When It Comes to Black Buying Power, Don’t Believe the Hype

August 24, 2011  |  

The East coast is waking up this morning to the total devastation caused by the quake, which rattled the  seaboard Tuesday afternoon.  The massive 5.9 quake, which could be felt as far away as Canada, left miles and miles of busted flowerpots, overturned lawn chairs and shattered glass from fallen picture frames in its path. Now the clean-up must begin. And by clean-up I mean all the great discounts and “I Survived the Great Earthquake of 2011” sales, which will probably be going on in your neighborhood soon.

But if you are black, you may want to reconsider who or what you spend your money on, according to a recent article, Black Buying Power: Watch Where You Spend Your Money.  The article suggests that African-Americans have been and continue to be underestimated, underserved, disrespected and misunderstood by the consumer market.  Blacks collectively have a buying power estimated at around $857 billion annually, yet car manufacturers, the entertainment industry and even the NAACP, have neglected to market directly to this powerful demographic.  All told, corporations spend about $263.7 billion annually on advertising, yet marketers have a tendency to lump people into simple groups without considering individual needs and diversity.

The article concludes with a quote from Ken Smikle of Target Market News, suggesting that, “consumers have economic buying power that needs to be used better in their own self-interest.  African American consumers should be asking if the brand (or store) they are purchasing from is making a contribution to the black community or investing in the black consumer market?”  I’m not quite sure how having a corporation marketing directly to us particularly benefits us economically, but I will bite.

Do corporations respect us as consumers? Well that answer is subjective and based on how much they spend in marketing dollars.  If a corporation who markets directly to black folks has a record of racial discrimination in their company or sells a product  which might be unhealthy and downright bad for the community, I don’t see how putting a bunch of black folks in a television advertisement is a sign of respect.  If anything this counter-productive message of catering to the black consumer market, also known, as black buying power, sounds more like a clever marketing ploy to make black folks feel empowered through further exploitation.

Back in 2008 Jared Ball, contributor to the Black Agenda Report, explored this topic in an a series of essays, in which he suggested that, “Myths of Black America’s “buying power” continue to confuse just how bad things really are or how this ‘permanent recession’ is an economic and social necessity.  This myth is meant to shift the blame of poverty onto the poor and suggests that economic inequality is more an issue of pathological behavior than a scientific inevitability.

For decades many articles, particularly in black publications, have been pushing this myth of the almighty black dollar.  Recently, several articles have begun to resurface around the subject, many asserting that by the year 2012 black folks will have a buying power of $1.2 trillion dollars.  As huge as that number sounds, the reality is that there is no collective $1.2 trillion we as a people can choose to spend.  If so, in which bank is this money located and can I get a copy of the account number?

In fact, the average married black household’s income is around $48,000 – less for a single parent household.  Moreover, in terms of income, the gap between whites and blacks has nearly quadrupled in the last 30 years, mainly because blacks typically earn 68 cents for every dollar whites earn.  Add to this the above average unemployment rate among African- Americans and the fact that the housing bust wiped out whatever equity black folks had been able to accumulate, and you should start to see the full picture of economic power the collective black community really has.

As consumers, African-Americans typically spend on telephone services, personal care products and services, electricity, natural gas, children’s apparel and shoes.  Blacks typically spend a higher proportion of their income on groceries and housing.  According to one study, blacks in lower-income neighborhoods are more reliant on smaller grocery stores which carry more expensive goods. The same could be said for housing, transportation and car insurance.  This should let us know that there are plenty of other barriers in place, including racism and classism, which seem to prohibit blacks from capitalizing economically on so-called disposable income.  Likewise, the growth of black businesses has yet to be allowed equal access to markets where black folks tend to shop for phone service, electricity; natural gas and groceries.  So it is inevitable that the “black dollar” will always find a route out of the community.

It is important to debunk the illusion of the black buying power because it asserts the fallacy of affluence over the tide in which the market travels.  If our collective influence really mattered in this country then blacks would have power over the Democratic Party.  The reality is that collective buying power is just a catchy slogan for us to engage in more conspicuous consumption. Which is why you have people like Souljah Boy, trying to buy a $25 million airplane and the guy up the street rocking $500 Louis Vuitton sneakers.  Kanye West said it best, “we trying to buy back our forty acres.”

However, $743 billion is a lot of money in aggregated income and we should not be fooled into believing that corporate America hasn’t long realized this.  It is the reason why Newports,Old English Malt Liquor and predatory loans are popular brands in the community, which only goes to prove that having the ability to make choices between one exploitative product and another can’t be confused with power.

Charing Ball is the author of the blog People, Places & Things.

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  • rdy4change

    Although I do usually agree with articles from this author I am going to have to disagree with this one. African Americans do have huge amounts of spending power. $857 Billion is no small number and should not be put aside.

    The problem is that we as African Americans don't own any franchise in the industries that we spend so much in. We by the most cars, clothing, food, phones, technology, and housing however do we own any McDonalds, Apple Stores, Car Manufactures, Clothing Manufactures, Walmarts? No we don't we just spend our money with other races who don't give back to our community.

    If we got together and owned franchises who made it a rule that if our people support our businesses we would give 10% back to the community. That could be in the form of creating more jobs for businesses that the community needs. That could be in educational tutoring programs for the local community. That could be in discounts on local services. That could be scholarships to college.

    So the truth is African American do have great spending power. But reality is that we as African Americans don't own any of the businesses in those industries for us to spend it on. Do that and you will see our true spending power and how it can make our communities grow.

  • Rod

    Thanks for this article. I appreciate your prospective. I happen to have read Jared Ball's article a couple of years ago and couldn't have agreed with him more. Advertisers want to convince black people that we are some sort of economic force of the country so that we're inclined to spend more money. Yet those whose agenda is to blame black folks for poverty and excuse politicians from their responsibilities for a more just society use the buying power myth to suggest we're sitting on a pile of dough and if we just stop buying the latest Air Jordans with our welfare checks, we will be fine economically. But as your article states, we are spending all this buying power on high interest rates, high insurance and expensive food from bad stores. In short, black folks are broke! There are definitely a few exceptions, but the every day rank and file black family is struggling beyond belief just to get by. We've been manipulated enough by the myth of black buying power.

  • This was a thoughtful article, but unfortunately it was sponsored by Wells Fargo!!! Anyone care to explain? It makes the author, probably unfairly, look hypocritical. I assume she had no control over the sponsorship, so perhaps this corroborates the premise of her article. Damn shame regardless.