How racism impacts the health of the African American community

The last few years have highlighted many of the inept and unpatriotic policies that have plagues our society for generations. Prevailing wisdom throughout the country proclaimed that elements such as racism, gender equality and equal pay were at or near a resolution. Some pundits argue that racism does not exists and is instead of vestige of antiquated thinking (Petree, 2020). Still others persist in believing that racism is a tool used to captivate and distract the general population from more pertinent issues plaguing society (Gerald, 2019). Unfortunately, the facts provide a different narrative as it relates to racism and its impact on the future of the African American community. The first and arguable most important element relates to the ownership and control of assets. Minorities in general, have been significant laggards as it relates to asset ownership in America. Outside of the home, African Americans are less likely to owns stocks, bonds, and other forms of income producing assets. In addition, incomes within the community continue to lag comparable peers in the country. Finally, criminal justice initiatives have only increased incarceration rates and broken up families, further contributing to the plight of the African American community. Although, to be fair, the African American community must accept some accountable, the racist and often inhumane policies of racism have contributed to the condition of the African American community.

To begin, the system of capitalism is predicated on owning, controlling, and influencing assets. Assets are items that are expected to provided future economic benefits to the holder of a specified holding period. These can include stocks, bonds, mutual funds, real estate, farms, timber land, and so forth. To prosper and ultimately make changes in society, individuals must own or influence assets. African Americans have historically not been large owns of American business and enterprise. As of 2019, only 33% of African Americans owned stock. This percentage is nearly half of white households which are at 61%. This is particularly troublesome as stocks represent ownership claims to the earnings of a business. Stocks are considered equity investments in a business. As such, the equity investors are entitled to a portion of the companies’ profits. Management typically distributes these profits in the form of dividends which are issued quarterly, or share repurchases which enhances the ownership claim of existing shareholders. As a result, share ownership provides future economic benefits to the owners of the company. Unfortunately, only 33% of African Americans are even participating in this value creation mechanism with nearly 60% of white America is. Ultimately, this will create a wealth imbalance which where are currently realizing in society today. As more white Americans own income producing assets, their own personal income, wealth, and status increases. This increase will occur at a much faster rate than African Americans as the white community participates more in the ownership of income producing assets. Overtime, more and more of these assets will be controlled by the white community and as such, the company will reflect their values as shareholders. This inherently isn’t a negative issue as they values are what allow society to prosper. For example, shareholders who value the environment often push for environment conscious policies during shareholder meetings and quarterly conference calls. In fact, many shareholders have been advocates for African American causes such as diversity in the workplace, better police force training, and support for historical black colleges and universities. Many shareholders have also stood behind the African American community during the George Floyd protests across America. Although these initiatives are well intentioned and show the better site of corporate social responsibility, the African American should be spear heading these initiatives as strong majority owner of corporations. This ensures that polices continue to be at the forefront of the minds of executives. It also provides African Americans with the ability to vote on certain policies and issues that they deem important. As it stands currently the African American community is relying on other people to fight for them as they are the owners of business. What should occur in the exact opposite, the African American community should begin owning business and leverage their own power to elicit change within society overall.

What aren’t African Americans owning stocks or other income producing assets? If these assets are so valuable to the communities earning potential and wealth creation, why aren’t more African Americans participating? One reason, experts say, is a longstanding preference by many Black investors for safer places to put their money. This is residual legacy experts say, of decades of discrimination and fear. Historically, black business was often the primary store of wealth during the civil rights era. Business ownership during this period was very high as segregation required African American communities to product their own products, goods, and services. As was customary at the time, society enjoyed the economic benefits of “separate but equal.” The reality was at the time anything but equal as African American business owners use the limited amount of resources they had to establish businesses in the segregation era. Many started retail stores, grocery stores, barber shops, bus lines, and more. As expected, African American started to slowly increase at this time as communities began to support each other. Profits were reinvested into the community thus created better goods, product, and services. Over a relatively short amount of time, the segregated and less proficient African American began to make inroads on the competitive markets of the white community. There products become comparable in price and value and their service was also increasing. To combat this economic development certain activities began to occur. The ku klux klan began to raid businesses, burning African Americans profit centers. This in combination of past racist behavior led to a series of events that caused the African American community to be more cautious and conservation with their money.

To summarize, the African American community had to endure congressional mismanagement of the Freedman’s Savings Bank which left 61,144 depositors with losses of nearly $3 million in 1874, the violent massacre decimating Tulsa’s Greenwood District in 1921. Here a population of 10,000 that thrived as the epicenter of African American business and culture, commonly referred to as Black Wall Street were either killed, beaten or had their livelihoods destroyed. In addition, African Americans endured the discriminatory policies throughout the 20th century which included the Jim Crow Era’s “Black Codes” strictly limiting opportunity in many southern states. All the above exampled involve racial injustice becoming much more widespread and vandalism taking away the assets that the African American community started to acquire. The scars of this racism still prevail today, as African Americans prefer safe investments over perceived risky investments. With blacks having so few discretionary resources to invest, their participation in the equity markets dwindled. This ultimately has grave implications for the African American community today. For decades to come, wealth created by growing stock values sent children to elite colleges, underwrote small business start-ups, and secured a comfortable retirement for American families. However, much of this progress was missed by the African American community due to racism in the past and its scares. As of 2020 the net worth of a typical white family is nearly ten times greater than that of a Black family $17,150 (McIntosh, 2020)

Black wealth is a function of black income. Unfortunately, here too is where African Americans fall short of their white counterparts. Over 55 years since the Civil Rights Act that barred discrimination on the basis race, African Americans appear to still be experiencing pay discrimination. A recent study by PayScale found that black men earn 87 cent for every dollar a white man earns (Gruver, 2020). This combination of lower wages and more conservative investment practices leads to lower overall wealth creation for black communities. In addition, African Americans are also face discrimination as it relates to employment. The recent COVID-19 pandemic illustrates how African Americans often deal with adverse and very difficult employment situations. The black community regularly experience higher unemployment rates and work in worse jobs, which feature lower pay and fewer benefits, than whites. Moreover, they tend to work in jobs that are less stable than those held by white workers. For example, African American workers often see their unemployment rates go up sooner than white workers when the economy sours, and their unemployment rates also take longer to decline when the economy improves than is the case for whites. This too contributes to the inequality we are currently experience in society today. First, African Americans primarily due to past racist activity are less likely to invest in productive, income producing assets. In addition, they most contend with lower wages based on similar qualifications than their white counterparts. In addition, those who do have high paying jobs are often the first to get fired and the last to get hired. All these elements of wealth and income have their roots in racial inequality.