Monday, November 19, 2007

Our Bleak Economic Realities

Our Bleak Economic Realities

“Black households were especially unlikely to hold financial assets such as stocks and bonds. In 2004, the average financial wealth of black households (as shown in Table 5.6, fourth panel) was only 15% of the average financial wealth for white households, an increase from 12% in 2001. The median financial wealth for blacks (as shown in the last panel of Table 5.6) was just $300, less than 1% of the corresponding figure for whites. The vast and lasting disparity in the distribution of wealth between blacks and whites is indicative of the lasting legacy of discrimination. To summarize, the data on net worth reveal a highly unequal distribution of wealth by class, which has been further exacerbated by race. A significant share of the population has little or no net worth, while, over the last 40 years at least, the wealthiest 20% has consistently held over 80% of all wealth and the top 1% has controlled at least a third. There is no reason to believe these wealth disparities will lessen anytime soon.” From, The State of Working America

Black folks like to brag about the hundreds of millions of dollars of disposable income or consumer power we supposedly have. A logical question might be if we have so much money at our disposal, why are we as a group in such bad shape financially? The Nielson Information and Media Company, the people who track our television watching and buying habits claim that by the year 2012 we (African-American consumers) will spend 1.1 trillion dollars; that’s trillion with a T. Alas little of that money will find its way back into our community, to our coffers or recycle itself in ways that produce wealth for us. In fact in an article on the Nielson Website at its Consumer Insight link we can see a report that urges corporate retailers to focus in on the African-American consumer. “Marketers looking to target a high-growth, high-potential audience need look no further. The African-American population segment is projected to increase more than four times faster than the white segment by 2025 (26% vs. 6%). Another reason to tap into the potential of the African-American market is the high degree of home ownership (43%) and education level, which links directly to earning potential (23% of African-Americans hold a bachelor’s degree). The Selig Center Buying Power Study found that the African-American market is much more geographically dispersed than other minority markets, and that five states boasted substantial African-American economies in 2006, measuring more than $50 billion each; New York ($75.6 billion), Texas ($58.1 billion), California ($55.7 billion), Georgia ($54.4 billion) and Florida ($52.7 billion). In addition to being spread across the map (see top 10 markets below ranked by DMA), African-American shoppers are equally varied in where and how they buy.” Nielson Consumer insight Magazine Please note the Nielson magazine is telling white businesses how to increase their bottom line, target black folks!
White folks study us assiduously to discern and ascertain our habits and patterns. They know human beings are creatures of habit and if you know a person’s habits you can predict (and if you are clever or cunning enough and you have the means, you can manipulate) their behavior. Whites know we have been conditioned to be exocentric (a sociological term meaning outer directed or oriented away from self/ethnic group), thus unlike all other ethnic groups in this country, Africans in AmeriKKKa tend to spend almost all of our money with other folks who don’t look like us and who care little or nothing about us. People who study us know we are exocentric and they are extremely eager to exploit our malady to their advantage. “Most marketers use strategies to target black consumers based on the belief that consumption is a positive means of self and collective identity expression. They recognize that blacks have been historically marginalized and now want to be included among society. According to the Consumer Expenditure Survey, as a group, blacks today spend more money on items such as children’s footwear, children’s apparel, and footwear. Sales and Marketing Management points out that black women spend 41 percent more than their white counterparts on personal care products. Such spending habits reveal how blacks regard appearance as a means of being socially accepted and how marketing is directed toward them on this basis. According to Lamont and Molnár, there is a black prioritization of conspicuously consuming for assimilation over strengthening public facilities such as churches and schools. This is due to the fact that consuming goods associated with social status are portable, whereas something like attending the best school is not. This value system is what many critics of black consumption deem harmful to the black community. Because marketing is directed to as young a demographic as possible to ingrain the quest for social acceptance through consumerism, young urban blacks are bombarded with images and symbols of success that they cannot afford. ” - Paradoxes in African-American Consumption: An Examination of Marketing Strategies and Black Identity Zahida Sherman
Our conspicuous consumption makes others rich while severely impoverishing us. We have become a sub-group of mindless consumers, foolish shoppers with few durable goods and more importantly few appreciating goods to show for it! “An important feature of the wealth distribution is that a significant percentage of households have low net worth, and many have zero or negative net worth. These households are extremely vulnerable to financial distress and insecurity. Table 5.5 reports the share of all households with zero or negative net worth or net worth less than $10,000. After substantial improvement from 1962 to 1983, these shares have shown small but consistent improvement since 1998. In 2004, 17.0% of all households had zero or negative net worth, while 29.6% had net worth of less than $10,000. In terms of race, the experience of black households differed significantly from that of white households, an aspect of wealth distribution that will be discussed in more detail in the next section. The third panel of Table 5.6 gives racial breakdowns for households with zero or negative net wealth. In 2004,
more than twice the percentage of black households (29.4%) as white households (13.0%) had zero or negative net worth. The relative circumstances of black households improved substantially from 1989 to 1998, with a 13.3 percentage-point decline in households with zero or negative net wealth. However, black households had an increase in this statistic from 1998 to 2001, jumping from 27.4% in 1998 to 30.9% in 2001 and not much improvement in 2004.” The State of Working America page 255- 256
As you can see from The State of Working America report our bizarre/unwise spending habits have not profited us at all, income or wealth wise. However non-African marketers are eagerly and anxiously targeting us to enrich themselves! As the report readily acknowledges the low degree of wealth in the African-American community is a residual of a centuries long legacy of slavery and legalized racial cast/oppression. However even within that stifling social milieu, we had opportunities to advance but failed to capitalize upon them. Despite calls by righteous leaders like Booker T. Washington, Marcus Mosiah Garvey, Nobel Drew Ali and Elijah Muhammad, who urged us to unite and establish our own economic base black folks failed to embrace a practical collectivist ethnocentric economic and political philosophy. In the end this failure may prove to be our ultimate undoing. As the US economy and economic system faces a major meltdown, the resulting devastation and the woeful lack of preparation on our part will make what we saw during Katrina look like a picnic. Only this time the devastation will be exacerbated by our own economic unpreparedness instead of a faulty flood control system and our people’s inability to evacuate a city. A chart in the 2005 edition of The Buying Power of Black America an annual report published by Target Market News which tracks African-American expenditures showed no savings nor investments ! So when the economic tsunami hits, even bougie Blacks will take a severe hit and the resulting devastation will not be pretty. What this means is as a group we will have few resources to pool together to stave off depression like conditions in our families and communities. This is not to scare you or cause panic, it is to inform you what is coming so we can take proactive measures or at least prepare psychologically for the impending day of economic reckoning.



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