Sept. 18, the Federal Reserve announced a 50 basis-point (BPS) cut to interest rates. This announcement spurred a round of excited news reports about where the economy might be headed. Many believe some of the back-breaking inflation the entire country has faced in recent years might finally be easing and that the job market might warm up. What does any of this mean for Black folks across the next 12 months, though?
Job Insecurity Persists
Despite the job market improving since the COVID-19 crash, there are many systematic obstacles that stand between African Americans and high-quality, well-paying jobs, according to Americanprogress.org.
Black Americans still face more hurdles to gainful employment than their white counterparts. We suffer systematically higher unemployment rates, fewer job opportunities, lower pay, poorer benefits, and greater job instability.
Many factors contribute to this. The major, predictable reasons are
Discrimination (overt and concealed) Discrimination persists in ways both big and small, and it can confound the ability of Black Americans to land gainful employment due every U.S. resident. Discrimination comes in many forms, such as a member of management repeatedly targeting a particular employee under the guise of “corporate efficiency.” When faced with discrimination in the job market, there is little an individual can do outside of legal action to redress the matter.
Job Segregation There remain plenty of jobs that are at least partially segregated by race. While overtly excluding a particular race from unfilled positions is illegal, de facto discrimination occurs when an administrative assistant quietly removes ethnic sounding names from a stack of resumes. While not outright forbidden from taking these jobs, African Americans are routinely looked over because they are not seen as a likely candidate for a certain type of job.
Additional examples of instability and uncertainty plaguing African Americans in an otherwise healthy job market are detailed below.
Inconsistent Loan Practices for Black-Owned Businesses
Black-owned business owners often have less starting capital and comparatively worse credit to work with, and they more frequently turn to loans to fill gaps. However, they are statistically less likely to get the loan and more statistically likely to get a loan under predatory or near-predatory terms. Studies show only 13% of Black-owned businesses received all the financing they sought in 2021, versus nearly half (48%) of low-credit white-owned firms. Goldman Sachs reports 37% of Black small business owners who took loans in 2023 reported payment terms that “felt predatory.”
On the upside, the Federal Reserve is expected to continue to reduce interest rates in the next 12 months. This will make it somewhat easier for consumers to borrow money for business creation and expansion, as well as home or car loans. Starting a business, or most any critical financial transaction, is easier with lower interest rates.
Political Uncertainty
At the time of this writing, we do not yet know the victor of the 2024 U.S. presidential election. That election, as well as the slate of races for lower offices, will have a significant impact on the economic picture in the United States. There are plenty of decisions by elected officials that impact the economy. Democratic and Republican presidential candidates are proposing radically different visions for how to run the economy. The Republican candidate is proposing massive tariffs guaranteed to increase U.S. purchase costs on products, while the Democratic candidate presses for family and business tax cuts, which may or may not materialize. Elections create a variety of outcomes, and we should all engage civically, through voting, volunteering, and encouraging others to do the same.
Housing will Remain Expensive Eye-popping housing prices generate considerable concern for Black families and business owners. The dip that many of us have been waiting patiently for in the housing market may not be in the cards for the immediate future. In August 2024, Lawrence Yun, NAR's chief economist, told Bankrate.com he foresees no major changes in purchase prices next year, with fluctuations of only about 5%. Overall, in five years, he expects prices to have appreciated a total of 15-25%.
In fact, housing prices may continue to rise, making housing unattainable for many. Rather than waiting for an “inevitable price drop,” those who are able to afford real estate should jump at the opportunity as soon as possible before prices inflate further.
Customer Preference: A Bright Spot Not everything about the economic picture for the next 12 months is gloom and doom. One place for (cautious) optimism is the fact that a larger segment of the public appears interested in shopping at and patronizing Black-owned businesses. Consumers are increasingly interested in the impact their spending has on local communities, and they appear conscious that spending money at a Black-owned business will have a beneficial impact on community residents.
There are, of course, cons to identifying your business as Black-owned. While this can appeal to many consumers it can also make you a target for consumer retaliation through unofficial boycott.
We must be ever mindful, however, that supporting an individual Black business will not singlehandedly save Black America from the persistent nag of racism, oppression, the maliciously applied capitalism, and systemic racism.
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