Black American Spending Power Rises 7 Percent, Study Says

Jet, March 15, 1999

Black women helped drive a 7 percent jump in the spending power of Black Americans during 1997, according to a new report.

The report, "The Buying Power of Black America," a study of wages and salaries issued by Chicago-based Target Market News, found that Black buying power increased to $392 billion in 1997 from $367 billion in 1996, and suggested new areas where corporations can target their marketing.

Blacks continued to spend most of their money on housing and related charges, which totaled $104.8 billion, but the analysis of government data found the biggest purchasing gains in the areas of personal-care products and Internet access.

"Because the economy has been good for a few years now, Black middle-class families are feeling more confident about spending more on things they have put off for the last couple of years," said Ken Smikle, president of Target Marketing News.

"There frankly are signs of splurging, spending on items for individual gratification." The emphasis is shifting more toward personal items and away from big-ticket products for the home, he noted.

The study drew on interviews and diaries taken from 3,000 Black households as part of an annual consumer survey by the Commerce Department.

Spending on personal items jumped to $7.4 billion in 1997 from $4.43 billion a year earlier as Black women with higher income treated themselves to hair salons, cosmetics, manicures and massages, Smikle said.

Black women's cosmetic purchases grew by $400 million, and expenditures for hair care products increased $113 million.

Internet spending by Black Americans jumped sixfold in 1997 to $60 million from $10 million in 1996, the report said.

"African-Americans have always embraced new communications technology with heavy purchases," said Smikle. "Acquiring access to the Internet is proving to be no exception."

In the personal-care segment, Black women spent 215 percent more than they did in 1996, and 60 percent more per capita than White women did in 1997.

The findings reinforced previous findings that American women have been shrinking the wage gap as they attain higher education levels than men. In 1998, women aged 20 to 29 held more than 54 percent of all bachelor's degrees, a significant factor in hiring for advanced technical jobs, according to the Census Bureau.

For Black women, wages grew 3 percent in 1997, compared to 6 percent for White women, according to Target Market's analysis of Labor Department figures.

But the number of Black women entering the work force jumped 4 percent in the same period, compared to less than 1 percent for White women.