THE RACIAL WEALTH DIVIDE AND THE SKINNY ON SNEAKERS

Every three years, the Federal Reserve publishes its Survey of Consumer Finances. This triennial survey queries a sample of household on a wide range of money matters and, moreover, breaks down financial data by demographic groups. The most recent survey we have covers the three year period of 2016-2019 and the next one, covering 2019-2022, should hit sometime this year.

From the 2019 Survey, we learn, among other things, that our political economy continues to be characterized by a huge racial wealth divide. The median white household, for instance. has a net worth of almost $200,000 ($188,200) while, in contrast, the comparable figure for Black households clock in at less than $25,000 ($24,100). This means that the "typical" Black household has 13 cents (12.8) for every dollar in wealth held by the "typical" White household.

Those figures are for the median Black and White households-- that is, for the household that's right in the middle of the wealth distribution for both groups. Being the midpoint, half of all the households have a net worth greater than the median and half have less than that figure. More pointedly, the data from the Survey is telling us that half of all Black households have a net worth greater than $24,100 and half have less than that. Likewise, $188,200 is the bright red line dividing White households, with half of those households having a level of wealth that exceeds that number and the remaining half's net worth or wealth falling below that line of $188,200.

You could, of course, count up all of the household wealth held by Whites and then divided that number of by the number of White households. Same deal with Black households. In that case, what you'd be calculating is the average or mean wealth held per White and Black households.

The 2019 Survey of Consumer Finances (SCF) did this kind of calculation, and here's what they found: The mean or average wealth of White households is borders on a million dollars ($983,400), compared to $142,500 for Black households. So, when we focus on the mean rather than the median, the average Black household has 14 cents for every dollar of wealth held by the average or mean White households.

According to the mean figures, the magnitude of the overall racial gap is $840,000 per household, which is the difference between the average net worth of White and Black households ($983,400-$142,500). That's how much more wealth Black folk would need per household to have the same net worth that White people have per household.

SNEAKERS, SPENDING, AND CASTIGATION OF THE POOR

Whenever that wide gap between White and Black wealth comes up in a discussion, it's not long before we start getting bombarded with stories about how Black folks' supposed predilection for "shiny shit" is the reason why we're sinking financially. These stories are grounded in the view that Black people are dysfunctional and wedded to behaviors that reek of a penchant for instant gratification and a weakness for the latest and most glamourous gadgets and clothing. According to this story, far too many of us go bananas over this kind of stuff--over this kind of glitz-- and end up using our precious dollars to chase down "shiny shit" rather than saving and investing our ducats in assets that appreciate in value.

Poor, Black parents--especially poor, Black women-- are regularly castigated for "foolishly" dropping what meagre coins they have on the latest and flyest gear for their kids. For those policing the spending of the Black poor, spending a few hundred dollars on sneakers, especially Jordans, is the quintessential example of the alleged financial illiteracy running amok amongst Black households. For those policing the spending and the supposed dysfunctional behavior of the Black masses, nothing is more infuriating than the sight of a bunch of Black folks queueing up to cop the latest Jordans. For these folk, for the people who seem to be constantly gazing at and scrutinizing how poor Black households are deploying their dollars, the purchase of Jordans is emblematic of the financial asininity that supposedly is keeping up them from saving, getting in on the magic of compound interest, investing, and embarking on the journey toward plentitude.

SNEAKERS AIN'T THE PROBLEM

But here's the problem: It's just not true that Black people are spendthrifts incapable of delayed gratification and furiously engaged in a race to the bottom. It's not true that, compared to Whites, Black households spend more and save less. It's not true that we're a dysfunctional group of financial illiterates. It's not true that we're a pathological people pushing our way toward penury. It's not true that there's an attraction to "shiny shit" that's shattering the economic dreams of Black households. It's not true that racial differences in behavior is the cause behind the racial wealth gap.

At this point, there is a growing body of carefully conducted research that dismantles the thesis that, everything else being equal, Black households spend more and save less than their White counterparts. A recent study from Duke University, for instance, assigned all households to one of three categories, based on their household earnings: low, medium, and high income, respectively. Within each one of these three groups, the researchers found that, on average, White households spent more than Black households. Low-income White households spent more than low-income Black households; medium income White households spent more than middle income Black households and high income White households spent more than high income Black households. And, as pointed out by another group of researchers, the Duke study also found that after accounting for such additional factors as racial differences in occupational distribution, geographical location, differences in rates of homeownership, and family structure, "white families at all income levels continued to spend more than comparable black households, with low income white households spending $1,200 more per quarter than low-income black households and high income white households spending $1,400 more than their black counterparts." All of this is consistent with an earlier study by Gittleman and Wolff that found that after controlling for differences in income, Black families actually saved slightly more than comparable White families.

What's more, there's clear evidence that, in comparison to White households, Blacks are more likely to find themselves in the position of having to provide financial assistance to a family member in need. Because of a history of exclusion and exploitation, Black families are more likely to have family members in dire economic straights and in need of a "couple of dollars" to meet their basic needs. Here's how sociologist Lisa Wade puts it:

"The lesson is simple but all too often unnoticed: Due to hundreds of years of enslavement and discrimination, African Americans are more likely to be poor than Whites. If you grow up poor, then most of the people in your family are poor. Accordingly, even if you "make it out" and arrive in the middle class (income-wise), you will likely be less financially secure than the person who earns the same income but came from a middle class family. That person can put all their extra income toward buying a home (and earning equity), retirement, additional degrees, starting a business, and sending their kids to college."

These data suggest that we're not the trifling sub-optimal decision makers that we're too often portrayed as in the media and public discourse. Surprising though it may be to some, Black households are not the 'shiny shit" addicts we're portrayed to be in public domain. There is, quite frankly, growing data that challenges the image of Black households as disproportionately trifling and hostile to delayed gratification. There's growing evidence that once we control for differences in income and other relevant characteristics, Black households save as much as (if not slightly more) than comparably situated Whites.

But far too many of are so convinced of the alleged dysfunctionality of Black folks that we can't even begin to entertain the possibility that our relative lack of wealth is not attributable to some kind of wretched behavioral patterns. Our vision is clouded because we've drunk--and continue to drink--from rancid wells of elitism and anti-blackness. We're in such an ideological stupor that we don't fully glimpse that, rather than being primarily ascribable to personal behavior, the origins and perpetuation of the racial wealth divide flows out of exclusion and exploitation.

When, and if, we take leave of the well of elitism and anti-blackness, we'll grasp the veracity of what Michelle Singletary said a few years ago: "If anything, many Black people are super savers, when you take into account the network of kinfolk and friends they assist financially."

In other words, the racial wealth divide ain't got shit to do with sneakers.

Catch you on the flip side,

Doc Greene