There’s no question it’s tough for Black professionals in the corporate world. Even tougher for Black entrepreneurs. And even when people of color make it they are hit with extra burdens not on the job, but the homefront. They have to pay a “Black tax” so to speak.
“Generally speaking, the so-called ‘Black tax’ is income black professionals give to their families to support them. It impacts the ability for many Black professionals to be able to save and build generational wealth,” Medium reported.
Since generational wealth is sorely lacking in Black households due to a number of factors — many of them societal — Blacks feel the need to give back to their families. And seeing that Black household wealth will hit zero — yes, zero — by 2082 according to a recent report by the Institute for Policy Studies, it’s necessary for Blacks who “make it” to help out their relatives.
Sheena Allen, founder, and CEO of tech companies CAPWAY and Phocal not long ago tweeted about the stress and strain of “Black tax.” The tweet went viral.
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“I feel like it was the elephant in the room, and nobody talked about it for some reason. Look, we all are in the struggle of the journey, but the reality of it is we don’t have this same advantage and opportunity of quickly building generational wealth,” Allen told Medium. She grew up with a rule that is common in many Black homes: to keep your family’s struggles private. If there was no food to eat or if the lights were cut off, no one else would know about it outside of your household. This cultural rule prevents many Black founders and tech professionals from sharing their experiences with money.
While no one knows how many — or how much — Black professional give on a regular basis to family members, what is known is that the median net worth of white families in the U.S. is still about 10 times the size of African Americans.
For Black tech founders, they often think their family and friends think they are rolling in the dough. It’s a misrepresentation Marsha Barnes, a certified financial planner, social worker, and founder of The Finance Bar, hoped gets cleared up. “It hasn’t been that many years ago that millennials or Black millennials became founders of anything or tech experts. Maybe it doesn’t mean that you’re wealthy, but for many of us, that equals, ‘Oh, she or he definitely has money or they are earning well,’” Barnes says.
Allen agrees. When the media picked up on her startup story, many around her thought he had hit the motherload. But not so. “I had $2 in my bank account because when you’re starting a company anywhere you can’t pay yourself. You have money coming from nowhere,” she said.
Still, some Black and Latinx founders and professionals believe that by giving back to their families is actually a way to help build generational wealth.
