The Black middle class is shrinking. For Black America, the recession is not over. These are indisputable facts reported again and again by media and quoted by pundits to fuel their indictments against the federal government for what it isn’t doing to fix the problem. But instead of asking the government what it’s going to do, we should also be asking “What is the Black community going to do?”
Government
bears responsibility to ensure fair and equal access to opportunity for all
Americans. That, too, is an indisputable fact. But the disappearing Black middle
class and the scarcity of wealth in the Black community didn’t arrive with the
recession in 2008.
Prior to
the tumble, Blacks controlled less than 3 percent of the nation’s wealth but
bore a disproportionate amount of personal debt.
In spite
of these trends, the overwhelming perception among African Americans leading up
to the recession was that their overall economic outlook was improving,
according to the Pew Research Center. Many people assumed that the Black middle
class was growing when, in fact, it was not.
As the
U.S. Congress and the Obama administration ponder a debt ceiling, Black
Americans should seriously think about establishing their own personal debt
ceilings to defend against economic uncertainties such as long-term joblessness
and declining incomes and property values.
In 2004,
four years before the Great Recession, Black household net worth dropped by 83
percent to $2,170. The net worth of the average white American household is 50
times that amount. Household wealth isn't based on income; it is calculated by
subtracting debt from your assets. A study released in 2010 by Brandeis
University found that the black-white wealth gap experienced unprecedented
growth between 1984 and 2007. During that time, assets among white households
increased while debt skyrocketed among Black households.
As debt
grew, incomes fell. Black median household income dropped dramatically to
$29,328 in 2009 from $32,584 in 2010, according to U.S. Census figures.
A recent
newspaper article stated that “for many in the Black community, job loss has
knocked them out of the middle class and back into poverty.” That statement
assumes these individuals were born poor. A study by the Economic Policy
Institute in Washington released in 2008, before the crisis struck, found that
45 percent of African Americans who were born into the middle class were living
in poverty as adults, compared to 16 percent of whites.
That is
not to say that the Black community today isn’t in crisis. The disproportionate
impact of foreclosures on the Black community, wage freezes and long-term
joblessness - even among college-educated Blacks - has worsened Black America's
already critical economic circumstances. Keep in mind that during a national
election cycle in which a Black president presides over a country experiencing
the worst economic climate in 80 years, fingers will naturally point to the
government to blame. But the economic disparities facing the Black community
didn’t start with this administration and they won’t end here, either.
Solutions will require thought leadership, education and advocacy in the Black
community, and an end to the culture of debt.
The
Chicago Urban League has been working in the trenches to extend access to
economic opportunity to African Americans for over 90 years. We offer financial
literacy courses for adults and youth so that they might avoid credit booby
traps, learn how to save and invest. We counsel first-time homebuyers so they
do not take on more debt than they can handle. We also teach fiscal
responsibility and long-term financial planning to business owners through our
Entrepreneurship Center. It is critical that Black enterprises thrive so that
they may hire and invest in Black communities.
Both the
government and private sector have a crucial role to play to ensure that
African Americans get their fair share of the pie. Our nation continues to
struggle with equal access to opportunity, the poor quality of public education
and the absence of a clear pipeline to good-paying jobs. I will address these
issues in next month's column.
But it is
going to require more than a shift in economic policies under the current
administration in Washington to reverse Black America’s downward spiral.
Opportunity must be accompanied by fiscal responsibility in Black households.
Black America must work deliberately to reverse its reliance on debt. For those
who need assistance, the Urban League is here to help.
Andrea L.
Zopp is president and CEO of The Chicago Urban League.
