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Black Wealth: Truth vs. Myth

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It’s no secret that African Americans have not been able to amass inter-generational wealth like their white counterparts. Yet, the narrative that describes the cause of this deep asset poverty has largely blamed the financial behavior of African Americans and ignored the larger structural influences that prohibit wealth building in the community.

That’s with the exception of a few irrefutable and blatant moments of disproportionate discrimination such as redlining of the 1930-1970’s and sub-prime lending of the 1990’s and 2000’s. This narrative is further perpetuated in the new independent documentary, Generation One: The Search for Black Wealth.

During the great financial crisis of 2007-2008, African Americans were accused of “taking out mortgages that they couldn’t afford.” There was no acknowledgment of targeted advertising by the real estate industry or the practice of putting people of color who qualified for prime lending products into subprime lending. All of it capitalized on the desire to achieve the “American Dream.”

In Ta-Nehisi Coates’ recent book, “Between the World and Me,” Coates addresses the historic foundations in this country of racial inequality and importance of wealth in not only status and influence, but also physical safety. He states, “A society that protects some people through a safety net of schools, government-backed home loans, and ancestral wealth, but can protect you only with the club of criminal justice has either failed at enforcing its good intentions or succeeded at something much darker.”

To be clear, there is always a degree of agency that every individual has over his or her finances, but larger macro-economic trends prominently strengthen or weaken one’s economic mobility.

In the case of African Americans, the economic reality that most African Americans are born into poverty that encompasses most of their community and family is a heavy burden that is challenging to overcome.

The challenge of overcoming historic discrimination to provide more equal opportunities is a long-held unfulfilled goal of the African American’s struggle for greater equality.  The goal harkens back to the time of Booker T. Washington through the 1950s and 60s when the mid 20th century civil rights movement fought for access to jobs, home-ownership, housing, and living wages.

Here are five common myths that we need to address in order to be able to move forward and make progress.

  1. African Americans spend too much and do not save enough. There is a common misconception that African Americans blow their money on flashy items and material things, rather than save and invest in assets that can yield them long-term earnings. The truth is African Americans tend to have the largest ratio of saving in relation to their income compared to other racial groups. Since Blacks are susceptible to economic downturns, layoffs and long-term unemployment, many tend to save money more, according to Prudential’s report on the African American Financial Experience.
  1. African Americans are lazy and do not want to work hard. African Americans are chronically unemployed or underemployed as compared to other social groups. According to a report released by Pew Research Center, African Americans are “the last to be hired and the first to be fired,” and many are also unemployed for a longer period of time. African Americans are constantly seeking additional work to get ahead but quality employment can be difficult to obtain and maintain.
  1. African Americans do not build wealth because they are comfortable relying on public assistance. Low-income white Americans are the largest beneficiaries of food stamps, according to the U.S Department of Agriculture. Some African Americans do rely on public assistance as a means of income-patching to withstand unemployment or underemployment, but in no way is it a reliance of choice. In the mid-80s, welfare and other public assistance programs created asset limits for beneficiaries, and thus reduced the ability for recipients to build a safety net to transition off benefits and become fully self sufficient.
  1. African Americans abuse credit cards and have more credit debt than others. In a report released by DEMOS and the NAACP, middle class African Americans have similar rates of default and late payments as do their white counterparts. Similarly, the African American middle class, like the American middle class, rack up credit card debt “to make critical investments in their future, including for higher education, entrepreneurship, and medical expenses”- not extravagant purchases. Many people use credit cards to patch their income or as a “safety net” to replace dwindling incomes and stretch resources.
  1. African American businesses do not succeed because they are not supported by African Americans. There is much rhetoric around black purchasing power and the need to leverage it into black-owned institutions as a means of community and economic development. In order to grow and thrive as a community, African Americans need more than just black dollars, but also external patronage, benefits and investments as seen with some of the most successful black businesses as noted by Alfred Edmond Jr. for American Express.

The false narrative about African American wealth building has largely proliferated because it is easier to blame the victim than to acknowledge or address the larger structural inequalities that disenfranchise a group of people. Moving forward, as a community it is necessary to dispel these myths with facts.

African American wealth cannot and will not look like white wealth.

The historic socioeconomic, cultural factors that impact the everyday lives of African Americans do not reflect that of their white counterparts. The responsibility and duty to individuals, family and community requires a different wealth and economic outlook. But the first step is to shatter the myths that cloud our political and public policy debates and deal with what is real and true.



Sabrina Terry is the Manager of Community and Economic Development at the NAACP National Economic Department.  She is also a part of The OpEd Project’s program at the Center for Global Policy Solutions.