"In A Desert Land" Helps Minorities Understand the Financial Challenges they Face in the American Economy

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This book is intended to get readers to think critically about the way they have traditionally approached the pursuit of the "American Dream." The author challenges every previously held assumption regarding what has either propelled certain minority groups to financial success or has made their paths to self-sufficiency difficult or nearly impossible.

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Tim Davidson, Sr

Over one in four African-Americans are living in poverty. This rate is nearly six times as high as white Americans and significantly higher than any other minority.

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In December 2011, Tim Davidson, Sr published his first book entitled "In A Desert Land: Economic Survival Strategies for Minorities in America". The book explores "five economies" that are alive and well in America and are becoming more and more prominent with every passing decade. Minorities predominantly reside in the poorest of these economies. The author presents some statistical data from the 2008 Census in an attempt to explain these existing economic conditions.

According to the 2008 US Census, the gap in median income between Whites and minorities like African-Americans and Hispanics has steadily increased over the last thirty five years. Prior to the Great Recession, the median household income of whites had ballooned to a level that is an amazing 75% higher than these traditional minority groups. Although the overall impact of the recession has not been determined, the disparity in its impact on unemployment is a clear indicator that this gap may be even wider.

Likewise, the accumulation of wealth in America appears to strongly favor the rich whose numbers predominantly include white Americans. The U.S Census Bureau Current Population Survey on the wealth distribution between 2007 and 2008 indicates that the poorest are still poor and the richest are getting richer. Those who represent the lowest 40% earned only 12% of the countries income. In contrast the top 40% earned over 50% of the income, with the top 5% earning a whopping 22% of the income. From the perspective of the poor, these numbers have either gotten worse or stayed the same over the last decade.

The recent US Census data provides some insight into the diversity in home ownership. First, nearly all groups appear to have brought into the notion that seeking to purchase a home is a good thing. A large percentage of people (nearly 30% and above) in each prevalent racial group are at least pursuing home ownership. White Americans lead the way in loan originations with 48% while Africa-Americans trail all groups with only 29%. The lag for African-Americans can easily be attributed to a disproportionate number living in poverty where home ownership is virtually impossible. The road to homeownership gets pretty bumpy for minorities once the decision to make a purchase is made. Of those applying for loans, minorities consistently have significantly higher decline rates. Based on the numbers, African-American have better odds of winning a coin toss than getting a mortgage loan approved (45%). The disparity is even greater when the number of withdrawn loan applications are factored into the equation.

It is also important to note that race and gender play a role in mortgage approval rates. While 70% of white women can expect to be approved for loans, only 54% of black women can expect the same. And, black men have the lowest approval ratings (51%) by a large margin when compared to every other group except black females.

Minorities typically hold the majority (80+%) of their wealth in the same set of assets (bonds, ‘other’, pooled investment funds and retirement accounts) as mainstream Americans. However, the amount of wealth held in these assets is typically much less in every category. The average amount held in bonds is only 25% of the mainstream group. Likewise, the mainstream group holds more than twice as much in pooled investment funds and retirement accounts than the average minority. Additionally, the mainstream investor has more than twice as much as the typical minority in the mysterious ‘other’ asset category. In sum, the average mainstream investor holds $340K in assets as compared to $136K for the typical minority. Finally, although minorities own a disproportionate number of CDs, they are obviously held in significantly smaller quantities because the average amount held in CDs is about one-half of the mainstream group.

The most striking information coming out of the U.S. Census Bureau Current Population Survey is that over one out of four African-Americans are living in poverty. This rate is nearly six times as high as white Americans and significantly higher than any other minority, including Hispanics, where one out of 5 are living below the poverty line.

The recent U.S Census also reveals that at nearly every level of academic achievement, the percentage of African-Americans to White graduates have steadily increased over the last 30-50 years. In fact the differences in high school graduation rates are statistically insignificant. When it comes to equalizing unemployment rates, the improvements in high school graduation rates for minorities has not had a significant difference. In fact the data also shows that at every education level the unemployment rate of African-Americans is nearly twice that of their white counterparts.

Furthermore, certain aspects of the American economy, like marketing and the rules associated with money management perpetuate the status quo for minorities. Critical life and financial choices by minorities has the effect of overcoming these factors or exacerbating the negative impacts.

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Tim Davidson, Sr

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