Thirty years ago this week, Reginald F. Lewis negotiated the $985 million leveraged buyout of Beatrice International Food with his investment banker Michael Milken and became the first black billionaire in history.
On the 30th anniversary of the deal, the historic event made it into the U.S. Congressional Record.
Currently, according to Forbes, there are only 10 black billionaires out of 2,043 in the world. In 2016, there were 12 of them. That is less than, way less than, 1%.[clickToTweet tweet=”The net worth of top 400 billionaires in US = the net worth of all 14 million black households.” quote=”The net worth of top 400 billionaires in US = the net worth of all 14 million black households.”]
Is the shrinkage of the black billionaire list an overall reflection of the state of black wealth?
The Shocking Prediction
There is a recent study out predicting the median wealth of black Americans will fall to $0 by 2053. Yes, $0.
The shocking prediction also states, “By 2020, median black and Latino households stand to lose nearly 18% and 12% of the wealth they held in 2013 respectively, while median white household wealth increases by 3%. At that point – just three years from now – white households are projected to own 86 times more wealth than black households, and 68 times more wealth than Latino households.”
We said shocking prediction, but this might not be shocking for many who are aware of how systematic discriminations have kept black people away from building wealth for generations.
Wealth setbacks in history
A great example of this is homeownership and housing laws because real estate “has long been the primary means by which Americans of modest and middle-class income are able to build generational wealth.”
Racially restrictive housing laws that were prominent deep into the 20th century made it so that blacks remained renters and not owners.
The Los Angeles Times has a fantastic piece on “Why Los Angeles is still a segregated city after all these years.” It is a must, must, must read if you want to understand how systematic racism shut out black people from building wealth through home ownership. This, of course, is not unique to LA.
One of the authors of the study mentioned above, Dedrick Asante-Muhammad, a senior fellow at Prosperity Now, had this to say about the difference between income and wealth:
“You find first-generation, even second-generation African-American and Latino households that have professional jobs and are making ‘middle-income money’- but they have the wealth of a white high-school dropout. They’re not truly part of a middle class- which would mean financial stability, money to weather challenging economic situations, or money to invest in the economic opportunities of their children.”
The Intercept’s article, “New Report Looks at how Obama’s Housing Policies Destroyed Black Wealth”, looks into how the bailout of large financial institutions and the policies of Home Affordable Modification Program actually ended up hurting the black community in particular.
So, what’s the solution?
We need to know about the history of the housing laws or how laws affect wealth creation. Furthermore, we need to learn about investment know-hows so that we have the knowledge we need to apply to make sure our wealth grows and not shrinks.
The black middle class exists, of course.
What are we putting our “middle class income” into? Are we investing in things that create wealth as opposed to diminish wealth? Supporting organizations that fight for systematic equality.
Are we voting for policies and people that look out of us? Getting involved in local, state, and national policy making so that our interests are protected? Speaking to our children about money and investments that create wealth? Diversifying our streams of income? Looking into fields outside of entertainment to create wealth?
The richest black person in America, Robert Smith, made his money investing in tech.
This process takes time.
When slavery ended and we didn’t get our 40 acres and a mule, we started out so far behind in the race to wealth building that it would be unrealistic to believe we would be at the same level as whites at this point.
However, each of us has a responsibility moving forward to be aware of why we are in this position and make all our money moves wealth moves.