Since 2010 US Markets have been soaring to record levels. Much of this growth was initiated during the 2008 financial crisis when many of large financial institutions consolidated like, Merrill Lynch and County Wide Financial Services with Bank of America, and The Emergency Economic Stabilization Act (more commonly known as the Wall Street Bailout) which rescued large institutions deemed as “Too Big To Fail” from completely sinking the economy. As a result, markets have rose to an all-time high in this 10-year period (from Feb 1, 2008- Jan 1, 2018, NASDAQ, DOW, and S&P 500) [1]. Many of the largest companies such as Apple and Amazon have grown to unprecedented levels. However, most of the individual benefits of this growth was experienced by the top 1% of earners. One can know this by the fact that America has been seeing the eradication of the middle class and severe wage decrease or at the best wage stagnation [2] [3]. Nonetheless the cost of living has increased in most major metropolitan areas in the US. So, what does this have to do with you and 2018?
Well, much of this is occurring at your expense. The US economy is shifting into an environment that rewards owners and not wage earners. Most industries do not need the number of employees that they once needed. Banks have instituted highly advanced ATM machines to the point that actual bank tellers are not needed as much. Heavy manufacturing jobs are now mostly done by machines, that do not come with the insurance liability that comes with people. China has begun experimenting with construction automation. And we were all just introduced to Sophia. The world’s first robot citizen. As long as the current economic system remains in tack, this trend will not change. This is why Trump’s promise to coal workers is laughable, because no intelligent company who is concerned with their bottom line will trade a machine, with the liability associated with a person. Companies are spending billions of dollars in research to find ways to replace you as a worker. Now one may argue that morally this is incorrect, and the government should step in to mitigate this movement towards automation. But the problem is that we’ve grown accustomed to speed and efficiency that automation provides for us. No one wants to wait in a long line to make a cash withdrawal from their bank account, when they simply remain in their vehicles and drive up to the four ATM machines located outside of their branch. So, this has moved beyond moral issue. It is now an accepted reality, and one would be smart to take heed. The only winners here are the company not their employees. So, what do black people do under these circumstances?
Become owners and more economically and financially astute.
See the rest of America is protesting the fact that average wages have been either decreasing or have become relatively stagnant for almost two decades. They are upset that certain industries have left and will most likely not come back, and if they do they will require less workers. They are seeing the trend of the privatization of the public sector, and are afraid that government pensions, and benefits will disappear. They take it personal that they’ve worked and paid into the Social Security system for decades and will probably not be able receive the benefits when or if they can retire.
So, it would be a huge mistake on the behalf of black people to fall into that trap, because the writings are crystal clear on the wall. This will be the new reality moving forward in the 21st century. And if black people are to survive, there are some key changes that need to occur in the mode of functioning in the community.
1. Black people have to curb the addiction to non-strategic consumption.
Everyone by now is familiar with the statistic that the buying power of black people is expected to reach between $1.2 trillion and $1.4 trillion by 2020 [4]. Currently, we cannot count this as true “worth”, because this money is not spent within the black community. It’s been reported that black people spend 93% of their income outside of the black community [5]. Imagine if that headline read “The Expected Economic Worth of The Black Community will be $1.4 Trillion by 2020”. The entire dynamic of the black community would be different. In order for black people to achieve this, there must be a commitment towards functioning strategically. Which means substantially reducing the amount of money black people spend with companies that do not contribute to the black community in some capacity, such as making partnerships with black individuals and brands that reciprocate back into the black community. That could be via financial investment, opportunities, and/or intellectual capital investment.
2. Reduce consumption in general. Instead invest and keep something on the side (save).
2018 may not present an actual recession, but one would be wise to start distributing their money differently. Financial immaturity will be sure to bite the black community in the “butt” when the economy does eventually slow down. Because it will. Economies always do, especially after a prolonged stent of growth.
3. Increase financial literacy.
In 2017, the black community saw a huge uptick in interest in the concept financial literacy and freedom. JAY-Z spoke on this at volume in his critically acclaimed LP 4:44. He rapped about the importance of being financially savvy, and how to play the “long game”. Experts like Dr. Boyce Watkins, and Dr. Claude Anderson’s message of black economic empowerment reached more black people within the past few years as well. 2018 needs to be the year of implementation. Black people should enroll in more business, and financial literacy classes available within our community to avoid being negatively impacted by the economic environment explained in the opening paragraph.
4. Start a business.
When Dame Dash created a fire-storm on the Breakfast Club by saying that black people should stop working jobs and be a “boss”, people didn’t understand the importance of that statement. The economy moving is into an environment conducive to entrepreneurialism not employees. Which is surprisingly how the world markets have functioned from ancient times. Everyone would have a product or service that they produced or provided and they would go to the community market to sale their goods. This model is still practiced in many non-western countries. The concept of a person owning a company and having a bunch subordinates is a concept created by slavery [6]. With the rise of automation, there will be limited job openings for “people” and most of them will be “high skilled” professions like engineers, doctors, lawyers, etc. Which will never be the majority of the population, nor has it ever been. So, black people must begin to sort of insulate themselves economically by creating the businesses that they patronize and support them. Another reason is that the newly passed “Tax Cuts and Job Creation Act” (Trump’s Tax Plan) was really a tax cut for businesses (mostly C Corporations) [7]. The “selling” point is that when companies have lower tax bills they invest that money in job creation, but as stated earlier they have no incentive to do this. What will most likely happen with the savings from their tax reduction is that they will spend it on research and development and their own pockets. In these days and times, you want those pockets to be your pockets.
Sources
[1]
Briefing.com, "Markets," Briefing, 08 January 2018. [Online]. Available: https://www.briefing.com/investor/markets/. [Accessed 08 January 2018].
[2]
Bureau of Labor Statistics, "Median weekly earnings, 2004–2014," Bureau of Labor Statistics, Washington D.C, 2014.
[3]
Bureau of Labor Statistics, "Usual Weekly Earnings Summary," Bureau of Labor Statistics, Washington D.C, 2018.
[4]
J. M. Humphreys, "2015 Multicultural Economy Report reveals trends in U.S. spending," Selig Center For Economic Growth, Athens, 2015.
[5]
L. Jenkins, Taking Care of Business, Chicago, Illinois: Moody, 2001.
[6]
S. Beckert and S. Rockman, Slavery's Capitalism A New History of American Economic Development, S. Beckert and S. Rockman, Eds., Philadelphia, Pennsylvania: University of Pennsylvania Press, 2016.
[7]
K. [.-T.-8. Rep. Brady, "H.R.1 - An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018," United States Congress, Washington D.C, 2017.