By Ryan Velez
Many people feel that the path to Black people getting more equitable treatment across the board is to flex our financial muscle. While this opinion has solid pros and cons, what can’t be argued is that the Black community’s buying power is on the rise. Black Enterprise reports that it is on track to hit a grand total of $1.5 trillion by 2021.
Where is this coming from? According to a report from a recent Nielsen study, African American households earning $75,000 or more per year are a fast-growing segment that will have more influence going forward than ever before. In the next 45 years, Black America is projected to be a 75 million-strong group, about 20% of the U.S. population. In terms of Black-owned businesses, that number sits anywhere from 2.5 million to 3 million enterprises and is projected to grow in larger numbers going forward.
Part of the issue regarding whether or not this money can be used for the community’s benefit stems from the idea that Black dollars don’t actually stay in the community for that long. Some claim that a dollar only stays in the community from 1-6 hours before it leaves. However, a recent Howard University study suggests that there may not be much truth to that claim.
Howard University analyzed credible data and research tracking sources, such as The Federal Reserve, Bureau of Labor Statistics, SBA, and even other reports from Nielsen, and none of these sources track how often money circulates within a particular community. Some believe that this concept originated in the book, Talking Dollars and Making Sense: A Wealth Building Guide for African-Americans.” Howard University reports that they reached out to the book’s author, Brooke Stephens, for further comment and she was unable to provide where she obtained her information other than citing a six-month study of which she could not actually provide.
The Black community’s wealth may be the subject of myths, but there are also people hard at work trying to put together the hard data that can dispel them. The Empowerment Experiment was conducted as a research project via a foundation set up by a Black, middle-class Chicago couple, who partnered with Northwestern University’s Kellogg Graduate School of Management’s Levy Entrepreneurship Center for the study.
Their research discovered that less than around 3% of the current Black buying power is spent in Black-owned enterprises and if Black America were to redirect just about 10% of total Black spending to Black-owned enterprises, that could translate into the creation of about 1 million jobs centered around communities of color.