This came out of the Houston Chronicle.
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http://www.chron.com/cs/CDA/story.hts/business/1547259
Aug. 25, 2002, 6:49PM
Blacks' wealth lags rise in income
Access to investing may close gap
By JANITA POE
Cox News Service
ATLANTA -- Drive through the tony communities of Water's Edge in Stone Mountain, Ga., or The Cascades in southwest Atlanta for a glimpse of the black American Dream.
The yards in these predominantly African-American neighborhoods are immaculate, the three-car garages brim with Lincoln Navigators and Jaguars.
The view suggests a successful denouement of a long journey for Black America, proof that African-Americans -- descendants of the slave work force of the old South -- have arrived. But for many the symbols belie true status. Blacks have made great strides in recent years in narrowing the income gap with whites, but in terms of wealth, blacks are still far, far behind.
In 1990, the median household income of black Americans was 60 percent of that of white Americans, according to the Census Bureau. By 2000 the figure was 69 percent. On a per-person basis, black income looked even better, 80 percent of whites' in 2000.
The change has been fueled, in part, by African-Americans' rise through the ranks of corporate America. In 1966, blacks made up 1 percent of all mid- and top-level managers in companies with 100 or more employees; in 2001, blacks made up 6.5 percent of those managers. (Blacks are 12.3 percent of the population.)
But the Census Bureau reported that in 1995, the most recent year for which figures are available, the median value of black households' assets was 14 percent of white households': $7,073, in contrast to $49,090.
Black Enterprise magazine publisher Earl Graves Sr. says many African-Americans are still getting acclimated to investing.
Experts point to many reasons blacks have fewer assets, on average, than whites with similar incomes. Historic racial barriers, such as housing and job discrimination, kept blacks from accumulating wealth, so they had less to pass on to today's generation.
In addition, though it's narrowing, the income gap between black and white households means black families tend to have less discretionary income for saving and investing. Blacks also tend to have less access to investment-savvy social circles, they say, and are less informed about long-term wealth building.
Most of these reasons are noncontroversial. But one possibility is generating pointed discussion among blacks: the notion that newly affluent African-Americans are spending too much, often on status symbols, and not saving and investing enough.
Brooke Stephens, a financial planner and author of Talking Dollars and Making Sense: A Wealth-Building Guide for African-Americans, says too many blacks are concerned more with buying nice clothes and cars than saving and investing.
"We are victims of the idea that looking rich means being rich," Stephens said. "African-Americans brag about the $600 billion coming through our community, but it's coming in and going right back out."
The Atlanta Journal-Constitution compared spending habits in two ZIP codes with median household incomes of about $78,000 -- one in predominantly black Stone Mountain and one in predominantly white Cumming.
The Stone Mountain households spent $17,015 on their most recent car lease or purchase, 15 percent more than the $14,822 the Cumming residents spent. Households in Stone Mountain also spent 15 percent more on clothing than those in Cumming.
Horace Huntley, a Birmingham Civil Rights Institute historian, says affluent blacks probably are spending more on status symbols, but he's less alarmed than Stephens. Huntley said some African-Americans value designer labels and fine cars because they are in the first generation of their families to move out of poverty. Like other nouveau riche through the ages, they are proud of their new status, he said.
Stephens said she understands the reasons for flashy spending, but she is concerned about the lack of emphasis on wealth accumulation among many blacks. "Ninety percent of the people driving the big cars and wearing the fancy clothes and owning the big homes are one step away from being on welfare," Stephens said. "It really frustrates me.
"You're not building wealth if you use all your money for consumption. Real wealth is being able to say I have the freedom to do what I want with my life, and I don't have to stay in this job if I don't want to. Too many of us are deluding ourselves."
The pattern may be changing.
"As you see African-Americans moving up into higher income brackets, you see more behavior conducive to accumulating wealth," said Georgia Tech economist Thomas Boston. "When people begin to have real wealth they become more conscious of providing for the next generation and they want to protect what they have."
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http://www.chron.com/cs/CDA/story.hts/business/1547259
Aug. 25, 2002, 6:49PM
Blacks' wealth lags rise in income
Access to investing may close gap
By JANITA POE
Cox News Service
ATLANTA -- Drive through the tony communities of Water's Edge in Stone Mountain, Ga., or The Cascades in southwest Atlanta for a glimpse of the black American Dream.
The yards in these predominantly African-American neighborhoods are immaculate, the three-car garages brim with Lincoln Navigators and Jaguars.
The view suggests a successful denouement of a long journey for Black America, proof that African-Americans -- descendants of the slave work force of the old South -- have arrived. But for many the symbols belie true status. Blacks have made great strides in recent years in narrowing the income gap with whites, but in terms of wealth, blacks are still far, far behind.
In 1990, the median household income of black Americans was 60 percent of that of white Americans, according to the Census Bureau. By 2000 the figure was 69 percent. On a per-person basis, black income looked even better, 80 percent of whites' in 2000.
The change has been fueled, in part, by African-Americans' rise through the ranks of corporate America. In 1966, blacks made up 1 percent of all mid- and top-level managers in companies with 100 or more employees; in 2001, blacks made up 6.5 percent of those managers. (Blacks are 12.3 percent of the population.)
But the Census Bureau reported that in 1995, the most recent year for which figures are available, the median value of black households' assets was 14 percent of white households': $7,073, in contrast to $49,090.
Black Enterprise magazine publisher Earl Graves Sr. says many African-Americans are still getting acclimated to investing.
Experts point to many reasons blacks have fewer assets, on average, than whites with similar incomes. Historic racial barriers, such as housing and job discrimination, kept blacks from accumulating wealth, so they had less to pass on to today's generation.
In addition, though it's narrowing, the income gap between black and white households means black families tend to have less discretionary income for saving and investing. Blacks also tend to have less access to investment-savvy social circles, they say, and are less informed about long-term wealth building.
Most of these reasons are noncontroversial. But one possibility is generating pointed discussion among blacks: the notion that newly affluent African-Americans are spending too much, often on status symbols, and not saving and investing enough.
Brooke Stephens, a financial planner and author of Talking Dollars and Making Sense: A Wealth-Building Guide for African-Americans, says too many blacks are concerned more with buying nice clothes and cars than saving and investing.
"We are victims of the idea that looking rich means being rich," Stephens said. "African-Americans brag about the $600 billion coming through our community, but it's coming in and going right back out."
The Atlanta Journal-Constitution compared spending habits in two ZIP codes with median household incomes of about $78,000 -- one in predominantly black Stone Mountain and one in predominantly white Cumming.
The Stone Mountain households spent $17,015 on their most recent car lease or purchase, 15 percent more than the $14,822 the Cumming residents spent. Households in Stone Mountain also spent 15 percent more on clothing than those in Cumming.
Horace Huntley, a Birmingham Civil Rights Institute historian, says affluent blacks probably are spending more on status symbols, but he's less alarmed than Stephens. Huntley said some African-Americans value designer labels and fine cars because they are in the first generation of their families to move out of poverty. Like other nouveau riche through the ages, they are proud of their new status, he said.
Stephens said she understands the reasons for flashy spending, but she is concerned about the lack of emphasis on wealth accumulation among many blacks. "Ninety percent of the people driving the big cars and wearing the fancy clothes and owning the big homes are one step away from being on welfare," Stephens said. "It really frustrates me.
"You're not building wealth if you use all your money for consumption. Real wealth is being able to say I have the freedom to do what I want with my life, and I don't have to stay in this job if I don't want to. Too many of us are deluding ourselves."
The pattern may be changing.
"As you see African-Americans moving up into higher income brackets, you see more behavior conducive to accumulating wealth," said Georgia Tech economist Thomas Boston. "When people begin to have real wealth they become more conscious of providing for the next generation and they want to protect what they have."