Black Economics: It’s a Matter of Fact; History Does Repeat Itself

By Alanna McCargo

Martin Luther King, Jr said it best: “There is no gain without struggle.’ These words in the context of the current day should be a reminder of the past and inspiration for the future. Times are tough right now, particularly as it relates to the financial environment and future prosperity in America. Let’s reflect on some of the staggering facts that are currently defining the struggle in the black community. Then let’s focus on what can be done to get on a better track for the future:

  1. The unemployment rate in America is just above 9% as a whole: for blacks, its at 15.9% (Bureau of Labor Statistics)
  2. The foreclosure crisis has hit minority communities the hardest, with the current foreclosure rate on loans issued from 2005-2008 at 7.9% for blacks versus 4.52% for whites. (Center for Responsible Lending, 2010)
  3. The wealth gap has widened to its deepest levels, with average black household wealth at $5600, with white households at 20 times higher (Pew Research)

The facts above lay out some of the economic struggles the black community faces and depicts the step backwards that has been taken. As the great recession of this generation continues to drag on, the black community is experiencing setbacks to progress that had been made over the years toward equality, economic empowerment and the creation of wealth for future generations. There have always been disparities in these numbers and gaps have been persistent, but the levels at which they stand now have erased progress and leave an enormous burden on the futures of our children and community.

Acting on the Facts

What can be done to get on a path toward progress? The answers are not simple, but there are some very fundamental things that have historically worked. These are fundamentals that we have to bring back to the forefront:

Keep education front and center. It is more critical than ever right now that focus remain on the improvement and upgrade of job skills. This advice is not only for our young people, but for many of the unemployed men and women between the ages of 25-50 who are out of work or facing layoffs. The jobs in this country are scarce, and the skills needed to do the jobs available have changed forever. Considering trade school and a return to good paying blue collar jobs should be top of mind. Continuing education and getting a college degree or certification will be imperative to compete in the job market of today and the future. Competition is fierce, and a college degree could be the difference maker. Look into job training programs in your state. Consider community college non-degree trade programs as a viable option. Education remains the critical foundation toward economic empowerment, and we need to get this back into focus in our homes and with our children.

Show and tell with your family and children when it comes to issues of finances. The discussions of household finances and budgeting are not happening early or often enough with our children. It is critical that we instill fundamentals of financial literacy into our families. If you are struggling to pay bills or keep a roof over your family’s head, it is important that the people in your household understand that struggle. Do not sugar coat it. This has been lost in recent generations. Not everyone can have the latest Apple gadget or phone or the latest pair of Jordan’s that are out. We are raising a generation that has lost the understanding of working hard to live and spending frugally on material things. Material possessions do not build wealth. Fancy cars, expensive suits and iPhones will not bring wealth to your family or future generations. The focus must change to building businesses and owning appreciating assets that translate into wealth for future generations. So start today in having truthful discussions with your children about the finances of your household and what it takes to keep a roof over your head and food in your mouths.

Save and Invest. This is so much easier said then done. Blacks lag behind in overall savings, and some who were doing their best to invest and save lost a lot of what was gained when the markets collapsed. Don’t give up. In everything you are able to earn, try to give yourself a little bit. You have to build some level of savings into your life, enough to help you during times when there may be nothing coming in. Start today on trying to save at least 4-6 months of rent or mortgage payments. Place your money in an interest bearing savings account or money market. It may take some time to see it grow, but every little bit does count. Think of savings and investment accounts as money you are putting aside for your family.

Reflecting on the Past will help us in the Future

This week the nation will celebrate the opening of the new MLK memorial in Washington DC. It is a significant and long overdue tribute to a man who lead the black community to a breakthrough. A man who believed in something, embraced it in his spirit and led a movement toward equality. He was an amazing speaker and visionary, but he also was a man of action. He knew that planting seeds during his lifetime would be of most benefit to future generations. We stand in a moment in history where there are serious choices to be made by us, to the benefit of our future generations. What seeds are you planting now? The United States of America as a whole is falling behind, losing ground with the rest of the world.

We should all take a look back at history, because nothing we are experiencing now is unique. Only the people dealing with it and the attitudes for solving it have changed. The way forward is with unity, and a shared desire to see our nation as a whole become strong again. This is not the responsibility of our government or of corporations. The responsibility is each of ours individually and within our communities to take on. Much of it starts with basic financial fundamentals, whether good, bad or ugly. We cannot move forward as a people without struggle. That was true when Dr. King said it on August 28, 1963 and remains true when we stand before his new monument on August 28, 2011 in remembrance.

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