to attend the 2008 Marketing to African-Americans with Excellence (MAAX)
Summit? Order the workbook which contains hard copies of the presentations
made by some of the nation's top experts on the Black consumer marketing,
R. L. Polk
Starcom MediaVest Group
U.S. Census Bureau
2009 by Target Market News Inc. All rights reserved
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Ariel/Hewitt study shows ethnic disparities in 401(k) saving, investing
7, 2009) Significant differences can be found across race and ethnicity
in the way U.S. employees save and invest in their 401(k) plans,
according to 401(k) Plans in Living Color: A Study of 401(k) Savings
Disparities Across Racial and Ethnic Groups--The Ariel/Hewitt Study.
This pioneering report --the largest, most comprehensive examination of
401(k) saving and investing behaviors of African-American, Hispanic,
Asian and white employees -- found that regardless of age or income,
African-American and Hispanic workers have lower participation rates and
contribute less to their 401(k) plans than their white and Asian
counterparts. As a result, their 401(k) account balances are negatively
impacted and chances for a comfortable retirement significantly
The Ariel/Hewitt Study analyzed 401(k) information for nearly 3 million
employees across 57 large, primarily FORTUNE 500 companies in the U.S.
It was conducted by the Ariel Education Initiative, the nonprofit
affiliate of Ariel Investments, and Hewitt Associates, a global human
resources consulting and outsourcing company. The Chicago Urban League,
the Joint Center for Political and Economic Studies, the National
Council of La Raza, the National Urban League, and The Raben Group also
participated. The study was funded with a grant from The Rockefeller
In response to the study, Mellody Hobson, president of Ariel
Investments, remarked, "401(k) plans are now the primary way Americans
save for their golden years. Most are unaware there are significant
savings disparities in 401(k) plans across racial and ethnic groups.
This study reveals important differences that must be addressed if
retirement security is to be a reality for all Americans."
The results of the study show that African-American and Hispanic workers
are less likely than their Asian and white counterparts to participate
in their 401(k) plans. Two-thirds (66 percent) of African-American
employees and 65 percent of Hispanic employees participate in their
company’s defined contribution plans, compared to 77 percent of white
workers and 76 percent of Asian workers. Even after adjusting for
factors such as age and income, the disparity remains.
Additionally, African-Americans and Hispanics contribute to their 401(k)
plans at much lower levels than their white or Asian counterparts. Among
those who save, white employees contributed 7.9 percent of income,
compared to Hispanic and African-American workers, who contributed 6.3
percent and 6.0 percent, respectively. At 9.4 percent, Asian workers had
the highest contribution rate of all groups.
Not surprisingly, lower participation and contribution rates lead to
smaller average account balances for African-American and Hispanic
workers. The Ariel/Hewitt study illustrates this point dramatically. For
example, employees who earn between $30,000 and $59,999 show a
significant difference in 401(k) account balances: African-Americans
($21,224), Hispanics ($22,017), Asians ($32,590), and whites ($35,551).
This disparity exists even at higher pay levels. For instance,
African-American employees who earn $120,000 or more have saved $154,902
in their 401(k) plans compared to $223,408 for white workers in the same
pay range. While other factors influence account balances, the variation
exists even after these adjustments.
In addition to participation and contribution rates, The Ariel/Hewitt
study examined three other factors that can further impact an employee’s
401(k) plan balance--equity exposure, loans and withdrawals.
The findings revealed that African-American workers are less likely than
Hispanics, whites and Asians to invest in equities. African-Americans
had two-thirds (66 percent) of their 401(k) assets invested in the stock
market. By comparison, whites and Asians had 72 percent and 73 percent,
respectively, of their 401(k) plan assets invested in equities.
Hispanics had 70 percent of their assets invested in equities. These
findings are compelling because the stock market has historically
outperformed all other investment options over the long term. It is
generally understood among investment experts that employees with
long-term time horizons should have a significant amount of their assets
invested in equities.
African-Americans are also more likely than the study population overall
to have a loan and are more than twice as likely to take a hardship
withdrawal from their 401(k) plans. Nearly two of every five
African-American workers and almost a third of Hispanic workers borrowed
from their retirement accounts compared to just one in five white
workers. By contrast, Asian workers were the least likely to take a loan
against their 401(k) plans, with less than one in five doing so.
"These statistics are troubling because loans and withdrawals jeopardize
long-term financial security to satisfy immediate needs. The impact is
heightened during an economic downturn, when unemployment rises and
withdrawals and loan defaults increase. We now realize this risk is
magnified for African-American and Hispanic workers based on the results
of our study," said Barbara Hogg, principal at Hewitt Associates and
co-leader of The Ariel/Hewitt Study.
Target Market News
Congratulates the Recipients
of the 2009
of the Year
of the Year
LOUIS CARR President. Broadcast
of the Year
CRYSTAL WORTHEM Multicultural Marketing Manager
Ford Motor Co.
of the Year
ESTHER FRANKLIN Executive Vice Pres.,
Director of Cultural Identities
Starcom Mediavest Group
of the Year
President / CEO
"UNDER THE INFLUENCE"
Tracing the Hip-Hop Generation's Impact on Brands, Sports, & Pop Culture
By Erin O. Patten
Hip-Hop culture has had a profound impact on marketing in the past two
decades and it provided an intersection for brands, sports, and popular
culture. Erin O. Patton documents this impact in his new book, Under the
Influence--Tracing the Hip-Hop Generation's Impact on Brands, Sports, & Pop
Adam Graves, senior vice president of Deutsch Advertising says of Under
the Influence and Patton: "If there are any marketers out there that still
think they can ignore the urban market they'd better think again...This
isn't just a book for so-called urban marketers; this should be
mandatory reading for every marketer in the country."
Click here to order