Women have always made less than men, sometimes for the same work. As it stands today, women make about 77 cents to 79 cents for every dollar a man makes. There has been a lot of talk recently about trying to balance out these numbers. The Lilly Ledbetter Fair Pay Act of 2009, signed by President Barack Obama, to address the statute of limitations for filing an equal-pay lawsuit. Signing that act into law was a major step in the right direction. It feels like things are getting better, but just like with a lot of civil rights issues, we have a long way to go.
The issue that I find most troublesome with wealth disparity is the struggle of the black woman. Why are black women more financially challenged than others? What are we doing that others are not? In 2010, a leading economic research group revealed some startling data. The data revealed that in their prime working years, a single white woman had a median wealth of $42,600 and a single black woman had a median wealth of only $5. Astounding! That is a BIG problem. What that data says to me is, although the black female dollar is extremely important to the economy overall, black women have the greatest financial challenges when it comes to managing their finances.
The research lists many reasons; I want to address a few. For one, when it comes to income and expenses, the numbers just don’t add up. Black women have a strong work ethic; they always have. Unfortunately, many of them are working in low-wage jobs. When we look at all working groups, black women are the most likely to work for poverty-level wages. Therein lies the first problem. It has been difficult for them to keep up with the cost of living because the cost of living is rising at a greater pace than their incomes. So what happens when any of us have less income than expenses? We have to make tough choices and sometimes the choices that we make are not to our benefit. Especially, when the choice is to start mounting up debt or going without the essentials. Unfortunately, when the debt starts to mount up, it’s hard to make that shift to get out of debt. As the formula goes, when your debts are more than your assets, your net worth is going to be negative. Hence, the $5 median wealth.
One of the more common reasons for the wealth gap that affects most black women is the lack of generational wealth. Historically, African-Americans have not been well-educated when it comes to finances. Usually when a family member wants to pass down financial resources to the next generation, they have a professional craft a customized financial plan. This is not common practice in the African-American community. According to 2013-2014 research done by Prudential, African-Americans rely less on financial advisors and more on family for financial information. Those family members can only pass on the knowledge they have gained, and many times that knowledge is limited. Instead of passing on generational wealth, some family members have passed on poor money management habits. As financial professionals, my cohorts and I must do a better job of connecting with all groups of people. We need to promote financial literacy and offer our services to those who would not normally seek us out. Prudential’s 2015-2016 study, The African American Financial Experience, continues to show that few Americans work with financial professionals -- only 14 percent of African Americans and 26 percent of the U.S. general.
Speaking of poor money management habits, another troublesome reason why black women are lagging is what I call “The Housewives Syndrome.” Remember when we would say people were trying to “keep up with the Joneses?” Well, the Joneses have left the neighborhood and have been replaced by The Housewives. The Housewives are perceived to be rich and trendy, and some of them truly are. They dwell in nice homes, sport fancy cars, wear the latest couture fashion, and always seem to have a celebrity makeup artist on deck. They look fabulous and are always camera-ready. I say “good for them.” Good for them, but not good for many of the women watching them and trying to mimic that perception. Trying to mimic that perception and following their spending habits is ruining bank accounts and credit scores -- simultaneously. This is self-defeating behavior for some who simply cannot afford The Housewives’ lifestyle. It is this kind of self-defeating behavior that causes one to live above their means and “max out.”
It starts with living paycheck to paycheck, then credit cards become maxed out. From personal experience, I know that once you have maxed out, it’s hard to dig out of that pool of debt; it takes a long time to get back to a healthy financial position. It can be done if one is willing to change her mindset and make the necessary financial sacrifices.
Finally, a key contributor to the wealth gap is the “I am my brother’s keeper” mentality. African-American women tend to take care of everyone. Sometimes it’s a responsibility that is forced on them and other times, they freely volunteer. They can’t imagine having it any other way. According to long-term care statistics, 65 percent of older persons with long-term care needs rely exclusively on family and friends.