African-Americans have made much progress in many facets of their lives in the past 15 years, but they continue to face economic challenges, as data from the Bureau of Labor Statistics and other academic surveys show.
True, the average Black household income has nearly doubled since 1993, while income for whites jumped only 72 percent. But the average Black income of $41,142 a year currently is well below its white counterpart of $62,661. And the savings ratio for Blacks is up only 3 percent since 1993, compared to 8 percent for whites and other ethnic groups. Blacks are now saving 14 percent of their income, compared to 20 percent for whites.
Black progress can be attributed in large part to the fact that Blacks are now more educated and have better paying jobs. Yet Blacks spend only 1.4 percent of their income on education – the same as whites – and rising inflation on essential commodities continues to undermine their buying power. The gap between the number of educated Blacks and Black spending on education isn?t explained by the 2006 BLS data, the most recent available. Analysts suggest most Blacks either are going to college on scholarships or have school loans that weren?t accounted for in the data.
Spending patterns have little changed for Blacks and whites alike since 1993. Blacks are spending more of their income (82 percent) than any other ethnic group and saving less. Most of the Black spending now goes to housing (37 percent), food (13 percent), pensions and personal insurance (10 percent), cars and other transportation forms (7 percent), according to the BLS data. Fifteen years ago, Blacks spent 36 percent of their income on housing, 16 percent on food, 15 percent on cars and other transportation forms, and 8 percent on pension and personal insurance.
Today, whites and other ethnic groups spend 33 percent of their income on housing, 12 percent on food, 11 percent on pension and personal insurance, and 7 percent on cars and other transportation forms. Fifteen years ago, whites spent 31 percent on housing, 15 percent on food, 15 percent on cars and other transportation forms, and 10 percent on pension and personal insurance.
The huge expenditure by Blacks for housing could be explained by the fact that Blacks are less likely than whites to get home mortgages; and when they get it, they are charged higher interest rates either because of poor credit history or because of lenders? racial bias. Indeed, the data show that 70 percent of whites own homes now, compared to 63 percent of Blacks. And yet, Black homeownership climbed a remarkable 23 percent over the past 15 years, compared to just 4 percent for whites, according to the BLS data.
Both Blacks and whites spend very little of their income on entertainment and apparel, although there are some differences. Whites spend twice as much as Blacks on alcoholic beverages; slightly more (3.8 percent) of their income on entertainment than Blacks (3.5 percent), down from 5.3 percent and 4.5 percent, respectively, a decade-and-a-half ago.
Blacks are expending the same amount they did 15 years ago on clothing and other apparel, at 5.2 percent of their total expenditures. Whites, meanwhile, are spending less on clothing, at 3.8 percent of their total expenditures now, down from 7.9 percent in 1993.?? Blacks now spend 4.3 percent of their total household expenditure on health care, compared to 6 percent for whites. Those spending levels are pretty much unchanged from 15 years ago.
Jeffrey M. Humphreys, an economics professor and ethnic spending expert at the University of Georgia?s Selig Center for Economic Growth, projected that Black buying power would jump from $318 billion in 1990 to $1.1 trillion in 2012, representing 8.7 percent of total spending in the U.S. For a community that constitutes 13.4 percent of the U.S. population, that spending level is nothing to shout about. ???