In its State of Black America 2009 report, the National Urban League examines challenges President Barack Obama’s administration must address. The report includes essays by leading scholars, analysts, and practitioners, asking their government to respond to their concerns â€“ and offers its specific recommendations for effectively tackling these issues. In his essay, Black Enterprise publisher Earl “Butch” Graves Jr. explains why “economic prosperity is vital to African-American families and explains how minority families can build wealth and transfer it to future generations.”
Racial barriers and attitudes traditionally have complicated African Americans’ path toward financial empowerment, with the ramifications reaching well beyond our earning power. However, if we are able to close the wealth gapâ€”the stubborn imbalance in the net worth of African Americans versus that of white Americansâ€”then we can finally begin to bridge those other persistent disparities and cure the ills that plague our community.
Make no mistake, this wealth chasm between African Americans and the majority is no mere perception; it is a stark reality. Nationally, the typical African-American family today possesses less than 10 percent of the net worth of the average white family.’ Almost 30 percent of black families have zero or negative net worth. And far fewer blacks than whites benefit from inherited wealth or assets.
Until recently, these figures represented millions of black families walking a financial tightrope. Now, with the economy in freefallâ€”and jobs, 401Ks and available credit disappearing like vaporsâ€”our increased vulnerability has plunged many of us into a state of crisis. Some are facing bankruptcy and the possibly losing their homes, while others may never own a home because the capital and credit history necessary is so out of reach. The price to be paid for this level of economic disparity is always steep. The implications here go far beyond the welfare of the families involved, however tragic the individual circumstances. What’s really at stake are the health and stability of the African-American community as a whole and the pace of our progress in America.
The new Obama administration recognizes this disparity. The president’s 2010 budget, released on February 26, 2009, contains a section “Growing Imbalance: Accumulating Wealth and Closing Doors to the Middle Class,” in which it is noted that the wealthiest 10 percent of households hold 70 percent of the total wealth. The combined net worth of the top one percent of families was larger than that of the bottom 90 percent and the top one percent. 3 But while it is important for the administration to advance innovative policies that close these disparities, the responsibility does not lie solely with the government.
Bottom line: If we ever hope to strengthen our families, communities and institutions, then we must adopt and apply principles to build, keep and transfer wealth.
Since its inception more than 40 years ago, Black Enterprise magazine has stressed economic fundamentals to our readersâ€”saving, smart investment, the responsible leveraging of credit and home equity. At the same time, our agenda has always been informed by the social realities that inform the lives of African Americans.