African Americans are feeling better than ever about their financial futures. According to the 2015 African American Financial Experience, an annual study conducted by Prudential Financial, a majority of African Americans were remarkably optimistic about their current financial situations with more than half of those surveyed saying they were better off financially now than they were five years ago.
But in this current climate of economic confidence and financial savvy, how affluent are black Americans in the larger community, particularly in comparison to whites? Inequalities in wealth continue to hinder overall economic health and wealth. White household wealth is 20 times more than that of African American households, according to a Pew study released in 2014.
“African Americans are focused on paying the bills and making sure they can provide properly for their families and loved ones, rather than planning and saving for the future,” says Delvyn Joyce, managing director of Prudential’s South Florida Financial Group.
Economic indicators show African Americans lag behind their white counterparts in the areas of transferring wealth and investing and making financial investments. The African American Financial Experience indicates that blacks remain apprehensive about making financial investments and are operating under the misperception that they lack the financial assets to make investments and build wealth.
“The growth in the African American community in terms of annual income is due in part to the growth of African American businesses,” explains Peter Rhodes, founder and CEO of BMA Cable Network’s Urban Mass Media Group. “You don’t need a half a million dollars and go into debt to start your own business. I worked two jobs in order to save enough dollars to start my cable network.”
Rhodes has since established a successful enterprise that has become a wealth building legacy for his family.
“The majority of black businesses are sole proprietorships with only a single employee. … African American businesses employ 921,000 people vs. 23.9 million employees in non-African American [small] businesses,” said U.S. Black Chamber of Commerce president Ron Busby, Sr., emphasizing the lack of support for black businesses. Busby also notes that a sharp increase in the number of black entrepreneurs is the result of corporate downsizing and unemployment.
The U. S. Census reports that the number of black-owned businesses increased at triple the national rate, and Forbes magazine reports that the number of businesses owned by African American women has grown 322 percent, making black women the fastest growing group of entrepreneurs in the U.S. But no matter how they arrive at the threshold of self-employment and small business ownership, African Americans continue to find that entrepreneurship is key to building wealth and is a primary pathway to economic prosperity.
Recent studies estimate that black buying power in 2015 will exceed 1 trillion dollars. To put that statistic into perspective, if black consumers were a nation it would be the 16th largest nation in the world.
“The size and influence of affluent African Americans is growing faster than that of non-Hispanic whites across all income segments, and the impact is being felt across all industries, and savvy marketers are taking notice,” said Cheryl Pearson-McNeil, Senior Vice President, U.S. Strategic Community Alliances and Consumer Engagement, Nielsen.
The enthusiasm, resolve, and willingness of African American business owners to build lasting wealth is translating into an unprecedented level of awareness of the viability of entrepreneurship and the potential for cultivating business opportunities for the next generation of black entrepreneurs.
“The African American financial experience in America has been hits and misses,” says retired General Motors auto executive, Roy Roberts. “We have to consciously put forth all the effort possible to make sure we create wealth because that is what’s going to make a difference in our lives and the lives of our kids and the generations to follow; wealth creation and not just spending everything we get our hands on.”
Economic experts report that continued advances in the financial experiences of African Americans will be based on a more thorough understanding of wealth creation and increased awareness of financial options. The choices black consumers make today will impact their overall economic well-being and future financial gains.
Real Times Media subsidiary, Who’s Who Publishing Company, has partnered with Prudential Financial, Inc. to host Titans of Industry: A Wealth and Wisdom Speakers Series, a six-city tour highlighting African American business powerhouses discussing pathways to building and maintaining wealth in the black community.
Join us live on Periscope @TheTitansExp, Wednesday, September 23, 2015 at 6 p.m. to be a part of the first discussion featuring panelists Gwendolyn Butler, Vice Chairwoman and Chief Marketing Officer, Capri Investment Group, LLC; Harry Johnson, President and CEO of the Friends of the Memorial Foundation, Inc.; Deborah Owens, CEO, Owens Media Group, LLC; Dr. William F. Pickard, Chairman and CEO, Global Automotive Alliance; and Dr. M. Roy Wilson, President, Wayne State University. For more information visit www.thetitansexperience.com.