02-17-2019  10:50 am      •     
Mark Morial
Published: 05 April 2006

Late last month, the National Urban League released its annual research publication, the State of Black America 2006, before a packed audience at the National Press Club in Washington, D.C. I wish I could say that the news was full of optimism and peppered with tales of economic buoyancy that lifts all boats along a rising financial tide. But such is not the case, especially for Black America.

Amidst the spin of financial newsmakers and analysts, we must tell the truth. The State of Black America is economically in trouble and getting worse.

The report was compiled and analyzed against the backdrop of one of the most catastrophic events to ever befall our nation. Hurricane Katrina exposed in the starkest and most depressing terms the race and class gaps that represent our national condition.

In 2006, the fact that the story is no better is a story in itself. This year, the Equality Index — a statistical measurement of disparities or "equality gaps" between Blacks and Whites across health, education, economics, social justice and civic engagement — revealed that the economic status of African Americans is 56 percent that of White Americans. Comparing factors such as income, unemployment, homeownership, business ownership, median net worth and poverty rates, the economic status of Blacks is 1 percent worse than just a year ago.

The cause is multifaceted. Some commentators argue that the problem with African American economic progress is both historical and systematic in nature. Others profess that it's social and endemic; the fault of lost ambition and ambivalence. Frankly, it is a combination of many factors.

The fact is according to the Equality Index, the economic divide that exists between Blacks and Whites is 20 percent wider than any other of the five indices. For example, the median net worth of the average African American family is 10 times less than the average White family, ($6,166 versus $67,000 respectively). This is largely due to the difference in homeownership, home equity values and income. Blacks own nearly 50 percent of their homes, while Whites own over 70 percent of their homes. But if you look inside the homeownership and net worth numbers, there is much more to the story.

Blacks experienced over twice as many home mortgage and home improvement loan denials than Whites. Clearly, these denial rates impact the ability to secure a home and, more importantly, the ability to improve one's home value over time.

This fact translates into a $42,800 gap in Black versus White home values.

When comparing income status, Black men earn 70 percent of the income that White men earn with the same level of education, creating an average income gap of $16,876 per year. Black women with the same level of education earn 83 percent of the income that White women earn, or $6,370 less each year.

What can be done? First, and foremost, Congress and the Bush administration should support and enforce the elimination of predatory lending practices by banks and credit agencies to enable all Americans to afford and maintain a home. But another idea is the creation by Congress of a "401K-like" "Tax Free Home Ownership Account" for employees that would be matched by employers. This would quickly spur home ownership. In the 1980s, Congress created the 401K account concept to spur investment in the market supposedly to maximize earnings for an employee's retirement. The same can be done to encourage homeownership.

One economic bright spot in the 2006 report was the growth of Black-owned businesses over the past few years. Although there is still a significant disparity between White- and Black-owned businesses, the gap is narrowing. The current equality index of 54 percent of Black-owned businesses compared to White-owned businesses is a vast improvement over the 2005 index, which reported only 37 percent of businesses as Black-owned.

However, access to financing and capital still prevent most Black-owned businesses from stabilizing and expanding. Again, the lower home equity values retained by African Americans prevent many minority-owned businesses from accessing the needed capital out of their own homes. A possible solution is for Congress to double the size of the New Markets Tax Credit program to enable more investment in businesses and minority-owned firms located and serving disadvantaged urban communities.

For Black America and others, there is trouble afoot. But, together there are also solutions that can help every American find the road to recovery and prosperity.

Marc H. Morial is president of the National Urban League. Read the State of Black America 2006 report online at www.nul.org.

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