on a successful business as a family inheritance to your children and grandchildren.
- Get as much education as you can. Higher levels of academic and technical education readily translate into better employment, higher income, and more wealth. Education begins with you teaching your children to read well. The new hierarchy of human needs is air, water, food, and education. Without education, you might as well be dead.
- Stop renting an apartment. Save enough money to make a down payment on a house. Then buy a house. The largest portion of the net worth of most families is in home equity, not cash assets.
- Open savings accounts for your children. Teach your children the value of money and how to earn, save, and invest it at an early age. Take personal finance classes so that you will become the best teacher for your child on the issues of money, saving, investing, and credit.
- First, invest your money and your time in your skills, your knowledge base, and your self-improvement -- not in cars, clothes, furniture, frivolous electronics, sports, games, the lottery, etc. Second, learn how to let big companies work for you rather than you only working for them through stock ownership. And third, invest your money in the U.S. and global stock markets. The world is much bigger than just the United States.
- Manage your credit carefully and avoid unnecessary debt. Beware of spending excessive amounts on holidays, birthdays, vacations, weddings and funerals. Learn to pay cash for what you need or don't buy it. And forget about what you want. Create a household budget that includes food, living space, utilities, and live by it. Save for a rainy day. It's coming!
- Two-person headed households are more viable economically than one-person headed households. Marriage can be an economic advantage when both parties are aligned on financial priorities and fiscal realities. Sixty-two to sixty-five percent of Black children are born into single-parent households and begin life trying to climb out of poverty. Most of them never make it.
- Create a living strategy that includes good nutrition, plenty of exercise, and proper rest so that you can share your good fortune in a long, healthy life with your family and friends,
- Tithe. Give to your church or to a social cause.
- Create a Will to pass on your accumulated wealth to the next generation. Studies suggest as much as 70% of most households' current wealth was inherited from a previous generation.