African Americans contribute over one trillion dollars in discretionary spending to the U.S. economy, in spite of the wealth gap that exists. What contributes to this disparity and how can the black community be economically empowered? Part 1 of a discussion with Trabian Shorters, Founder & CEO of the BMe Community. (Part 1 of 2)
See a partial transcript of this interview below:
Traynham: African Americans contribute over $1 trillion in discretionary spending to the U.S. economy. That´s right, folks, you heard that correctly — $1 trillion. That spending, however, is contrary to the wealth gap that exists. Trabian Shorters, found and CEO of the BMe Community, is with me to discuss this disparity and efforts to economically empower the black community. Welcome to the program.
Shorters: Glad to be here.
Traynham: It is good to have you. So I want to start off by really defining discretionary spending. And what does that mean — for our viewers at home?
Shorters: Sure, sure. Well, this is not money that you´re throwing away, this is money that you have to spend on things like groceries or your regular care, but it´s money where you get to choose how it´s spent.
Traynham: I see. So I could be a cup of coffee, a new car, whatever the case may be.
Traynham: Sure. But a trillion dollars is a lot of money that we as a community contribute to the economy. But talk to me as to why there is still a disconnect between financial literacy and the black community.
Shorters: Yeah, so I don´t really define the challenge in terms of disconnects, discrepancies, problems. The issue here really is who do you think you are. Because it´s not that black — if you have discretionary spending, if could spend it any way that you want to, then it´s hard to say that somebody else is the reason why you´re not able to build your wealth.
Traynham: I understand what you´re saying.
Shorters: So it´s not — so I would say it this way. It´s not about what other people call you, it´s about what you answer to. Who do you think you are? Right, when you have a chance to buy or spend with a black business, do you do that? When you have a chance to bank with a black business, do you do that? And if you do or if you don´t, do you even think about it? Like, is there a reason why? So a lot of this gap relates to policy, so let´s be real about that. There´s economic policy. And the other part of the gap relates to mind set. And so we think a lot and work a lot on how to change that mind set and then how to invest in our own.
Traynham: So let´s break it down for a few moments. So let´s talk about the policy and let´s also talk about the personality or your personal choices here. What are the policy barriers, if any, that should be broken to be able to raise the awareness within the community?
Shorters: Yeah, so number one, we don´t think about poverty in terms of assets, we think about it in terms of income. Poverty is not a function of income. Poverty has always been a function of assets. Right?
Traynham: Assets meaning a house or whatever the case may be?
Shorters: Assets meaning things that appreciate in value. So it´s your home, it´s your stocks, it´s your bonds, if you´re invested in that. It´s anything that goes up in value.
Traynham: What about you? What about investing in you? What about your education?
Shorters: Oh, yeah. Well, I think education is one of those leaders. People who have education do better than who do not. So that — I would count that in the asset column. I would count business ownership in the asset column. I would count property ownership in the asset column. So all these things are things that appreciate in value. And when you look at the typical white family, literally has 22 times the assets of a typical black family with the same income.
Shorters: So when you think about that, I live in South Beach, all right?
Traynham: Which is, I assume, in Miami, Florida.
Shorters: In Miami, Florida. You will see young people there hanging out on the beach 24/7, going to expensive clubs — just spending money like crazy. But their actual income is zero. Are they poor? Or are they spending Mommy and Daddy´s money? Right. So assets is a function — I mean, poverty is a function of family assets. And, literally, the number one determinant about who goes to college when you talk about education, the number one determinant is family assets.