Tag Archives: racial wealth gap

African American Poverty By HBCU/PBI States (2020)

“With segregation, with the isolation of the injured and the robbed, comes the concentration of disadvantage. An unsegregated America might see poverty, and all its effects, spread across the country with no particular bias toward skin color. Instead, the concentration of poverty has been paired with a concentration of melanin.” – Ta-Nehisi Coates

HBCUs and PBIs are arguably African American institutions that are built to solve and protect African American interests. There is no greater crisis that currently faces African American economically than its poverty. Its impact across all statistics like health outcomes, civic participation, business creation, student loan debt, and the list goes on and on. What exactly HBCUs and PBIs are doing about African American poverty in their cities and states is complicated to address. Many would say that simply graduating the number of African Americans with degrees is more than enough. That is until you realize the depth and impact our counterparts are using their higher educational institutions to do. MIT has an incubator that allows students to create companies while matriculating. Schools like Stanford have helped create Google, Harvard is the birthplace of Facebook, University of Texas and Texas A&M formed UTIMCO to create the nation’s largest endowment, and much more. PWIs banking with banks like J.P. Morgan, Wells Fargo, and others ensuring that European American owned banks have a deposit base that allows them to conduct the business of financially protecting their community and lending for European American homeownership and small business creation. HBCUs, not so much. It is also not just the HBCUs, but HBCU foundations, HBCU alumni associations, and other organizations that are supposed to be part of the vanguard/ecosystem of African American institutional development that pulls African American individuals, families, and communities away from poverty in conjunction with other African American institutions.

Poverty is already a complex and layered system and African American poverty is that on steroids. Each state and the HBCU/PBIs institutional system in it are part of the counterattack against African American poverty. Or at least we want them to be. For the alumni and administrations who see their institutional system as part of the empowerment and pulling of African America out of the throws of poverty it requires to know the actual depths of the situation.

Among the U.S. states with the highest poverty rates for 2022, HBCU/PBI states constituted 8 out of the top 10 for overall poverty.

ALABAMA

Overall Poverty (2020): 15.5%

Overall Poverty (2015): 19.3%

African American Poverty (2020): 23.5%

African American Poverty (2015): 31.1%

Change In African American Poverty 2015-2020: Decreased 24.4%

ARKANSAS

Overall Poverty (2020): 16.2%

Overall Poverty (2015): 18.9%

African American Poverty (2020): 27.1%*

African American Poverty (2015): 33.2%*

Change In African American Poverty 2015-2020: Decreased 18.4%

CALIFORNIA

Overall Poverty (2020): 11.8%

Overall Poverty (2015): 16.5%

African American Poverty (2020): 19.0%*

African American Poverty (2015): 25.4%*

Change In African American Poverty 2015-2020: Decreased 25.2%

DELAWARE

Overall Poverty (2020): 11.3%

Overall Poverty (2015): 12.5%

African American Poverty (2020): 17.3%

African American Poverty (2015): 19.9%

Change In African American Poverty 2015-2020: Decreased 13.1%

DISTRICT OF COLUMBIA

Overall Poverty (2020): 13.5%

Overall Poverty (2015): 17.7%

African American Poverty (2020): 21.6%*

African American Poverty (2015): 25.9%*

Change In African American Poverty 2015-2020: Decreased 16.6%

FLORIDA

Overall Poverty (2020): 12.7%

Overall Poverty (2015): 16.5%

African American Poverty (2020): 19.8%*

African American Poverty (2015): 26.9%*

Change In African American Poverty 2015-2020: Decreased 26.4%

GEORGIA

Overall Poverty (2020): 13.3%

Overall Poverty (2015): 18.3%

African American Poverty (2020): 18.8%

African American Poverty (2015): 27.0%

Change In African American Poverty 2015-2020: Decreased 30.1%

ILLINOIS

Overall Poverty (2020): 11.5%

Overall Poverty (2015): 14.4%

African American Poverty (2020): 24.2%*

African American Poverty (2015): 30.6%*

Change In African American Poverty 2015-2020: Decreased 20.9%

KENTUCKY

Overall Poverty (2020): 16.3%

Overall Poverty (2015): 19.1%

African American Poverty (2020): 24.4%*

African American Poverty (2015): 32.4%

Change In African American Poverty 2015-2020: Decreased 24.7%

LOUISIANA

Overall Poverty (2020): 19.0%

Overall Poverty (2015): 19.8%

African American Poverty (2020): 29.4%*

African American Poverty (2015): 33.7%*

Change In African American Poverty 2015-2020: Decreased 12.8%

MARYLAND

Overall Poverty (2020): 9.0%

Overall Poverty (2015): 10.1%

African American Poverty (2020): 12.9%

African American Poverty (2015): 14.6%*

Change In African American Poverty 2015-2020: Decreased 11.6%

MASSACHUSETTS

Overall Poverty (2020): 9.4%

Overall Poverty (2015): 11.6%

African American Poverty (2020): 17.6%

African American Poverty (2015): 21.8%

Change In African American Poverty 2015-2020: Decreased 19.3%

MICHIGAN

Overall Poverty (2020): 13.0%

Overall Poverty (2015): 16.2%

African American Poverty (2020): 25.9%*

African American Poverty (2015): 33.0%*

Change In African American Poverty 2015-2020: Decreased 21.5%

MISSISSIPPI

Overall Poverty (2020): 19.6%

Overall Poverty (2015): 21.5%

African American Poverty (2020): 30.7%

African American Poverty (2015): 34.3%*

Change In African American Poverty 2015-2020: Decreased 10.5%

MISSOURI

Overall Poverty (2020): 12.9%

Overall Poverty (2015): 15.5%

African American Poverty (2020): 21.2%

African American Poverty (2015): 28.1%*

Change In African American Poverty 2015-2020: Decreased 24.6%

NEW YORK

Overall Poverty (2020): 13.0%

Overall Poverty (2015): 15.9%

African American Poverty (2020): 20.0%

African American Poverty (2015): 23.2%

Change In African American Poverty 2015-2020: Decreased 13.8%

NORTH CAROLINA

Overall Poverty (2020): 13.6%

Overall Poverty (2015): 17.2%

African American Poverty (2020): 21.5%

African American Poverty (2015): 26.5%

Change In African American Poverty 2015-2020: Decreased 18.9%

OHIO

Overall Poverty (2020): 13.1%

Overall Poverty (2015): 15.8%

African American Poverty (2020): 27.3%*

African American Poverty (2015): 34.7%*

Change In African American Poverty 2015-2020: Decreased 21.3%

OKLAHOMA

Overall Poverty (2020): 15.2%

Overall Poverty (2015): 16.6%

African American Poverty (2020): 28.2%*

African American Poverty (2015): 29.9%*

Change In African American Poverty 2015-2020: Decreased 5.7%

PENNSYLVANIA

Overall Poverty (2020): 12.0%

Overall Poverty (2015): 13.6%

African American Poverty (2020): 24.9%

African American Poverty (2015): 29.5%

Change In African American Poverty 2015-2020: Decreased 15.6%

SOUTH CAROLINA

Overall Poverty (2020): 13.8%

Overall Poverty (2015): 16.8%

African American Poverty (2020): 23.1%*

African American Poverty (2015): 26.0%

Change In African American Poverty 2015-2020: Decreased 11.2%

TENNESSEE

Overall Poverty (2020): 13.9%

Overall Poverty (2015): 18.3%

African American Poverty (2020): 21.5%

African American Poverty (2015): 30.9%

Change In African American Poverty 2015-2020: Decreased 30.4%

TEXAS

Overall Poverty (2020): 13.6%

Overall Poverty (2015): 17.2%

African American Poverty (2020): 18.6%

African American Poverty (2015): 23.2%

Change In African American Poverty 2015-2020: Decreased 19.8%

VIRGINIA

Overall Poverty (2020): 9.9%

Overall Poverty (2015): 11.8%

African American Poverty (2020): 16.4%*

African American Poverty (2015): 21.2%*

Change In African American Poverty 2015-2020: Decreased 22.6%

*Denotes that African Americans had the highest poverty rate among all groups during that period.

SOURCE: TalkPoverty.org; KFF.org

Norfolk State University Alumna & Community Banker Carla Holmes Discusses The History Of Black Homeownership

The ache for home lives in all of us, the safe place where we can go as we are and not be questioned. Maya Angelou

African American homeownership (pictured below) has never breached above 50 percent. Ever. According to HBCU Money data, it would take $14.7 billion in down payments for African American homeownership to just reach 50.1 percent. This is assuming that those 900,000 African American households would only be using FHA at 3.5 percent down. A debatable matter on the risk side that such low down payments would pose to households should the real estate market turn against them in the early years of their ownership. The $14.7 billion could decrease given the geography of African Americans being predominantly focused in the southeastern United States where homes on the whole are cheaper than much of the rest of the country. Using the southeastern median home price in fact would drop the $14.7 billion down to $12.3 billion. How big is this number? African American owned banks (what is left of them) only hold $4.3 billion in assets combined. The approximately 100 remaining HBCUs have combined endowments of around $3 billion. There are 44 people (none of which are African Americans) on the Forbes 400 who are individually worth more than $14.7 billion.

The causes of this are many, but the impact of it has been extremely pointed. In a country where homeownership has significant social and economic value to a group, African Americans have largely been starved of the social and economic oxygen that homeownership prevails and continue to lack the ecosystem necessary to make the sustained push above and beyond what has now become the mythical 50 percent line. But all hope is not lost.

Recently, Carla Holmes, a Norfolk State University alumnae and community banker, sat down for an interview to discuss the history of African American homeownership and more importantly the potential path forward. “I often say that community development found me. I noticed there was a need for education and training in the community and especially in the Black community in moving towards homeownership and understanding more about affordable housing.”

For the full podcast and interview click here.

Ariel Capital’s 2020 Black Investor Survey: African America’s Continued Fight To Close The Investment Gap

“On March 23, 2020, the S&P 500 fell 2.9%. In all, the index dropped nearly 34% in about a month, wiping out three years’ worth of gains for the market. It all led to a 76.1% surge for the S&P 500 and a shocking return to record heights. This run looks to be one of the, if not the, best 365-day stretches for the S&P 500 since before World War II. Based on month-end figures, the last time the S&P 500 rose this much in a 12-month stretch was in 1936, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.” – CBS News

Ariel Capital released their 2020 Black Investor Survey and the results show that there is reason to be pessimistic today, but potentially optimistic for tomorrow. The survey focuses on middle class African American and European American households earning over $50K in 2019. Some key financial points outside of this survey that should be taken into context though are poverty for African American stands at 21.2 percent versus 9.0 percent for European Americans. This high rate of poverty for African Americans means that middle class African Americans, as noted in the survey, are more likely to have high levels of assistance to family and friends which provides a damper on higher investing capabilities. These high levels of poverty are highly reflective of the median wealth gap between African and European Americas, $24,100 versus $188,200, respectively. African America continues to suffer from weak institution building and therefore the ability for its economic and financial ecosystem to strengthen continues to be suffocated. Firms like Ariel Capital and other African American financial institutions need more investment and support from other African American institutions, like HBCUs, in order to scale and create more employment, wealth, and economic opportunities beyond the grassroots level.

KEY HIGHLIGHTS:

  • The deep-rooted gap in stock market participation between the groups persists, with 55% of Black Americans and 71% of white Americans reporting stock market investments.
  • 63% of Black Americans under the age of 40 now participate in the stock market, equal to their white counterparts.
  • Ownership rates of 401(k) plans are now similar between Black and white Americans (53% vs. 55%).
  • White 401(k) plan participants put 26% more per month toward their retirement accounts than Black 401(k) plan participants ($291 vs. $231).
  • Black Americans are less likely than white Americans to own almost every kind of financial vehicle, with the exception of whole life insurance, which is favored in the Black community.
  • They are also less likely than white Americans to have written wills, financial plans, or retirement plans.
  • For Black Americans, disparities grow every month; while they save $393 per month, white Americans are saving 76% more ($693 per month).
  • Black Americans are also far less likely to have inherited (23% vs. 51%) or expect to inherit wealth (15% vs. 35%).
  • Black Americans are less likely to work with financial advisors (21% vs. 45% of whites).
  • Student loan delay or deferral was reported as being three times more common among Black Americans (16%) than whites (5%).
  • More than twice as many Black 401(k) participants (12% vs. 5%) borrowed money from their retirement accounts.
  • Almost twice as many Black Americans (18% vs. 10%) dipped into an emergency fund.
  • And 9% of Black Americans (vs. 4% of white Americans) say they asked their family or friends for financial support in 2020, while 18% of Black Americans and 13% of white Americans acknowledged giving financial support to family and friends last year.
  • Among Black Americans, 10% discussed the stock market with their families growing up, while 37% discuss the stock market with their families now (compared to 23% and 36%, respectively, for white Americans).
The chart above tracks the participation in the stock market through individual stocks, mutual funds, or ETFS. For African and European Americans, 2020 is an all-time low of participation since tracking began in January 1998. However, the gap of participation has closed from 24 percentage points in 1998 to 16 percentage points in 2020. Primarily due to the all-time low of European America’s participation falling by 10 percentage points and African America’s falling by only 2 percentage points. The closest the gap has been was in 2001 and 2002 when it was 10 percentage points and in 2002 saw African America break through 70 percentage points the only time in the survey’s history when we reached 74 percent.

HBCUs can play a significant role in closing the investment gap by introducing students to HBCU alumni who have gone on to become investors and financial advisors – thus circulating both intellectual and financial capital within the HBCU ecosystem. Even more so, they can assist in ensuring students set up investment accounts like a Roth IRA during their freshmen year and throughout matriculation. The earlier students are engaged in investing the more compounding can work for them over their lifetime which in turn makes for wealthier alumni, larger future donations, stronger African American communities, and more value proposition for HBCUs to promote within the African American community.

The Greatest Financial Literacy Video Ever (According To Our Editor)

“A wise person should have money in their head, but not in their heart.” – Jonathan Swift

By William A. Foster, IV

Anyone who knows me and has talked to me about money has been sent this video. As a financier who has been asked for personal finance help by family and friends along with once upon a time being a former adjunct professor whose primary job was to teach a prism of subjects for incoming freshmen at a local community college throughout the course, one of those being financial literacy, finding this video was like stumbling upon treasure.

Dan Griffin, CPA, in one hour could honestly change your financial life if you listen, take notes, and put into action everything he discusses. I have watched more financial literacy videos than I can count and this is hands down the best. It is not smoke and mirrors, nor him trying to sign you up for anything, or any of the quite frankly pompousness that I tend to come across with this new era of financial literacy experts that have cropped up as a niche industry. Are there credible people out there trying to teach financial literacy? Absolutely. Is it getting harder and harder to figure who is genuine and who is a pimp turned pastor turned financial advisor? Definitely. Dan Griffin’s video is the most basic financial “meal” imaginable, meat and potatoes. His voice throughout is never too high or low, but simply steady. Moving from one subject on the financial menu to the next and explaining them in depth while giving you additional information to look up on your own. Quite frankly, I have yet to see anyone come remotely close to this one hour.

If the wealth gap for African Americans is to be closed both individual and institutionally, then it starts with improving our basic financial literacy and that is what this video does. As a bonus, we have also added how you can legally get to a point where you are paying no federal taxes.

The Finance & Tech Week In Review – 3/4/17

zu3yfgjbqpaifw5vkjxp

Every Saturday the HBCU Money staff picks ten articles they were intrigued by and think you will enjoy for some weekend reading impacting finance and tech.

These are the 22 best universities in emerging economies / WEF wef.ch/2lCMeSB

Why college doesn’t help more in closing racial and ethnic wealth gaps / St. Louis Fed bit.ly/2kz2sf6

This enormous solar power plant just became the biggest in the world / WEF wef.ch/2mdBq1y

You knew millennials were worse off than their parents, but this is how bad it is / WEF wef.ch/2mvIMLw

15 of the CIA’s most intriguing declassified maps / WEF wef.ch/2mdRxMl

Portable 3D printer builds a tiny house for a tiny price / New Atlas newatl.as/2mVpEpG

Astronomer and photographer Zoltan Levay makes distant galaxies beautiful. / Science News  ow.ly/s7zJ309yHRF

Trump announces budget cuts that may give China tech leadership / Computerworld ow.ly/Svss309AnxS

 Apple forfeits teachers’ pet rep as U.S. share sinks / CIO ow.ly/M5uC309AnoX

Advances in coral restoration hold promise for protecting coasts—and economies / Pew Trusts ow.ly/LHUX309Ansk