Direct Sales and the Black Community – Creating Black Wealth – Part 1
by George Kennedy
Wealth in the black community is collapsing through no fault of its own. Myriad reasons, largely political, explain this phenomenon. Unless African Americans shift their ingrained preference for “stable employment” with healthcare and pension rights to self-reliance, the decline in the average and median wealth in African American households will continue unabated.
Let’s look at the decline: “Less Than Equal: Racial Disparities in Wealth Accumulation”, a study recently released by the Urban Institute offers results that should alarm black America. Here is why: “The average wealth of white families, in 2010, was $632,000 but $110,000 for Latino families and $98,000 for African American families – a wealth gap of over half a million dollars. Median wealth shows the same trend: $91.000 for white families versus $10,000 for Latinos and $11,000 for African Americans in 1983: for 2010, it’s $124,000 for white families, $15,000 for Latino families, and $16,000 for African American families. These are all in 2010 dollars. Therefore, between 1983 and 2010, the racial wealth gap nearly tripled.”
The industry that offers the greatest opportunity for every category of interest, educational level, and experience to create wealth is direct sales. In the US in 2012, direct sales generated $31.6 billion dollars in revenue. Tape it to your forehead, the bathroom mirror, or the refrigerator door: direct sales is not just becoming mainstream, it’s emerging as the dominant market trend – a trend unlikely to be stopped anytime soon.
Are we less entrepreneurial than other groups in America? We have been involved in the direct sales industry for over a century, thanks to Madame C.J. Walker who, by the way, generated her wealth within African American communities of her day. She saw a need to solve a problem while adding value and the rest contributes to the lore of capitalist history in America. But, African Americans need to step it up! Although direct sales generated almost $32 billion in sales in 2012, our level of participation in that industry was pegged at 7.1 percent of the 15.9 million people involved. We step it up by doubling, tripling, even quadrupling our level of participation.
We were taught that opportunity is in the eye of the beholder. Let’s look at the opportunity in direct sales: generally, it costs much less to get started in direct sales than to build a business on your own. You leverage your time, talents, and energy to work for you, not an employer. You cannot be fired – you work for yourself. You reap the rewards; you control your destiny. Moreover, you earn income exponentially, not through the linear model employers prefer. You decide how much income you want to earn and you learn to shelter it through tax benefits available to Home-Based Business owners.
The two product groups that continue to gain share as a percent of retail sales in the direct selling industry are Wellness (i.e. weight loss products, vitamins, etc.) and Services. Home and Family Care/Home Durables and Personal Care have experienced a gradual decline since 2008. Leisure/educational as a product group accounts for the lowest level of sales at 2 percent in 2012, down from 3 percent in 2008. Individual/person-to-person selling was responsible for 64.9 percent of sales – up from 2009 and 2010.
The gender breakdown among those in direct sales currently tilts toward women: 78.1 percent vs. 21.9 percent for men. Those percentages can be misleading considering that men account for many, if not most (in some companies), of the multiple 6-figure income earners. There are opportunities for African American men to step up their game among their networks of friends and colleagues.
The upside of working for yourself in direct sales is the ability to create wealth – intergenerational wealth; the kind of wealth that can be bequeathed to children and grandchildren. Wealth on this level provides the emotional and financial peace of mind absent in most African American families. The kind of wealth possible through direct sales provides not just familial economic stability but for African American communities as well, especially when employment is difficult to find. This is just basic economics: Creating wealth and cycling that wealth through your community 5-6-7 times or more, creates other businesses and employment opportunities for family, friends, and neighbors and support your favorite community charities. The wealth others have created through direct sales provides the means to own homes, invest in stocks, and other income-producing opportunities – white sources of wealth.
The other half of the wealth-creation paradigm is wealth accumulation. Not only is your economic survival more secure, wealth accumulation affords you a margin of income to influence local, state, and national politics. The votes of those in this category of citizen are highly prized and rarely if ever, suppressed. The ultimate objectives of deepening our participation in direct sales are to accumulate the kind of wealth that establishes a solid foundation beneath our families, our communities and to influence those who make decisions that affect the quality of life and the future prospects of African Americans for generations to come. At the end of the day, money, who has it and its power to influence outcomes, is all about race. It always was. African Americans need to get in the game.
