Big Spenders, Small Investors: Blacks Have Little to Show for Hard-Earned Dollars
Stacy M. Brown | 9/18/2013, 3 p.m.
Blacks also spend wildly to keep up their appearances.
The black hair care and cosmetics industry counts as a $9 billion a year business, but while African Americans are spending the most, they are profiting the least, said officials from the Black Owned Beauty Supply Association (BOBSA) in Palo Alto, Calif.
Beauty product lines designed for African Americans were once 100 percent owned and operated by blacks, today other ethnic groups control more than 70 percent of the market, a BOBSA spokesperson said.
Another report, released in May, titled, “The African American Financial Experience,” revealed that blacks have been hurt to a greater degree than any other group during the Great Recession.
The study, produced by the Prudential Company in Newark, N.J., noted that blacks were more likely to lose jobs and to own homes with appraised values that had fallen below what was owed on the mortgage.
“When most black people buy homes, we hurt ourselves economically,” said Dorothy A. Brown, professor at law at Emory University in Atlanta and a former special assistant to the Federal Housing Commissioner at the U.S. Department of Housing and Urban Development in Southwest Washington, D.C.
Home ownership has been an important vehicle in creating a solid white middle class, but it has not done the same for most black homeowners, said Brown, 53.
Officials at the Brookings Institution in Northwest Washington, D.C., said poorer white neighborhoods had more home value per income than poorer minority neighborhoods and, even when homeowners had similar incomes, black-owned homes were valued at 18 percent less than white-owned homes.
The current homeownership rate reveals that 73.5 percent of whites own homes while approximately 43.9 percent of African Americans are homeowners, according to the Harvard Joint Center for Housing Studies State of the Nation report for 2013.
“The recent crash and subsequent rebounding of the market, fiscal cliff jitters notwithstanding, show the white median net worth is down by only 16 percent while the black median net worth is down by 50 percent,” Brown said. “This is because the stock market has significantly rebounded and compensated whites’ losses in home equity, but blacks, without comparable stock investments, have not benefited.”
The Brookings study also revealed that, while many whites are comfortable investing in the stock market, most blacks are not.
Sixty percent of African Americans have less than $50,000 saved in company retirement plans and only 23 percent have more than $100,000.
The loyalty blacks have to their church also has proven costly, said officials at Faith Communities Today, a nonprofit based in Hartford, Conn.
A 2013 study revealed that black churches have collected more than $420 billion in tithes and donations nationwide since 1980, an average of $252 million a week.
“What people fail to see and understand is that, the church pastors aren’t waiting for miracles to fund their lifestyles, they don’t have to pray, day in and day out, to make their ends meet,” said Northwest resident and author, Byron Woulard.
“They are getting rich off God, not from God,” he said.