Job Rich Cash Poor

Lisbon     Some nuggets being mined from a recent report by the Economic Mobility Project of the Pew Charitable Trust point about disturbing trends, but are consistent with arguments that the ACORN Financial Justice Center has been making about the problems in predatory practice and subprime financing. For African-American families the surveys seem to indicate that in the middle 5th income group, 2/3rds of the families today, are making less than their parents’ generation emerging in 1968 at the end of the civil rights era. In fact as noted by the Economist recently, “…black upward mobility consists largely of poor families moving up.”

Hmmmm….that’s good for many of our members, but it sure seems to be a slippery slope!

Decades later black men are still collecting 22% less in their pay envelopes than white workers, if they are working at all, since unemployment is also severely higher for non-white workers as well. Black men are also less likely to be college educated than black women by a large margin and black households (as well as white households) are much less likely than almost 40 years ago to have two adult wage earners, rather than one, and that means a lot less family income as well.

One of the facts that struck me the hardest though was a comparison of wage earners in the bottom 1/5th income group. This is a group that ACORN knows an awful lot about. In 2000 the average white household was worth $24,000, which is not a lot of money, but is something. In the same year black wage earners making the same amount of money as the white wage earners were worth $57.00 — a figure almost amounting to pocket change for many people! A wealth and asset gap from $24,000 to $57 is huge! In effect black wage earners are job rich and cash poor, but that also means that everything is riding on that one slender reed of an employer’s whim and the economy’s well being. Gulp! The gap exists up the ladder as well where blacks are worth only 1/5th as much as whites in the middle 5th and only 1/3rd as much in the top 1/5th, but it’s the bottom where the rough edge is dragging hard.

This is also probably deteriorating rapidly right now in the foreclosure and subprime crisis that is eroding homeownership gains among minority families. As these figures reveal there simply is not the cash reserve to cushion economic shocks of any kind, when clearly families are living literally from paycheck to paycheck. The impact of predatory products of every kind in the bottom fifth also has huge capacity to erode these slim margins and cage families on the verge of insolvency at every turn.

This is an asset building problem and not a financial education problem. No amount of financial education is going to make $57 seem like real wealth or true assets. We have to have strategies that are real at the bottom of the economic ladder to produce wealth and reserves that can cushion families and build firmer foundations to stabilize the rise from poverty. And, that’s not happening now!

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