The wealth of black people in Britain and factors hindering financial success

Building on the last post on 7 things that hold black children back from succeeding. This is the current Economic status of black people in the UK relative to other groups:

The Money Spot™ - UK Personal Finance · #36 The wealth of black people in Britain and factors hindering financial success

ASSETS
 
On home ownership
 
According to .gov.uk:

• 63% of households in England owned their own homes in the 2 years from 2016 to 2018;
• 68% of White British households owned their own homes, compared with 74% of Indian households;
• households in the Black African (20%) and Arab (17%) ethnic groups had the lowest rates of home ownership at 20% and 17% respectively;
• home ownership among Black Caribbeans at 40% was twice that of Black African (20%);
• in every, socio-economic group and age group, White British households were more likely to own their own homes than all ethnic minority households combined

 
On pensions assets:
 
According to a January 2020 report by the People Pension, compared to White ethnic groups,

• Black ethnic groups have a 27% lower pension;
• Asian ethnic groups have a 30% lower pension;
• Mixed heritage  groups have a 13% lower pension;
• Arab and other ethnic groups have a 6% higher pension.

 
The average gap between a female pensioner from an ethnic minority group and male pensioner from white ethnic groups is 51% (half). This figure is 27% for an ethnic minority male pensioner.
 
The average ethnic minority pensioner has £3,350 less in annual pension income.
 
Ethnic minorities are also less likely to qualify for auto-enrolment into a work place pension because they are more likely to earn less than the auto-enrolment threshold of £10,000.
 
INCOME
 
According to gov.uk:
 
In the year ending March 2019, the median annual household income in each quintile before housing costs were paid was:

• top quintile (top 20%): £54,000
• second highest quintile: £35,700
• middle quintile: £26,800
• second lowest quintile: £20,500
• bottom quintile (bottom): £13,300

 
If we look at the bottom two income quintiles, that is the lowest 40% of income earners,

• If you are black there’s a 57% chance that you are there;
• Only two ethnic groups perform worse – 67% (two-thirds) of Bangladeshis and 74% (three-quarters) of Pakistanis are in the bottom two income quintiles.
• Only 38% of whites and 38% of Indians are in the bottom two income quintiles.

If we look at the top two income quintiles, that is the highest 40% of income earners,

• If you are black there’s a 25% chance that you are there;
• Only two ethnic groups perform worse – only 15% of Bangladeshis and 11% of Pakistanis find themselves in the top two income quintiles.
• 42% of whites and 44% of Indians are in the top two income quintiles.

 
These figures are before housing costs. The picture changes a little bit after housing costs but I chose to present the ‘before housing costs’ picture because there is a degree of discretion with regards to how much a household decides to spend on housing.
 
While there are income disparities that will feed the gap between the assets of the rich and the assets of the poor, I feel as though the reasoning behind the asset differential is very basic and needs further exploration.
 
On job security:
 
Do ethnic minorities just work less and as a result earn less?
 
No! According to gov.uk:

• 75% of working age people (aged 16 to 64) in England, Scotland and Wales were employed in 2018;
• 82% of people from White ethnic groups were employed, the highest percentage out of all ethnic groups;
• 57% of people from the combined Pakistani and Bangladeshi ethnic group were employed, the lowest percentage out of all ethnic groups; and
• 67% of working age Black people were in employment.

 
Based on these stats, the employment rate for black people is 8 points lower than the average for the population  and 15 points lower than for Whites.
 
In addition, it’s worth noting that Black people and other minorities are more likely to be self-employed, be on zero hours contracts and are generally more likely to be employed in less secure lower income jobs including as part of the gig economy.
 
Two things stand out as definitely missing:

1. How many ethnic minorities don’t own a home in the UK but own a home (or homes) back home in Africa or the Caribbean? This would be an interesting statistic but the government would probably struggle to get any meaningful data on it except perhaps through anonymised surveys.
2. Also, what proportion of people are struggling to build a meaningful asset base because a high proportion goes to support relatives back home? 

 
The UK doesn’t have an identical history to the US and certainly I don’t think UK mortgage lenders discriminate according to race directly or indirectly but if someone thinks they do, I’d love to hear their story.

Remittances are a key component of economic growth in Africa. According to Pew Research, "money sent by the African diaspora to their home countries in sub-Saharan Africa reached a record $41 billion in 2017...a 10% jump in remittances from the previous year", another source suggests $46 billion was remitted in 2018, that would be the official figures but billions more are remitted via unrecorded channels. Official development aid to Africa was just shy of $52.8 billion in 2017 (OECD 2019 statistic). Provided this money isn't all being used for consumption, wealth accumulation by Africans is underestimated if we look purely at wealth held by the diaspora within the countries they live.

In addition, after discussing the issue of low rates of home ownership with my African peers other factors to consider include:

• A knowledge gap in which either people do not think of buying a home because they don't think it's possible or they think it's a complex process.
• Misinformation within the community with regard to the financial sense of buying a home in the UK;
• Poor financial literacy in black communities including the fact that we are not held accountable by the community in the same way Indians are;
• Indians also have a lifestyle which means many full-time earners commonly live in the same household thereby allowing reduced costs and homeownership for investment, etc;
• A higher proportion of people struggling with mental health problems meaning it's more difficult to deal with big life issues like home ownership...they become stressors and triggers.

 
Social mobility
 
According to research from the University of Manchester,

• Ethnic minorities in Britain are experiencing growth in clerical, professional and managerial employment (absolute mobility), however they still face significant barriers to enjoying the levels of social mobility of their white British peers (relative mobility)
• Immigrant minorities have lower rates of social mobility than does the rest of British society. Their children experience rates of upwards mobility that are similar to their white British peers. Despite this mobility, the second generation still faces what they called “significant ethnic penalties in the labour market.”
• “Levels of educational attainment have improved significantly for ethnic minorities, but these have not translated into improved outcomes in the labour market. The success of policy interventions and third sector projects targeted at ethnic inequalities in early childhood and education, contrasts to the continuing employment barriers faced by young black men and Muslim women.” This finding means that even if they succeed in education: young black men and Muslim women struggle to get jobs that are commensurate with their human capital. Apparently, “unemployment rates for Black African and Black Caribbean men have consistently been triple those of white men”.

 
 
FACTORS THAT COULD HOLD BLACK PEOPLE BACK
 
When it comes to discrimination in the labour market, some of the same things that lead to targeting or discrimination in the formative years (as described in my previous post) can also adversely affect the likelihood of black people getting well paid jobs:

1. Name – some research suggests people with non-white sounding names are called to interviews at lower rates.
2. Black hair styles can be interpreted as not professional and lead to potential employers not hiring a black person based on their hair with reasons like, “we didn’t think they were an appropriate fit.” Certainly, when I go to interviews I make sure to have a Westernised wig on, I don’t want my hair to hold me back. Once I get the job, I style my hair as I please.
3. The perception of being threatening – may prevent black people and especially black men from getting jobs that they desire.
4. The stereotype that black people are less intelligent – an absolutely abominable stereotype to hold in this day and age may prevent some getting well paid jobs and result in a higher propensity for black people to be hired into lower skilled, manual jobs.
5. And all the issues of poverty and educational inequalities and racism in educational institutions covered in the last post are cumulative and have long run negative effects on black people’s economic prospects.

 
So there you have it. This is a summary of the current wealth and income stats for black people in Britain. I think it raises a lot of questions. I would love for people to contact me and leave a voice message or a note at katsonga.com/coach or as a comment on this post explaining what they think has helped them succeed or what they believe is holding them back from progressing to higher levels in their career and in building wealth.

​​Heather 
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