May 29, 2009

Black Buying Power

Despite an economy represented by high unemployment rates, a home foreclosure crisis and low consumer confidence, African American buying power is projected to reach $1.2 trillion in 2013, according to a report conducted by the University of Georgia’s Selig Center for Economic Growth. That will be a significant increase over the roughly $800 billion Blacks are believed to have spent in 2006. [SOURCE]

The Selig Center for Economic Growth developed this definitive data series for 1990-2008 and the projections for 2008 through 2013.

In regards to income and wages, the African American median family income declined by $404 or 1 percent and the median weekly wage for African American workers ages 25 to 54 years old declined by 0.2 percent. The weekly wages for African Americans differ by gender—particularly, the median weekly wages of African American men declined in 2007 by 3.4 percent from $649 to $627, while it increased for women by 2.6 percent from $552 to $566.

$1.2 trillion seems like a number to celebrate. However, if we focus on "spending power" then we will be bamboozled and flim-flammed. Spending power ain't realy POWER because it does not translate into the power to have a sustained impact on our own destiny. Black folks spend too much time puffing out our chest about this so-called "spending power" ... when actually all that the $1.2 trillion dollars equals is our "disposable income" ... and Black folks surely know how to dispose of our income. We give away our money faster than any other ethnic group in the country. Only 5% of our disposable income stays in our community. We only spend 5% of our income with Black-owned businesses.

It’s not what you earn; it’s what you keep.
Poor people pay interest; rich people earn interest.

If you have a dollar and the otherman has a dollar. You give 95 cents of your dollar to the otherman. Are you surprised when the otherman's roads are better; the otherman's public schools are better; the otherman's homes and cars are better? When you only keep a nickel out of your dollar in your own community ... can we be surprised when the police don't respect us; when our children don't respect us; when our school systems are bankrupt; when our public services from the local government are substandard. Spending power doesn't equal POWER.

You shouldn’t work for money; money should work for you.
Don’t have champagne tastes with a beer budget.

$1.2 trillion seems like a number to celebrate. Nevertheless, a whopping 24.9 percent of all Blacks are still officially classified as poor and critics complain that despite its absolute size, Black income is failing to create Black wealth because it tends to flow into Black communities and right back out.

Villagers, don't be bamboozled. the difference between income and wealth when it comes to power is simple --> wealth flows from your net worth. What happens to you if you missed two paychecks? Many of us would be homeless if that happened.

Check out a person’s net worth and you can see how wealthy he or she is. The government tells us that the typical white household had over 10 times as much accumulated wealth (or net worth) as the typical Black household. The median net worth (assets minus liabilities) for the typical white family was $88,651 compared to $7,932 for Hispanics and $5,998 for Blacks. Do you begin to see the trick bag that is placed over our head when we focus on "spending power"?

Credit is a good servant but a poor master.
Stop ending each month with more month than money.

Villagers, the next time you see the statistics on Black Buying Power, stop and think about the word “power” and what it means in that particular context. Power for whom? Yes, it’s Black Buying Power, but it’s power for those who receive some 95% of our $1.2 trillion everyday. It is power for others to purchase fine homes and cars. It is power for others to build their own communities. It is power for others to send their children to college. It is power that allows the otherman to maintain their collective hold on the economic system of this country.

Jim Clingman uses the term “Black Buying Weakness.” If we continue to give our power to someone else through our conspicuous consumption of their products and services, we will continue to have billions of dollars in aggregate income and only thousands of dollars in individual family wealth. Additionally, we will continue to have the power of income rather than the power of wealth, which only allows us to our pay bills, continue to work on the proverbial plantations, purchase all of our needs and wants from the proverbial company store, and create the power of wealth for others.

Do you remember the systems of sharecropping and dependence upon the company store shown in the final episodes of the Roots miniseries? It seems like we are repeating that same history today as we convert our $1.2 trillion of spending power into relative miniscule amount of wealth that Blacks have. We could never catch up then, and we will never catch up now, if we continue to depend upon income rather than wealth.

The power of wealth manifests itself in ownership and control of income-producing assets and infrastructure such as banks, hotels, manufacturing facilities, real estate, distribution channels, and other wealth-builders and wealth-retainers. The power of income manifests itself, via the transfer of that income to others, in ownership and control of assets by others from whom Black folks must purchase our very sustenance. If we allow that system to continue, by pouring the vast majority of our income into the vast pools of wealth owned by others, we will always be on the bottom of the economic heap. Yes, some of us will still have the latest cars, fine homes, stock portfolios, and high positions (jobs) in corporate America, but collectively we will remain an income-rich and wealth-poor group of Africans in America.

We must take stock of our economic position in this country by understanding that income is not wealth. Villagers, you are encouraged to redirect more of your income toward your own people, just like other groups do. And, the next time they count how much money we have collectively, they will add a footnote that says, “Black spending among Black owned businesses has increased significantly, the result of which is an increase in the net worth of Black families as well as an aggregate increase in Black wealth.

The power of income or the power of wealth. Which would you prefer for our people?

1 comment:

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