Black Wealth Is Black Power
These are the best days in American history for African Americans to build wealth. Here’s why? The stock market is booming; interest rates are historically low, black unemployment has dropped, and the economy is doing reasonably well. Opportunities for blacks to build wealth have never been better.
I could not honestly make this assertion 50 years ago when our nation practiced legalized segregation and discrimination against African Americans. As the Kerner Commission reported in 1968, “Our nation is moving toward two societies, one black, one white—separate and unequal.” Because our government failed to implement recommendations the Kerner Commission made, African Americans remained disenfranchised and locked out of our nation’s prosperity.
Increasing Black Middle-Class
Things have changed much since the seventies. African Americans moved into the middle-class in record numbers following the enactment of the Civil Rights Act, Voting Rights Act, and Fair Housing Act. Racism exist and there are still many hurdles for African Americans, but there are many more financial opportunities.
These opportunities make it very possible for African Americans to build wealth if they know and practice wealth building strategies consistently. No person should experience chronic poverty in this nation anymore except perhaps those who suffer from a severe impairment. Even racism is no longer a legitimate reason to live in persistent poverty.
Black Wealth v. White Wealth
Although opportunities abound today for African Americans, we still lag way behind white Americans in building wealth. It has taken longer than the past fifty years to overcome several centuries of chattel slavery, legalized segregation, and systemic racism. The Economic Policy Institute (EPI) makes this observation:
Average wealth for white families is seven times higher than average wealth for black families. Worse still, median white wealth (wealth for the family in the exact middle of the overall distribution—wealthier than half of all families and less-wealthy than half) is twelve times higher than median black wealth. More than one in four black households have zero or negative net worth, compared to less than one in ten white families without wealth, which explains the large differences in the racial wealth gap at the mean and median.
Before going further let’s define wealth. Most people would describe wealth as income, money or property. One needs money and income to build wealth, but these things do not represent wealth necessarily. Plenty of people make lots of money but have no wealth.
With this distinction in my mind, here’s my simple definition of wealth. It is a person’s net worth or the value of his holdings after he subtracts his debts from his assets. For example, if a person has $300,000 in assets (e.g., house, cars, furniture, jewelry, retirement, etc.) but $400,000 in debts (e.g., student loans, credit cards, mortgage, etc.) his wealth or net worth is -$100,000. He has lots of things but no wealth.
Knowing the definition of wealth helps us avoid the trap of spending money on shiny things that make us look wealthy, but add no value to our net worth. We can avoid the tricks of advertisers that know our spending habits and target us with ads of fancy cars and clothes. They know we buy these things to satisfy our need for status and appearance.