Annual Edition 'Buying Power of
Black America' report breaks down billions in expenditures Black
consumers are responding to tighter economic condition by focusing more of
their spending on items and services that improve their homes and
lifestyle. That's one of the trends revealed in the 15th annual report,
"The Buying Power of Black America," published by Target Market News. The
report analyzes spending for black households in 2008 and finds that
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New study says
wealth gap between blacks and whites has quadrupled since mid 1980s
2010) The wealth gap between white and African-American families
increased more than four times between 1984-2007, and middle-income
white households now own far more wealth than high-income African
Americans, according to an analysis released on Monday by the Institute
on Assets and Social Policy (IASP) at Brandeis University.
IASP, in a research brief, also reported that many African Americans
hold more debt than assets and at least 25 percent of African-American
families had no assets to turn to in times of economic hardship. The
fourfold increase in the wealth gap, it said, reflects public policies,
such as tax cuts on investment income and inheritances, which benefit
the wealthiest and persistent discrimination in housing, credit and
"Our study shows a broken chain of achievement. Even when African
Americans do everything right -- get an education and work hard at
well-paying jobs -- they cannot achieve the wealth of their white peers
in the workforce, and that translates into very different life chances,"
said Thomas Shapiro, IASP director and co-author of the research brief.
"A U-turn is needed. Public policies have and continue to play a major
role in creating and sustaining the racial wealth gap, and they must
play a role in closing it," said Shapiro, author of The Hidden Cost of
Being African American: How Wealth Perpetuates Inequality and the
co-author of Black Wealth/White Wealth.
Wealth, what you own minus what you owe, allows people to start a
business, buy a home, send children to college and ensure an
economically secure retirement. Using economic data from the same
nationally representative set of families from 1984 to 2007, the IASP
analysis found that the real wealth gains and losses over the time
demonstrate an escalating racial gap.
Over those 23 years, it said, the racial wealth gap increased by $75,000
– from $20,000 to $95,000. Financial assets, excluding home equity,
among white families grew from a median value of $22,000 to $100,000
during that period while African Americans saw very little increase in
assets in real dollars and had a median wealth of $5,000 in 2007.
Summing up all assets and debt, one in 10 African Americans owed at
least $3,600 in 2007, nearly doubling their debt burden in real terms
since 1984, IASP said.
The growth of the racial wealth gap significantly affects the economic
future of American families, it said. The current gap is so large that
it would pay tuition at a four-year public university for two children,
purchase or make a solid down payment on a house, or provide a nest egg
to draw upon in times of job loss or crisis.
"The gap is opportunity denied and assures racial economic inequality
for the next generation," said Tatjana Meschede, a co-author of the
Notably, IASP's analysis found that by 2007, the average middle-income
white household had accumulated $74,000 in wealth, an increase of
$55,000 over the 23-year period, while the average high-income
African-American family owned $18,000, a drop of $7,000. That resulted
in a wealth gap of $56,000 for an African-American family that earned
more than $50,000 in 1984 compared to a white family earning about
$30,000 that same year.
Those figures, IASP said, make it clear that higher income alone will
not lead to increased wealth, security and economic mobility for African
Americans. Consumers of color face a gauntlet of barriers -- in credit,
housing and taxes -- that dramatically reduce the chances of economic
mobility, it said.
Indeed, the data indicate that the general trend in lending, in which
consumers of color pay more for accessing credit, increases their debt
and blocks opportunities to move forward, putting them at a severe
economic disadvantage. These are concerns that must be addressed through
the creation of a Consumer Financial Protection Agency, now being
debated in Congress, and other policy changes, IASP said.
"The data suggests we need renewed attention to public policies that
provide real opportunities for advancement by reducing barriers to
mobility inherent in our tax system and increasing transparency,
regulation and access in our housing and credit markets," said Laura
Sullivan, another co-author.
Several factors help explain why improving targeted public policies
would reduce the racial wealth gap and lessen the increased reliance on
debt. One factor is that over the period studied there was an increasing
dependence on credit markets to make ends meet. Among those with no
financial assets, credit is often an emergency resource to help cover a
job loss or medical emergency.
A second factor is that deregulation of the lending market brought a
proliferation of high-cost credit, including securitized subprime and
predatory loans, payday lending and check-cashing stores. Consumers of
color were targeted in this market and resorted more frequently to
credit cards and other forms of high-cost debt in the absence of assets
or extended family resources to draw upon.
"The data make a critical contribution to the debate today about how to
ensure greater economic security and opportunity for all our citizens. A
racial wealth gap affects all of us because it means that a large
portion of the population cannot contribute to building the wealth and
strength of our nation, and that is a drain on us all," said Meizhu Lui,
director of the Insight Center for Community Economic Development's
"Closing the Racial Wealth Gap Initiative."
The Institute on Assets and Social Policy is a research institute at the
Heller School for Social Policy and Management at Brandeis University
dedicated to promoting a better understanding of how assets and
asset-building opportunities improve the well‐being
and financial stability of individuals and families left out of the
economic mainstream. IASP pursues its mission through original research,
policy analysis, program evaluation, technical assistance, community
engagement, organizational capacity building, and leadership
development. For more information, visit: