- Created on 07 May 2013
Study Prompt Calls for Policy Reforms to Eliminate Racial Wealth Gaps
According to a new research report, America’s racial wealth gaps will persist until public policy reforms provide every family the opportunity to build wealth.
Less than Equal: Racial Disparities in Wealth Accumulation, from the Urban Institute’s Opportunity and Ownership project, analyzed data and trends from 1983-2010. Over these years, the average household income of Whites remained double that of either Black or Latino families.
But when wealth was considered, the amount of available assets remaining after all indebtedness was deducted, White families’ wealth grew six times that of either that for either Black or Latino families.
“When it comes to economic gaps between whites and communities of color in the United States, income inequality tells part of the story. But let’s not forget about wealth. Wealth isn’t just money in the bank; its insurance against tough times, tuition to get a better education and a better job, savings to retire on and a springboard into the middle class. In short, wealth translates into opportunity.”
The report also found that although the Great Recession of (2007-2009) hit communities of color particularly hard, the type of financial losses varied. With Black unemployment double that of the rest of the nation, Black retirement assets fell by 35 percent during these years. This data suggests that lower-income Black families withdrew money from retirement savings following a job loss or other adverse events. For Latinos, the average retirement asset decline was 18 percent.
By contrast, the Great Recession years took half of Latino family home equity, compared to an average 25 percent for Black and White families. To better understand this lost wealth, it is relevant to note that in 2010 only half of Black and Latino families owned their homes, while 75 percent of Whites were homeowners.
With more assets and diversified income streams, white wealth declined 11 percent during the Great Recession. But Black wealth dropped 31 percent during these same years and Latino families dropped the greatest at 44 percent.
Yet despite these findings, it is equally true that many families of color still desire to own a home and their own piece of America. Their dreams may be deferred, but still remains strong. As the nation’s economy continues to struggle towards prosperity, tightened mortgage lending, higher FHA fees, and continued discussions of federally-mandated down payments do not bode well for more families of color reaching the American Dream.
For the Urban Institute, the answer to these growing and disturbing disparities is reconsidering public policies.
“Families of color were disproportionately affected by the recession. However, the fact that they were not on good wealth-building paths before this financial crisis calls into question whether a whole range of polices (from tax to safety net) have actually been helping minorities get ahead in the modern economy,” according to the study.
Contrasting programs such as the Supplemental Nutrition Assistance Program and Temporary Assistance for Needy Families (SNAP) as two social safety programs designed to provide basic essentials; the report noted how tax subsidies for homeownership and retirement policies actually help to build wealth.
“The federal government spends hundreds of billions of dollars each year to support long-term asset development. But these asset-building subsidies primarily benefit high-income families, while low-income families receive next to nothing.”
The Urban Institute’s conclusions are strikingly similar to those reached earlier this year by the Brandeis University’s Institute on Assets and Policies.
“The evidence points to policy and the configuration of both opportunities and barriers in workplaces, schools and communities that reinforce deeply entrenched racial dynamics in how wealth is accumulated and that continue to permeate the most important spheres of everyday life,” the Brandeis report stated.
Here’s hoping that those entrusted with policy decisions are listening.
Charlene Crowell is a communications manager with the Center for Responsible Lending. She can be reached at: This email address is being protected from spambots. You need JavaScript enabled to view it. .
- Created on 06 May 2013
Better Bank Lending Would Improve Small Business Exports
The Office of Advocacy, an independent office that serves as the voice for small business within the federal government, recently released a report that found improved small business lending by banks in the United States would boost exports by the smallest businesses.
The report, called The Impact of Credit Availability on Small Business Exports, examines the relationship between the steep declines in small business lending and falling rates of small business exports during the recent recession. Small exporters with fewer than 100 employees especially felt the effects of deteriorating bank health or declines in bank lending. The effects of declining bank health on exporting were less evident for larger firms. The report defines bank health in terms of bank capital, liquidity, and nonperforming loan ratios.
“Small businesses that export their goods and services need to compensate for the riskiness of cross-border transactions and to allow for longer transportation times to get goods to market,” said Dr. Winslow Sargeant, Chief Counsel for Advocacy. “Add to that the greater reliance of small firms on bank credit in general, and it’s easy to see how even small changes in bank health could have the effect of undermining small business exports.”
“As policymakers focus on ways to improve the economy, the smallest businesses need more access to capital to grow their businesses and export their products,” said Dr. Sargeant. “Small businesses are playing an important role in this nation’s economic recovery, and if we want to export more American products around the world, we must improve this country’s lending environment.”
In the report, the author, Dr. Joe Peek, also examines differences by industry and state. The full report is available on the Office of Advocacy website at http://www.sba.gov/advocacy/7540.
- Created on 06 May 2013
Buffalo Wild Wings Changes Prices and Menu, Adds Gamechanger Beer
Buffalo Wild Wings, long known for its flavorful chicken wings, is throwing its hat into the premium beer ring. Their new beer, which was announced during the company’s first-quarter earnings call on Monday, is named “Game Changer.”
Buffalo Wild Wings CEO Sally Smith said the game is “a premium craft beer that is designed to go perfectly with our flavorful wings while watching a game.” Smith also noted that the restaurant brand has been looking for ways to increase their beer margins for some time now, but found it challenging due to cost restrictions from brewers and distributors.
Buffalo Wild Wings also announced that it’s changing its pricing for wings. It will now sell wings according to weight instead of quantity. Wings will now be available in “snacks, small, medium and large” serving sizes.
“Our new servings will allow us to serve a consistent portion of chicken to our guests when the size of wings fluctuates,” Smith said.
The company buys wings by the pound and has sold them by the piece, but chicken growers are producing bigger birds with bigger wings, leaving the brand with fewer wings per pound. Wild Wings has been testing new portioning in about 40 markets. The company will begin implementing the new portioning at all of its restaurants in July, and plans to have it completed by the start of football season.
- Created on 06 May 2013
Census Shows Decreasing Revenues for Black Businesses
A recent article in the Philadelphia Tribune revealed depressing numbers related to black business growth.
“Every five years, the U.S. Census does a survey to determine how many businesses there are in this country, who owns them, how many persons they employ, and what their annual revenues are. The figures for 2007, while lauded for the increase in the number of Black-owned businesses, revealed decreasing revenues for Black businesses, relatively few employees, a vast majority of them in the service industry.
The article goes on to say that the average gross receipts for Black firms as a whole fell 3 percent, from $74,000 per firm in 2002 to $72,000 per firm in 2007. And that 67 percent of black businesses had annual receipts of less than $50,000.
Read more here.
- Created on 03 May 2013
'Buying Power of Black America' Report Probes Spending Shifts
According to the data found in a new report, "The Buying Power of Black America," Black consumers have shifted their priorities and preferences.
With the nation slowly recovering from recession, businesses need to develop strategies for regaining and increasing their share in the Black American economy. Black consumers now represent the margin of profitability in most consumer product categories.
"What the recession did to Black consumers' buying habits was to give them a reason to re-evaluate how they spent billions of dollars," said Ken Smikle, president of Target Market News and editor of the report.
"Before tight economic times, many companies were in the habit of taking their loyalty -- especially to top brands -- for granted. That changed during the downturn. Price became a bigger factor driving purchasing decisions. Now brands have to earn the loyalty of Black consumers all over again, and Black consumers are asking brands, 'what have you done for me lately.'"
For the past 17 years, Target Market News has published the only report that details in dollars the impact of the Black Consumer
Market. Now approaching a trillion dollars in spending, the earned income of Black America already makes it the 16th largest market in the world, and it is on the verge of surpassing the gross national income of Mexico.
This 105-page report breaks down how much of Black consumers' $836 billion in income during 2011 was spent on clothing, entertainment, food, beverages, toys, consumer technology, cosmetics, autos, travel and dozens of other categories.
The top five categories with the largest dollar expenditures were Housing and Related Charges - $206.2 billion; Food - $70.7 billion; Health Care - $25.5 billion; Cars and Trucks (new and used) - $22.6 billion; and Apparel Products - $21.1 billion.
The top five categories showing an increase in spending between 2010 and 2011 were
Appliances, $2.7 billion (29%); Sports and Recreational Equipment, $850 million (28%); Personal and Professional Services, $5 billion (27%); Computers, $5 billion (21%); and Non-Alcoholic Beverages, $4.3 billion (16%).
Besides the economy, another factor causing a shift in the loyalty Black consumers is social media and increased access to business information. The new edition of The Buying Power of Black America debuts a section detailing the advertising dollars spent by major companies in Black media. It also compares the ad spending of companies by categories.
The Buying Power of Black America is an analysis of data compiled annually by the U.S. Department of Commerce. It is based on interviews and diaries collected from 3,000 Black households, and is the most comprehensive survey conducted on Black consumers.
