Securing The Bag – The Importance of Wealth Generation in the Black Community

-- By JermelMcClure - 17 Mar 2022

Money Talks

“Money Talks” is an age-old adage that dates back to the fifth century b.c. and still rings true over 2,500 years later. Wealth and income provide families with access and privilege that compounds over time and provides longevity and the freedom of choice. Unfortunately, for Black families in America there have consistently been roadblocks preventing the establishment of generational wealth and the ability to secure high wage employment. The systemic racism that plagues our nation has held Black families in a state of economic stagnation, while white families have been afforded the opportunity to achieve economic prosperity with ease. While policymakers and talking heads debate over the best solutions for reducing and combating the racial wealth gap, Black professionals must take steps to protect themselves and their descendants by maximizing their wealth potential – Securing The Bag.

A Legacy of Disenfranchisement

Since America’s founding there has been an exploitative culture of white wealth generation and Black wealth stagnation. For hundreds of years Black people were forced into slave labor that built America into the global powerhouse that it is today without compensation. The impacts of slavery’s institutionalized theft persist today and contribute to the enormous disparity between the median wealth of Black families when compared to white families. The legacies of slavery, the Jim Crow era, and mass incarceration are expressed today through residential segregation, housing discrimination, and discrimination within the labor market.

Contemporary Times

Although the societal constraints on Black people have morphed over time, the racial wealth gap persists. In 2019 the Federal Reserve conducted a survey that recorded Black family median and mean wealth as less than 15 percent of that of white families. Additionally, the survey recorded that liquid savings for white families are four times higher than the number for Black families. The findings regarding the disparities between Black and white family’s liquid savings are especially pertinent in the contemporary moment because of the millions of Covid-19 related job losses. The ability to save more money for unforeseen emergencies provides white families with a level of insulation from what for families who lack similar savings capacity would be a devastating blow. The global economic downturn caused by Covid-19 disproportionately negatively affected Black families and likely took a toll on their ability to generate wealth for future generations.

One Step forward, Two Steps Back

Despite the societal changes that have taken place since America’s founding like the Supreme Court’s ruling in Brown v Board of Education and the passage of the 1964 Civil Rights Act, there is currently a debate that questions if any real progress has occurred regarding the economic subordination of Black people within society. According to the Federal Reserve, growth rates for the median wealth of Black families rose 33 percent during the three year period from 2016 – 2019, whereas for white families over the same period of time the growth rate was only 3 percent. Despite the substantial growth in median wealth for black families there has only been a modest change in the gaps between wealth in black and white families. A recent article published by the Harvard Gazette cited a 2018 study which noted that historical data reveals that no progress has been made in reducing income and wealth inequalities between black and white households over the past 70 years. The debate over the advancements or lack thereof that have been made in terms of reducing the racial wealth gap have merit. While we’ve been able to observe some substantial gains regarding the growth of the median Black household wealth, there has been a skyrocketing increase in the median wealth of white families over a longer period of time. A 2018 study conducted by the Economic Policy Institute found that the top 1 percent of Americans has seen their wealth grown by 157 percent over the past 40 years whereas the bottom 90 percent’s wealth has only grown by 24 percent over the same period of time.

Ensuring a Prosperous Future

Young Black professionals in general, and law students in particular should be mindful of the daunting racial wealth gap when choosing their career paths and employment. It is important to enter into high income positions early in ones career because investing and earning compound interest is the easiest way to ensure the creation of generational wealth. While a high income can lead to wealth creation they should be considered as two distinct categories. Wealth is often passed down through generations of a family, providing future generations with more choices and greater opportunities. Income is more short-term and solely dependent on the capital that is brought in by through a direct exchange for labor. In a paper published by the Stanford Center on Poverty and Inequality, “The Fading American Dream” it was noted that the number of children who are higher earners than their parents has sharply declined over the past 50 years due to the growth in inequality regarding familial wealth and resources. Black professionals provided with the opportunity to access high paying jobs should take advantage of those opportunities with future generations in mind. Professor Jack, Assistant Professor of Education at the Harvard Graduate School for education opined that his research shows that access to elite institutions increases the chances of historically marginalized communities’ odds of establishing generational wealth so long as those students, “use their education as springboard to a better future the same way their richer counterparts do.”

Get The Bag

Money Talks, and if Black professionals are interested in ensuring a brighter future for their children and future generations, they should choose a career that will enable them to earn enough to do so.

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