The Black Tax #3 — How about a pay raise?

by Debt Hater on July 13, 2006

The Black Tax #1 — The intangibles can be expensive
The Black Tax #2 — The High Cost Of Poor Health

Jody Armour, a professor at USC School of Law, wrote that“The black tax is the price blacks (and other minorities) pay in our daily lives because of racial stereotypes. Like a tax, racial discrimination is persistent, pervasive and seemingly inevitable — as in “Nothing in life is certain save death and taxes.”

During American slavery, Africans would do everything they could to save enough money to “buy” their spouses, children and relatives to save them from being sold away or to finally free them. But, of course, money was meaningless when you were a slave. You could save all you wanted to, but the price for your loved one just got higher.
Life was abyssmal for them and they were paid nothing for their trouble. Even when they had money, it often didn’t do them any good.
Now things are considerably different, but not much better in the finance department. Today, a black high school graduate working full-time from age 25 to 64, will earn $300,000 less than a white high school graduate. A college degree won’t help much more. The average black college graduate will earn $500,000
less than an average white college graduate.
That’s a house. That’s a college education for two children. That’s a nest egg to look forward to. All dreams deferred, and denied.
Despite all this, it doesn’t look like we’ll ever get our reparations. So, instead, how can black people account for these life disparities in their finances? What if the black tax actually amounts to a 10% premium on African Americans?

Let’s look at this in dollars.

Black men earned about 78 cents on the dollar for every dollar white men earn. Black women earn about 68 cents for every dollar white people earn (these figures are lower depending on where you look).
Add a 10% tax to that, and it means that blacks men really only earn 70 cents on the dollar and black women earn 61 cents.
We’d have to be paid more than white people, on average, just to break even!
Perhaps whenever we negotiate salary, we should tack on that 10%. Calculate your living expenses and add 10%.
The next time I go on a job interview, believe I will add that figure into the mix.
Besides that, we’ll just have to be smart and unafraid to take risks with our money — and I mean real risks like investing or buying a home and not paying Pookie down the block to buy into a stupid pyramid scheme.
That means paying into the 401k at work and being disciplined not to touch it. It means educating ourselves on home buying, budgeting, credit improvement and investing. It means starting our own businesses and building them. It means accepting when we’ve screwed up our credit (the guilty one raising her hand here!) and doing everything possible to fix it.
And it means that when we have stellar credit, sparkling portfolios and enviable bank accounts, we shouldn’t horde it, but teach others how to do it too. And spread the wealth, even when you don’t have much. We are blessed to bless others.
We’re not going to be paid enough to eliminate the race & wage gap, so we have to save more. We’ll have to build generational wealth to account for the “black tax” — on our health, our spirits and our money — otherwise it will continue to overburden us and our descendants.

History teaches us that no one is going to do it for us. We’re the last people on earth who should expect such charity. So, it still goes back to personal responsibility, even when the deck is stacked — and then some — against us.

{ 1 comment… read it below or add one }

Marcus July 31, 2006 at 12:10 am

Just a few comments related to how we can close certain gaps via our own actions….
…….because no one is going to do it for us.
The figure for Black vs. White college grads needs to be adjusted for a few things.
1) We need to focus our college activities on higher paying majors. I went to a near-Ivy league private school (finished barely 7 years ago), most of the Blacks majored in AA Studies, Sociology, Education, etc.
Nearly all of the Asians, East Indians, West Indians and other ethnics majored in Finance, Accounting, Comp Sci or Engineering. The overwhelming majority of the Whites did the same.
For the record, I’m West Indian and my parents would’ve shot me if I hadn’t majored in something ludcrative. Ditto for all of my cousins, WI friends, etc.
2) A lot of Blacks (IMO) sell themselves short by not chasing the big $ career wise. Then again, people from low income backgrounds of all races do that. In short, children of upper-income homes are better equipped knowledge wise, ambition wise and social comfort wise to chase higher earning positions.
3) Colleges: It’s an unpopular fact, but where you got to college can impact earnings for years. Fewer of us in elite colleges = fewer of us in elite jobs.
In my career in corporate America, I rarely meet Blacks who didn’t attend schools like I did.
Take race out of it, most of nearly all white high school classmates went to the local state school. They earn a lot less than my friends from college.
If you adjust for these factors, the differences in earnings drops substantially.
Now let’s take on the Black Tax – we tax ourselves too.
I had a good friend from college (white) his first job out of school made him the highest income earner in his family. They helped him out though, co-signed on his car, lent him some cash to get by until those first couple of checks rolled in, etc.
No one has ever asked him for cash and this is a low income family. As long as they can pay their bills, they’re not gonna ask.
Does that usually happen in Black Families?
On the West Indian side, people borrow from higher earning relatives to go to school and they pay you back.
On the non-West Indian side, people will borrow for a TV and not pay you back OR borrow to cover up financial bad habits.
Nearly everyone in my Black MBA club has had a relative take advantage of them fianncially.
That’s the worst Black Tax of all, because it comes from your own and the people taking the money rarely use it for anything significant.
Just my 0.02
-Marcus

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