As The St. Louis American publishes its largest edition in its 83-year history today, including a 68-page special section on “Diversity: A Business Imperative,” we are simultaneously confronted with the most disturbing economic data on African Americans (and Hispanics) in recent memory.
This week the Pew Research Center reported that the median wealth of white households in the U.S. is 20 times that of black households and 18 times that of Hispanic households, based on data gathered by the U.S. Census Bureau. Household wealth is the sum of assets (houses, cars, banking accounts, stocks and mutual funds, retirement accounts, etc.) minus the sum of debt (mortgages, auto loans, credit card debt, etc.). It is different from household income. Wealth gaps between whites, blacks and Hispanics have always been much greater than the respective income gaps, but the disparities reported this week are the largest since the government began publishing such data a quarter-century ago.
These troubling disparities lend a new and heightened urgency to our repeated call for policies that enable greater inclusion of African Americans and other under-represented minorities into the economic mainstream. Given that wealth data reflect financial habits as well as economic opportunity, the report also makes it perfectly clear that, informed by knowledgeable community influentials, efforts to grow financial literacy must virtually start from scratch in learning how to enlighten minority communities, not see them as outsiders, and integrate them more effectively into productive uses of their income.
These gross inequities also show the impact of bad decision-making by individuals who themselves must do more to understand better the dynamics of our economic system and learn how to participate in it productively as owners and investors, rather than simply as unwary and short-sighted consumers.
We say “unwary consumers,” because these gloomy numbers are the most recent evidence of predation on minority homeowners that was a significant catalyst in the meltdown of the housing market in 2006. Plummeting house values were the principal cause of fall in household wealth among all groups, with Hispanics and blacks hit hardest. From 2005 to 2009, the median level of home equity held by Hispanic homeowners declined by half – from $99,983 to $49,145 – while black homeowners saw home values drop from $76,910 in 2005 to $59,000 in 2009. Among white homeowners, the decline was from $115,364 to $95,000.
Finally, consider these appalling statistics: More than one-third of black (35 percent) and nearly one-third of Hispanic (31 percent) households had zero or negative net worth in 2009 (compared with 15 percent of white households). The fact that more than one-third of all African-American households are worth literally nothing (or less than zero) economically is particularly disturbing for descendents of slavery’s implacable discrimination and humiliation and the subsequent corrosive effects that continue to manifest themselves today. The progress in growing a black middle class after the Civil Rights Movement was real, but now those gains are in peril as the economy shifted and public sector jobs are being cut.
We understand that we make the call for diversity and inclusion in a business ecosystem where these crucial concepts are sometimes scarcely more than buzzwords, much easier to mouth and to convene a committee around than to put into actual practice. Moreover, it is clear, given how far we have fallen and how far we have to go, that removing barriers and putting these concepts into practice will not be effortless or painless. It must involve – as Sandra Jordan’s report on transformative changes in the Duke University Health System (see Diversity, pages 63-5) makes clear – taking risks, sharing power, upsetting applecarts and changing accepted ways of doing things that work just fine for many people who will oppose and resist the changes.
The benefit of greater diversity and inclusion for American society, however, is collective, if we consider the challenges to our nation’s future fiscal health and stability, which is tied so closely to more broad prosperity. Simply put, if minority communities in this country, with their huge and growing numbers, continue to fail economically in such large numbers, then this country will continue to lag in the global economy – become less competitive and less stable. This nation, out of enlightened self-interest, needs to change, at all levels, its attitude and modus operandi to assure that more of its people have the opportunity to make a contribution to their own personal, as well as the nation’s, future well being.
