African American professionals are growing more and more concerned about how the economy’s continued decline will affect them. The statistics prove they have plenty of reason to be scared.
Black median income had risen to a historically high level of 63.5 percent of white income in 2000, and was on track to reach 63.9 percent by 2004. But the recession of 2001 and sluggish job growth widened the gap, and the ratio fell back to 62 percent in 2004, according to the Washington, D.C.-based Economic Policy Institute.
That downturn demonstrated that neither educational achievement nor work history could shield professionals from job cuts. When the ax fell, a lot of those who got cut had attained master’s degrees. Some were sought-after superstars plucked from the best and brightest of young black professionals. But many struggled for months, even years, to recapture their previous salaries and career status. Some never did.
Recession affects spending, upward mobility and sustainability across communities and economic sectors. Job losses — 49,000 in May, according to the Labor Department — are disheartening, because statistics have shown that African American professionals are more severely impacted than other racial and ethnic groups.
The income of black professionals already lags behind that of their white and Asian counterparts, and having to start over at a lower salary (or none at all) becomes a drag on the black community’s wealth-building equation.
The combination of job losses and the disproportionate effect of the foreclosure crisis is a recipe for despair in the black community. As senior members of the community lose their homes in record numbers, children and extended family members are called upon for economic assistance. Assets don’t accumulate, and these job and housing market stressors, along with rising medical and long term care costs, deplete potential inheritances.
So how do African Americans prepare for hard times without placing individuals, families and the community on life support?
One answer: Entrepreneurship. An outcome of the 2001 recession was the proliferation of black startup businesses, as professionals became disenchanted with the lack of advancement opportunities in corporate America or didn’t feel like going to the back of the line.
Organizations like the National Black MBA Association must advocate for equitable wages and access to career enhancement tools that give black professionals a chance to succeed and accumulate wealth. There must also be a focus on financial literacy and debt restructuring so that the black community can protect assets, savings and inheritances.
Economic shifts are inevitable, but their disproportionate impact on the black community must change.