The Redistribution of African-American Wealth

“Unfortunately, when African-Americans make money, we spend it. We don’t use it to invest or produce. When we get our tax refund, we go straight to the store.” – Cloves Campbell

A study conducted by Nielsen with the National Newspaper Publishers Association (NNPA) found that the buying power of African-Americans will reach $1.2 trillion by the year 2015. African Americans have always been a part of the economic engine of America, but with record high unemployment and a crumbling community infrastructure where is our money going?

Here are a few highlights from the Nielsen report:


  • 91% of Blacks believe that Black media is more relevant to them.
  • Brand name products represent 82% of Black households’ total purchases compared to 31% for private labels.
  • 54% of African-Americans own a smartphone, an increase from 33% last year.
  • African-American Baby Boomers (45-64) spend more time at the stores or grocers, fast food restaurants and the gym; and prefer television and print as primary media sources.
  • Generation Y (18-34) are more likely to spend time at someone else’s home; and selected radio, mobile phones and gaming consoles are their media of choice.

A majority of African-Americans are influenced by what they see on African American media outlets (internet, television and radio). African-Americans are more inclined to buy brand name products, own smart phones, and spend most of their hard earned money on food and entertainment. The problem is most of the African-American money is leaving the community. Drive through any area dominated by African-Americans and you will see abandoned businesses or because of gentrification old African American communities are seeing new investments in housing and infrastructure but the residents are being forced out because of the cost.

Additional highlights from the Nielsen-NNPA report:

  • With a buying power of nearly 1 trillion annually, if Blacks were a country, they’d be the 16th largest country in the world
  • Blacks make more shopping trips than all other groups, but spend less money per trip. Blacks in higher income brackets, also spend 300 percent more in higher end retail grocers more than any other high-income household.
  • There were 23.9 million active Black Internet users in July 2011–76 percent of whom visited a social networking/blog site.
  • Black Americans use more than double the amount of mobile phone voice minutes compared to whites–1,298 minutes a month vs. 606.

The spending culture in the African-American community is not a new occurrence; it has been with the community since the early days of emancipation. We enjoy material goods in the African-American community it has come to define us as a people. For a people that has been powerless for over two centuries the acquisition of material goods was/is used as an act of false empowerment. I was not immune from such destructive mental thinking. Growing up I spent more time worrying about clothes and shoes than education, but I was fortunate to have a mother who emphasized education many within the community are not as fortunate. Today, young mothers and fathers worry more about making sure there children are dressed in name brands rather than making sure they can read on grade level.

More than any other group, African-Americans spend more outside their own community, empowering other communities but leaving ours in financial ruin. There is a stigma even amongst African-Americans that African-American businesses are inadequate, that somehow because of the business owners color their services or products cannot be worth much.

From 2002 to 2007, the number of Black-owned businesses increased by 60.5 percent to 1.9 million, more than triple the national rate of 18.0 percent, according to recent data released from the U.S. Census Bureau’s Survey of Business Owners. Over the same period, receipts generated by Black-owned businesses increased 55.1 percent to $137.5 billion. Tennille Robinson

In 2008, when the economy crashed, African-American businesses were hit the hardest. Here is an excerpt from a story written by Bob Herbert from The American Prospect (

“… Charles Walker, a black kid from a rough-and-tumble neighborhood in Detroit, realized his dream. It took a long time, but after years of working and prudent money management, after stints as a manager for CVS stores and a market called Metro Foodland, he was able to put together a deal, with help from relatives and a handful of outside investors, for a market that was part of the discount Sav-A-Lot chain. At age 47, the happily married father of three grown children had his supermarket.”

 “He did well for a while, bringing in $100,000 a week and employing a staff of 20. The store was a gleaming marvel in a neighborhood that was struggling but seemed to be improving. Then, as Walker put it, ‘the economy changed’.”

 “Not nearly enough attention has been paid to the damage that the continuing Great Recession has done to black Americans. It’s true that jobs and homes were lost across a wide expanse of ethnic and income groups. It’s true that white businesses as well as black-owned firms have failed. But African American communities were particularly vulnerable, and the downturn swept through them like an invading army, destroying wealth that had been painstakingly accumulated over decades and, in some cases, generations.”

 “For many small African American businesses, and for countless entrepreneurs like Charles Walker, the downturn has been ruinous. The inevitable reduction in demand from a customer base struggling disproportionately with joblessness and the home-foreclosure crisis came at the same time as a drastic curtailment in access to capital for most small businesses. For black businesses, already chronically undercapitalized, the one-two punch was often fatal.”

 “Small businesses generally get started and survive their early stages with capital drawn from the personal assets—mainly savings and real estate—of the business owners, their relatives, and friends. Home equity is a common source of collateral for small-business loans. With substantially lower levels of wealth and homeownership to begin with, blacks have a much harder time putting together start-up capital, and they find it more difficult to hang on during rough patches in the economy. The Great Recession was much worse than anyone’s idea of a rough patch.”

 Last year, the Pew research Group released a report detailing wealth in America. The report found that African-Americans have little to no wealth:

“The median wealth of white households is 20 times that of black households and 18 times that of Hispanic households.”

 “…the typical black household had just $5,677 in wealth (assets minus debts) in 2009; the typical Hispanic household had $6,325 in wealth; and the typical white household had $113,149. Moreover, about a third of black (35%) and Hispanic (31%) households had zero or negative net worth in 2009, compared with 15% of white households. In 2005, the comparable shares had been 29% for blacks, 23% for Hispanics and 11% for whites.”

How can African Americans spend nearly ONE TRILLION DOLLARS annually yet only have $5,677 in median wealth? The answer is simple; we do not invest money in our community or businesses. Our culture promotes brand names clothes, cars, and shoes, but do not promote home ownership, education empowerment, investing, or savings. When we die we leave nothing behind for our children to build on. In order to survive and thrive, African-Americans must learn to save and capitalize their money, re-invest in their community and produce more entrepreneurs. Our houses may be rented and our schools might be crumbling, but we have the newest model car in the garage and our kids have on the latest Jordans, we cannot continue to redistribute all our wealth and expect economic conditions to improve in our community.


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