Tag Archives: forbes 400

Jay-Z’s Billionaire Ascension Highlights The Black-White Billionaire Wealth Gap In America


“I want to inspire people. I want someone to look at me and say “Because of you I didn’t give up.” – Reginald F. Lewis

Forbes Magazine recently declared that Shawn Carter AKA Jay-Z AKA Hova officially has the net worth to enter billionaire status. We wonder if there will be a follow-up to 50 Cent’s I Get Money song that was remixed and called the Billionaire Remix or Forbes 1-2-3 where Jay-Z, Diddy, and 50 Cent who at the time were worth a combined $1 billion between the three of them. Now, Jay-Z can do the song all by himself. Unfortunately, while social media celebrated Mr. Carter’s new found billionaire status, it does open up an additional layer to the conversation on the racial wealth gap in America. Of course, no one who is a billionaire is going to garner sympathy from Main Street America, but the lack of African American billionaires certainly can be argued as a point of why there is continued institutional weakness among Main Street African America.

African Americans make up 15 percent of the American population, but of the Forbes 400 wealthiest Americans there are only three who make the cut – Mr. Carter is not one of those three. This amounts to less than 1 percent representation. According to the website, “The minimum net worth to join this exclusive club hit an all-time high of $2.1 billion while the average net worth for a Forbes 400 member rose half a billion to a record $7.2 billion.” The only three African Americans present on the Forbes 400 are Robert Smith, who recently made headlines by promising to pay off all of Morehouse’s 2019 class student loan debt. Then there is David Steward, a man who could walk into almost every room in African America and would not be recognized, but has made his $3 billion fortune through co-founding an information technology firm that is integrated in the highest levels of corporate and government. Lastly, Oprah Winfrey, who ironically is not even the wealthiest HBCU graduate but is the wealthiest African American HBCU graduate. It would take 60 African American billionaires with a net worth exceeding $2.1 billion to be representative according to our population’s percentage. Overall, there were 680 billionaires in the United States in 2018 and only four of those at the time were African American, Michael Jordan being the fourth who is also a recently minted billionaire and also is a case study in himself of just how astonishing the wealth gap is among African American and European American billionaires, but more on that later. The irony of representation for African Americans is that the United States in 2018 comprised almost 25 percent of the world’s billionaires despite being less than 5 percent of the global population according to Wealth-X.

In 2014, the median wealth for African America stood at $9,590 versus $130,800 for European Americans, according to the U.S. Census Bureau. This means that for every $1 that African Americans have European Americans have approximately $14. This in itself is an astonishing number until you examine the gap among the billionaire class. The five wealthiest European Americans (Bezos, Gates, Buffett, Zuckerberg, & Ellison) have a combined net worth of $427.7 billion versus $13.4 billion for our billionaire five of Smith, Steward, Winfrey, Jordan, and Carter. It is a ratio of the aforementioned having $31 to every $1 of the latter, which is almost 2.5 times greater than the overall gap. For the gap to be progressively worse as the wealth goes higher is in some ways astonishing and in a lot of ways expected because of how the wealth is being created. Re-enter, Michael Jordan.

There is the man who built Nike and the man who owns Nike and they are not the same. Very few will argue that had Michael Jeffrey Jordan not signed with Nike in 1984 the company, founded and majority owned by Phil Knight, probably never becomes more than a two-bit player behind the likes of Adidas, Reebok, and New Balance. Jordan was a paradigm shift. The financial gods aligned the stars in 1984 for Phil Knight with the signing of the man who would become arguably the greatest NBA player of all-time, the NBA’s continued meteoric rise in popularity, cable television, and ESPN. All of these ingredients came together to take Nike from a company that in 1984 was doing $867 million in revenue to the behemoth that it is 35 years later with revenues of $36.4 billion. An increase of 4200 percent over the time period. Jordan’s brand accounts for almost 10 percent of the company’s revenues today despite Jordan himself not having played in the NBA for almost 20 years. No other brand comes close to the singular importance that Jordan still holds for Nike, and therefore Phil Knight. Yet, Knight’s net worth is almost $34 billion, while Jordan’s is only $1.9 billion. Ultimately, Jordan who earns around $100 million annually from Nike or 3.2 percent of the Jordan brand revenues is simply well compensated labor, while Knight, the owner, truly reaps the fruits of His Airness.

Consequences of these gaps is not unnoticed institutionally within communities. Billionaires tend to be major donors to institutions like education, healthcare, and more philanthropically. These are areas of institutional infrastructure for African America that are severely under built and underfunded.  Never mind the investments they make in the order of private equity or venture capital that spawns new generations of wealth and influence, which tends to lead into immense political influence in the form of political contributions that shapes policies for hundreds of millions. Phil Knight has contributed well over $2 billion to his former alma maters, the University of Oregon and Stanford Graduate School of Business,  an amount equal to the value of all 100 plus HBCU endowments combined. He has so much influence that the state of Oregon has changed laws just to accommodate his giving to the University of Oregon.

Unfortunately, coming back to one of Jay-Z’s most prolific lyrics tells a lot of the issues facing African American wealth accumulation where he says “I’m not a businessman, I’m a business, man.” For many this line is interpreted as Mr. Carter braggadocios that he is bigger than just being Phil Knight, he is Nike – and he is right and that is where he is also wrong. Instead of controlling the company and brand, he is the company and brand. In other words, if he does not work, then he does not eat in a sense. Many of Mr. Carter’s businesses are built on their relationship to him. They are what is considered a lifestyle brand and he is the lifestyle brand you aspire to be. You drink his liquor or wear his clothes because this allows you to share in his coolness. For his business to continue to produce, then he himself must remain relevant. Three of the five African American billionaires have made their money via sports/entertainment and mainly off their own image, while four of the five European American billionaires have built their companies via technology and scaled those businesses to something that the entire world wants and needs. Even Mr. Buffett, who has largely made his money through investments and lords over companies like Geico, Wells Fargo, and many other companies is so integrated into people’s lives, often in ways they do not even realize on a day-to-day basis. Their companies and brands are far more well known to the world than the founders themselves. Governments buy Microsoft software. In fact, Microsoft Windows still accounts for use on almost 80 percent of the computers worldwide. They have created systemic companies, while our billionaires have created mostly popularity brands and as we know popularity eventually fades as new generations arise. The fact that Mr. Carter has remained relevant this long is a testament to him for sure (and his wife), but not something anyone should assume can last a lifetime. There is also the reality that even if it does, he can not pass his social capital along to his children, but Jeff Bezos’ children can and will most likely inherit Amazon even if they choose to not run it.

The situation is also not isolated to African America. Worldwide, the sons and daughters of Africa are battling the same fate. Asia is experiencing a meteoric rise in their billionaire class and now trails only Europe/US with the Diaspora with the most billionaires. Africa, one of the world’s fastest growing economies, has less than 2 percent of the world’s billionaires but contains over 15 percent of the world’s population – mainly, due to Asian and European interest continuing to siphon the continent of resources and burden it with predatory debt to their own interest and benefit. Simply put, we are not going to sing, dance, or chase balls in closing the wealth or power gap overall or the gap in the pantheons of the two. We are going to have to build institutions that wield wealth and power on a mass scale not just in small silos. Mr. Carter and Jamie Dimon are financially worth roughly the same, but Mr. Dimon is the CEO/Chairman of J.P. Morgan bank that controls almost $3 trillion in assets. An amount that is 600 times all African American owned banks combined. Mr. Dimon is not a business, man. He is “just” a businessman.

A multilayered cake is what the wealth gap entails like so many other issues that African America is looking for solutions to as a community. This data ultimately just gives us another layer to examine to help level the playing field. Mr. Carter’s billionaire status while admirable also should raise pertinent strategic questions for the community in its economic development. How is African American wealth being created? Is it scalable? Is it replicable? Are we seeing the wealth circulated back within the our community’s institutions? The reality of what it means that the gap at the apex of wealth is so pronounced must be examined and what it can tell us is still to be determined, but we do know that while men lie, women lie, numbers do not.

Does Graduate School Matter? America’s 100 Wealthiest: 44 Percent Have Graduate Degrees


By William A. Foster, IV

Our most widely known scholars have been trained in universities outside of the South. – Dr. Carter G. Woodson

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Probability is defined as how likely something is to happen. Most events can not be predicted with absolute certainty. The best we can do is to say how likely something is to happen using the theory of probability. We all know that education is important, but how much education is needed has always been up for debate. Let us be clear, all education is not created equal. Howard University  and the University of Phoenix are in different pantheons of education despite both offering undergraduate and graduate degrees. A large portion of college, be it undergraduate or graduate is about the network you are plugging into and the proverbial “ownership” that institution serves. For instance, Notre Dame clearly is “owned” by the Catholic community. Its social, economic, and political DNA all flows through its Catholic roots and papal connection from its founding and is rooted in all that it does today. It goes without saying that a Catholic at Notre Dame will be afforded a higher probability of certain opportunities and access to its network’s power, something that non-Catholics attending Notre Dame would not be afforded. This institutional ownership can be based on religion, ancestry, gender, etc. All of these things must be factored in and complicit when analyzing, but that does not change the overarching reality that just an undergraduate degree is enough information intake anymore to break through into the pantheons of America’s wealthiest.

Out of the 100 wealthiest Americans 44 percent have graduate degrees. The normal assumption is of course they all have MBAs, which is well represented certainly, but by no means was the MBA the dominant degree that even I assumed it would be. Overall, 74 percent of the wealthiest 100 have at least a bachelor’s degree, 13 percent attended some college and dropped out, and the rest some mixture of high school or unknown education. You could argue that the country does not just say education matters, it practices it and rewards it. The Bureau of Labor Statistics shows that over a 35 year span those with master’s, doctoral, and professional degrees will earn $100 000, $215 000, and $240 000 more than those with just a bachelors, respectively. That is not even taking into account the potential of those additional earnings being transformed into investments, which is often the catalyst for becoming among America’s wealthiest. Unless you are coming into a family inheritance, then you will need all the extra capital you can get to increase your probability of economic success. Again, all education is not created equal and whom you are being educated by matters, but to see that education is prevalent among the country’s economic elite does speak volumes to community values. The breakdown of the graduate degrees was also surprising. Yes, MBAs led the way, but as aforementioned the gap was not as large as I assumed it would be. MBAs constituted 43 percent of graduate degrees, MA/MS were next with 32 percent, law degrees or JDs were third with almost 23 percent, and PhD/MDs comprised almost 16 percent. With this type of information it further reinforces HBCUs need to build their graduate school ecosystem and network from within.

HBCUs best and brightest undergraduates continue to be cherry picked by HWCU/PWIs in an institutional brain drain of the HBCU ecosystem. This impact allows for a justification of a disproportionate amount of research funding to be steered away from HBCUs. We also know that graduate schools are responsible for the likes of creating companies such as FedEx and Google. A report by the Kauffman Foundation on MIT’s alumni founded companies alone shows the school’s alumni have created economic impact equivalent to the eleventh largest country on Earth and employs almost 2 million people. If HBCUs were to even match half of that employment number it would drop African America’s unemployment rate to under 6 percent and create jobs for every HBCU graduate. At current, the gap between HWCU and HBCU research spending is startling to say the least with the top 20 HWCU research institutions spending $40 to every $1 in research that the top 20 HBCU research institutions spend. As noted in our article on public HBCU athletics, HBCUs are spending $0.80 on athletics for every $1.00 of research, while our counterparts are spending $0.14 on athletics for every $1.00 of research. If graduate schools matter and research matters in the climb up the economic ladder in America (and arguably around the world), then HBCUs and their alumni have to stop treating their graduate schools like places for their undergraduate alumni to holdover while they figure out life or wait to get a job offer after graduation.

There are 43 HBCU (including Chicago State University and Charles Drew University) with graduate programs, five HBCU law schools, and four HBCU medical schools. Currently, the only full service HBCU, those with graduate programs, law school, and medical school, is Howard University. No public HBCUs have a medical school which means HBCUs are missing out on public funds directed toward medical research. Again, research is typically the forerunner to products being developed and companies being founded. Having access to public funds is often vital to that development. Another way to look at it is that African Americans are paying into the tax base for medical research, but not able to extract any of it through our public institutions. It is not only STEM though that we must be concerned with. The social sciences and humanities are areas where there is a vital opportunity to present to the world an African Diaspora point of view through research. Yet, when it comes to something as simple as African Studies we are anorexic in our presence in the field. The Root a few  years ago pointed out, “only Howard and Clark Atlanta universities offer master’s programs. Howard is also the only HBCU to offer a doctoral program in African studies, which is offered by eight traditionally white institutions.” How will African American businesses be able to do business in Africa if we do not have a cultural understanding of the diversity within our own Diaspora? One would imagine that someone with graduate level studies could form a consulting company that sells services that help businesses transition products and services for optimal success on the continent. The continent by the way with the fastest growing economies in the world.

The MBA on the other hand is an animal upon itself. One in which of late a number of HBCUs have decided to offer. The MBA long served as a tool of training tomorrow’s CEO’s and upper level management. It usually required a minimum of five years working experience, the GMAT, and sacrificing your social life for two years due to the intensity and demand of the nation’s best programs. I once had a classmate try to work 15 hours per week as a waiter while we were in business school and it almost killed him. Truly great MBA programs will tell you that between good grades, social life, and sleep you are only going to achieve two during your two years. It is one of those degrees, as noted by the percentage aforementioned, that if you are going to offer you better offer it right. Unfortunately, most HBCUs are offering an MBA program that is barely a notch above the University of Phoenix’s MBA program. It is questionable whether it is worth the paper it is printed on and does little more than add tuition revenue to the school’s coffers and debt to the student’s bottom line. They are usually not unique in any kind of way other than accessibility which is really not the point of an MBA. I moved to Boston to do part of mine in a program that required a semester abroad at usually the visiting country’s top MBA program. A traditional MBA that is going to have brand recognition is not going to be part-time. To get the benefits there is sacrifice required not convenience. I say that to say HBCUs that are offering MBAs just to offer them will never be able to recruit the top talented HBCU undergraduates or professionals because they are just one in a pile. Instead, what many should have been doing is offering specialized MBAs in fields like agriculture, computer science, government, philanthropy, or even an MBA for education professionals like Rice University does. Even more like Brandeis University that offers an MBA in Jewish Studies. Why are there no HBCU MBAs that teach HBCU graduates how to run and manage African American owned organizations and businesses? We face unique challenges in starting and building organizations and businesses and yet, HBCUs largely ignore this as an opportunity.

It is clear that in this, the information age, that knowledge matters. Knowledge always has been to some degree, but even more so now – power. Quality knowledge across a great spectrum is vital to developing tomorrow for our communities, institutions, and families. We teach students in undergraduate the basics of that knowledge, but it is in graduate school where they learn the nuances, develop, and hone the skills of putting that knowledge to use. Is graduate a guarantee to riches? Certainly not. Nothing in life ever is. However, what we do see is that if we plan to close the wealth gap both individually and institutionally; it will be done through harnessing more knowledge not less. As the requirements for high skilled jobs and entrepreneurship skyrocket, then we are increasingly getting further and further behind the curve by not innovating within our own graduate schools and ecosystem. Often doing more reactive and symbolic gestures than substantive ones. Of the 1.8 million full-time students enrolled in graduate programs in the United States, 12.1 percent are African American according to the Council on Graduate Schools. Nationally, graduate students comprise 14.3 percent of the combined undergraduate and graduate school population. Conversely, African American graduate students comprise only 6.9 percent of the combined African American undergraduate and graduate school population. Most likely due to many African American undergraduates choosing to go straight to work immediately upon graduation, unable to forgo an additional number of years of earnings despite the aforementioned long-term economic benefits.

America’s wealthiest come from a myriad of different industries. They have all made their wealth in a vast spectrum of different ways. The constant to their stories is graduate level education tilts the odds in their favor to achieve economic independence and wealth for  almost 1 out of 2. In other words, like the motto of the HBCU Endowment Foundation, an organization with a strong emphasis on HBCU graduate school development, – “Sacrifice today, so tomorrow may prosper.”

Editor’s Correction: There are five HBCU medical schools. Tuskegee University has a veterinarian school, which is recognized as a medical school.