The proper management of money has proven to be a difficult task for many in the Black community. According to recent data by the Pew Research Center, the typical Black household has about $5,600 in wealth (assets minus debts) compared to the typical White household, which has about $113,000 in wealth. This 20-to-1 wealth-gap is even more striking during periods of economic downturns.
There are several key factors that contribute to this vast disparity in wealth. The most prominent of factors is past (and on-going) discrimination that continues to plague our economic advancement. Two studies summarizing this fact show that up to 80% of an individual’s wealth can be accounted for by intergeneration material transfers, and that three-fourths of where a person winds up–in terms of wealth–is determined solely by the wealth status of their parents. The Black community–due to the long history of racism, employment discrimination, block busting, red lining, etc.–has not experienced the same economic opportunities that have allowed Whites to amass the substantial wealth that they transfer from generation to generation. But, while the history is clear, there are current obstacles that impede the economic growth of our community.
The culture of spending within the Black community has been one of our greatest economic Achilles heels. Simply put, money isn’t staying in our community. For example, the Asian, Jewish and White communities tend to spend money within their own communities first. These various cultures help and support themselves socioeconomically, in part, by spending money this way.
Another factor is that when members of our community achieve wealth, a dependency often develops between friends, family members and even our neighborhoods on the recipient. Here, the wealth of one is now expected to take care of the wishes, needs and desires of mothers, fathers, friends, cousins, nephews, community organizers and church leaders. This is, of course, in addition to the needs and desires of the one who originally achieved the economic success. As an entertainer, myself, I can personally tell you this phenomenon can reach astronomical levels.
But what is not realized is that in the entertainment industry, earning money is far less straightforward than in other industries. A rapper/producer such as myself may have a multi-platinum record or single out, but it can be months or even years before we see our share of the money. Managers, agents, attorneys, and other such professionals, can easily earn a combined 50% off the top, and that’s before we can even start to think about taxes. Since fewer and fewer musicians are working with major labels these days, we often have to pay for our own studio time, engineering, mixing, mastering and more before releasing our music. We have public relations people, producers, collaborators, and other such professionals, all of whom are depending on us to make their living. Beyond that, if every single number isn’t properly accounted for, an artist can end up in a tax situation with the government that can take years to clear up, despite his or her best intentions.