Research suggests that when people have access to living wages and financial resources, they tend to make efficient use of both. During the pandemic when millions of Americans were out of work, credit card balances on average actually declined, thanks to the living wage assured by more generous unemployment benefits. Despite evidence to the contrary, the myth prevails that the people in poor communities of color would more easily thrive if only they used their resources better. One example of the pervasiveness of this belief is the myth that the lifespan of a dollar in black communities is only six hours.
The source of this myth is a self-help book called, “Talking Dollars and Making Sense: A Wealth Building Guide for African-Americans. In a segment about the topic on the black-owned cable network TV One, TV journalist Roland Martin contrasts the six hour figure with the lifespan of a dollar in the Asian community (28 days) and in the Jewish community (19 days).
This statistic has often been used to show how little we spend in our neighborhoods compared to other racial and ethnic groups in the U.S., and imply that were we to simply “buy local,” as if we don’t already in the first place, many of our problems would simply disappear. However it’s worth noting that the source of this figure is sketchy at best, the book’s author Brooke Stephens never mentions the name of the study nor provides any information about the author. Experts suggest it’s simply an urban myth, and a destructive one at that.
The origins and debunking of the 6-hour are thanks to Truth Be Told, a non-profit, non-partisan website and digital network, run by Howard University’s Department of Media, Journalism and Film in the School of Communications. The organization investigated this claim and spoke to several economic experts including former Obama Labor Department official William Spriggs.
“It’s what I consider an urban myth,” said Spriggs, who is now chief economist at the AFL-CIO union. Spriggs also teaches economics at Howard University.
Spriggs said a red flag for him was the mention of dollars circulating in the “Jewish community” for 19 days. While the government does collect income and wealth data about race, it does not collect any financial information about religion.
“What makes me suspicious is that it has economic data based on religion when the federal government doesn’t collect any information by religion,” Spriggs said. “Where would you get that from?”
And even if it is theoretically possible, the data about spending in Asian communities is equally suspect. Asian communities are incredibly diverse, many of them poor as well.
“It would be a mistake to try to include all of these different people under one umbrella to talk about spending in communities,” Spriggs said.
Several federal government agencies like The Federal Reserve Bank and The Bureau of Labor Statistics produce data on black spending patterns. However, their data also does not show how often money circulates within a neighborhood.
That said, private market research organizations such as Nielsen and the Chicago-based Target Market News also track black spending patterns, and their findings cast even more doubt on the claim that Black consumers are less likely to direct their purchasing power into their own communities.
The available data in the Nielsen study shows that 43 million blacks in the United States have about $1.1 trillion in spending power and that they also have unique behaviors from the total market. They are much more tech-savvy and conscious consumers. They are as we say today, ‘woke,’ and they pay attention to how companies are speaking to them.
As we spend more, we want more from the brands we support. Forty-two percent of Black adults expect brands we purchase from to support social causes, according to Nielsen’s 2019 Diverse Intelligence Series (DIS) Report. As consumers, we tend to be even more likely support brands that align with our lifestyles and values.
The truth is that economies of scale make the goods and services offered by small businesses in our communities likely more expensive than those at Walmart, for example. In this regard, the relatively lower levels of wealth and income in our communities may sometimes make spending outside of our communities a survival necessity. But the myth of the black dollar has been weaponized and used against people of color to show a lack of restraint and commitment to our communities for too long. It’s long been time for this myth to be dismantled, and let’s work to shout this truth loud enough to drown out the pervasive lie.
"If we’re not helping all employees of color earn more, invest more and develop genuine autonomy, we’re not uplifting disenfranchised communities. The financial health of marginalized workers is critical to achieving equity and creating a productive and engaged workforce."
Founder of OfColor