The Rev. Jesse Jackson’s Wall Street Project is now four years old. Thousands of attendees, both independents and people representing the corporate interests of dozens of companies, were represented at the January 23-26 conference, in an electric atmosphere at which networking was the name of the game. Rainbow/PUSH and the Wall Street Project announced a number of initiatives, including a venture capital effort between Rainbow/PUSH and AOL/Time Warner to debut this fall. Brokers in the house may have been more interested in the 1000 church initiative announced by Rev. Jackson, an initiative that will pilot investment clubs and economic literacy efforts in 1000 churches around the country.

It is wise for Rainbow/PUSH to emphasize financial literacy among African Americans. According to the 1998 Survey of Consumer Finance, just 30 percent of African Americans have retirement accounts, compared to 55 percent of whites that are planning for retirement. Just 5 percent of African Americans hold direct stock investments, compared to 25 percent of whites. A larger number, 48 percent, held direct or indirect stock investments in 1998; most data suggests that even higher-income African Americans are only a third as likely as their white counterparts to be stock market investors. When income is equal, why are African Americans less likely to be stock investors? Answers revolve around trust, knowledge, and market penetration. So while the Rainbow/PUSH effort to increase the level of economic literacy among African Americans is community building, it may also be seen as a way of increasing the profits of those brokerage companies that are able to tap into the African American market.

Even as we hear that the economy is slowing down, we are also hearing that increasing numbers of African American and Latino families are joining the middle class. According tot he Chicago-based Target Market News, African Americans make up a third of the population earning between $35,000 and $75,000 a year. This is a population of spenders, with $20 billion of disposable dollars on clothing, $377 million on women’s hosiery. This could also be a population of savers and investors, if only those who developed advertising for these markets focused on African American and Latino dollars. According to the Selig Center for Economic Growth at the University of Georgia, African American Buying power is $572 billion a year, and Latino buying power is $452 billion. Latino dollars have more than doubled in the decade beginning in 1990. Thousands of retailers will find that their profit margin will rely on their ability to reach out to black and brown consumers. Those who hawk investment products may find rich returns when they target markets that have traditionally been underserved.

There may be gains to be realized in housing markets, as well. White home ownership, at 71 percent, has nearly peaked. Meanwhile, African American and Latino ownership is at 25 percent below the white level, at 46 percent. One could argue that there is a level of homeownership saturation among whites. The mortgage brokers who want to find a new and highly motivated customer base is advised to look at the African American community.

The matter of market saturation is also relevant when looking at retail sales and technology. In retail sales, too many companies are trying to build and develop new stores instead of attempting to attract new customers to existing stores. They are focusing on the maturation of the baby boom, instead of looking at our nation’s new demographic mix. They are chasing dollars in the suburbs, ignoring the middle class dollars, many of which are minority, in the inner city. How many more dollars can retailers really wring from the suburbs? If they look toward cities, they may find a profit margin that is mostly black and brown.

Similarly, the digital divide suggests that it makes more sense to market computers and computer equipment to whites instead of people of color. But the shrewdest technology purveyors know that many inner-city residents would get online if they only had the training and equipment to do so. The FleetBank Foundation has begun an initiative to bring computers and computer training to inner cities. They say their work will provide value for the inner city, but also customers for them. If Fleet can train inner-city dwellers to bank by computer, they can cut their costs, but also develop a loyal consumer base.

Consumer confidence has been falling for the past two months, reaching an all time low last week, when it dipped by 14 points last month, hitting its lowest rate in 4 years. In contrast, some entrepreneurs of color feel optimism about the new economy. They have the data and the marketing skills to target a community that may well determine both growth opportunities and the profit margin in their industry. With white savings, investment, and homeownership peaking, the growth opportunities for many may well be black and brown.

Business and Economics
January 31, 2001