Avis Jones-DeWeever, director of the National Council of Negro Women’s Research, Public Policy and Information Center, pointed to the fragility of the black middle class.
“It is important to note that much of the black middle class that we have today are fairly newcomers to this status. Most are either their first or second generation within this status,” she said. And because many black middle class families must often stretch their incomes to accommodate extended family members, they have less disposable income to invest in potential wealth-building opportunities.
Jones-DeWeever also observed a new green economy may be “the next potential dot-com-like boom. “The scary part is, that as it stands today, African Americans are not positioned to substantially take part in that potential economic boon,” she said, pointing to research that shows that African Americans are severely underrepresented at only 5% in terms of potential green employment targeted by the Recovery Act.
The bursting housing bubble hasn’t been an equal opportunity crisis, noted James Carr, CEO of the National Community Reinvestment Coalition. As a result, millions of middle class African American and Latino households, who have fewer savings and less ability to survive lengthy bouts of unemployment, could fall out of the middle class before the economy recovers. This is exacerbated by the fact that they were disproportionately targeted for deceptive mortgages.
Carr proposed a three-fold response to the problem that includes limiting damage to home prices caused by unavoidable foreclosures; channeling economic recovery funding into communities disproportionately targeted for unfair and reckless lending; and passing anti-predatory lending legislation and an enhanced Community Reinvestment Act to protect consumers from future fraudulent practices and abuses.
“Government action should not be limited to ending predatory lending, but should also include providing focused attention on helping communities rebuild,” said Carr. “Prioritizing areas hardest hit by widespread unemployment and mounting foreclosures would more directly help stabilize the housing market and steady falling home prices that continue to undermine the strength of U.S. financial institutions.”
Further Reading: Wealth For Life Principles
1. I Will Live Within My Means
2. I Will Maximize My Income Potential Through Education and Training
3. I Will Effectively Manage My Budget, Credit, Debt, and Tax Obligations
4. I Will Save At Least 10% of My Income
5. I Will Use Homeownership as a Foundation For Building Wealth
6. I Will Devise An Investment Plan For My Retirement Needs And Childrens’ Education
7. I Will Ensure That My Entire Family Adheres To Sensible Money Management Principles
8. I Will Support the Creation and Growth of Minority-Owned Businesses
9. I Will Guarantee My Wealth Is Passed On To Future Generations Through Proper Insurance And Estate Planning
10. I Will Strengthen My Community Through Philanthropy