The next time you hear someone collectively ask the black community "What do you have to lose?" please tell that person the answer: $1.2 trillion. The University of Georgia's Selig Center for Economic Growth says Black Buying power is expected to reach that level this year, and hit $1.4 trillion by 2020, meaning if black wealth were a country, it would be the 15th richest nation on the planet.
This is not a political statement. Look across the aisle or on you screen, and you will hear a conversation about blacks that is grounded in a perspective that centers on weakness and 'lack.'
Changing the Dialogue
Fear and emotions can often make us miss what's happening as a normal part of evolution. Often missing from the dialogue around blacks and money is that income growth rates of black households in the United States are outpacing those of whites at every annual income level above $60,000.
In fact, the largest increase for African American households occurred in the number of households earning over $200,000, with an increase of 138%, compared with a total population increase of 74%.
None of this undermines the reality, however, that there are a whole host of factors including racism, lack of access to capital, and lack of opportunities to build knowledge and experience when it comes to money, that have been real barriers for the black community.
When you take a look at the financial history of blacks in the United States, however, the fact that we have become such an economic force is one of the greatest examples of resilience in modern history.
Major Money Moments in Black History
It is imperative that we understand the financial history of blacks in order to help reframe the conversation around the group. For example, on March 3, 1865, President Abraham Lincoln tried to improve the financial circumstances of blacks by creating the Freedman's Savings and Trust Company, commonly known as the Freedman's Bank.
Within 10 years, those newly freed slaves amassed $57 million. They built communities, schools, hospitals, and really created their own economy. Due to corruption, and reckless spending, however, the institution failed in 1874. The depositors were never reimbursed, despite efforts by Frederick Douglass to secure a promise from Congress to reimburse 65% to the depositors who had money in the institution. The deposits were never reimbursed. That money would have been trillions of dollars in the community today.
Turn the clock forward, and between 1880 and 1930, millions of blacks moved north as farming and sharecropping became less lucrative, and new jobs in industry were being created in the north, according to the Federation of Southern Cooperatives Land Assistance Fund. Land ownership among blacks peaked at 15 million acres in 1910, of which 218,000 black farmers were full or part owners. A steady decline of landownership begins after that. Among households whose wealth grew during this time, the number of years owning a home accounted for nearly 30% of the difference in the relative growth of wealth between white and black families.
Look only a few years back, and you can see how the predatory lending practices that led to the housing market bust, wreaked havoc on the black community. Not only did 240,000 blacks lose their homes, but by 2031, a typical Black household's wealth is forecast to be nearly 40% lower than it would have been without the Great Recession. As a result, the overall wealth disparity between White and Black homeowners, which had been forecast to drop to 4.0 by 2031, will instead grow to 4.5 according to the ACLU.
Rising Above
In spite of these and other tremendous setbacks that have left lasting emotional, psychological, and financial tolls, Blacks have emerged as a major economic power, and clearly there is a lot that all groups can learn from their experience. The black community has many insights to share, and should be discussed as such.
Policymakers, lawmakers, and educators should consider opportunities for the black community that empowers us with the knowledge, education, and confidence that is needed to transcend these costly challenges, and allow us to step into our economic power.
I am excited to collaborate with Rainworks Omnimedia on the development of Eye on Money: Black Finance 360°, a traveling museum exhibit, designed to give a 360° looks at Black finance in America, so that we can understand the past as it relates to the present and future. We will use this story of resilience to empower the black community with financial management skills, so that it can lift itself up and claim all of the wealth that it has created in every way.
For financial professionals: Click here to link to information that will help you and those you serve understand the complexities of the relationship blacks have to money.
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