UNC Study Shows African-Americans Economic Impact

Posted on Nov. 14, 2007

North Carolina’s growing African-American population contributes more than $44.7 billion to the state’s economy through its purchases and taxes — $22,272 per black resident — while costing the state budget $4.5 billion — or $2,498 per black resident — for health care, education and corrections, according to a new report by researchers at UNC.

If recent growth trends continue, the total economic impact of black spending in the state could increase to $60 billion by 2009.

The new report details the impact of African-American spending and employment, state government costs for education, health care and corrections, and ways North Carolina can better capitalize economically on its significant African-American population.

“This study shows that clear opportunities exist for financial institutions and other businesses to capitalize on this growing market,” said Andrea Harris, president of the N.C. Institute of Minority Economic Development, which helped fund the study. “It also offers recommendations for expanding economic opportunity and impact.”

The study was conducted by the Frank Hawkins Kenan Institute of Private Enterprise, part of UNC’s Kenan-Flagler Business School. It follows the institute’s January 2006 report on the economic impact of the state’s Hispanic population. The report is available online.

Among the findings of the study, which used 2004 and 2005 data for analysis:

• North Carolina’s African-American population totaled 1.8 million, or 21.8 percent of the state’s total population, and accounted for 20.4 percent of the state population growth from 1980 to 2004.
• Forty-two percent of the African-American population is concentrated in six metropolitan counties: Mecklenburg, Wake, Guilford, Cumberland, Durham and Forsyth.
• The state’s African-American population is substantially younger (median age 32) than the state’s white population (median age 39).
• African-Americans are less likely than whites to live in nuclear families (41.1 percent versus 70.1 percent) and more likely to live in single-parent families (42 percent versus 11 percent).
• African-American households (average size 3.3 persons) tend to be larger than white households (average size 3.0 persons).
• African-Americans accounted for 29.3 percent of the state’s overall work force increase between 1995 and 2005, with two sectors – education and health services (118,522) and leisure and hospitality services (71,034) – absorbing the largest increases of workers.
• The median education level for both blacks and whites is a high-school diploma. However, a $19,570 difference exists between the two groups in median household income and an $11,970 difference exists in per-capita income.
• Racial disparities in earnings and income are due primarily to the fact that blacks are more likely than whites to be concentrated in low-paying occupations within N.C. industries.
• The share of African-Americans incarcerated in North Carolina (59.4 percent of all people incarcerated in the state) is nearly three times their share of the state’s total population (21.8 percent).
• African-Americans annually pay $3.8 billion in state and local taxes (direct and indirect), while costing state and local budgets about $4.5 billion annually for K-12 education ($2.7 billion), health care ($1.3 billion) and corrections ($453 million), for a net cost to the state of about $759 million, or approximately $420 per resident after their tax contributions are considered.

“The net cost to the state budget must be seen in the broader context of the aggregate benefit blacks bring to the state economy,” researchers John D. Kasarda ’71 (PhD), director of the Kenan Institute, and James H. Johnson Jr., director of the institute’s Urban Investment Strategies Center, wrote in the study. “Black-owned businesses, for instance, are also important employers of North Carolinians, creating almost 85,000 jobs. Above and beyond their direct and indirect impacts on North Carolina business revenues, black workers contribute immensely to the state’s economic output and cost competitiveness in a number of key industries.”

Three areas of opportunity could significantly expand the economic impact of African-Americans in North Carolina, researchers said. They are:

• Helping black-owned businesses develop globally competitive business strategies to capitalize on opportunities provided by the global economy;
• Providing entrepreneurial training and support for ex-offenders, who are largely unemployable, so they can develop their own small businesses and, in turn, employ others; and
• Improving K-12 education, particularly for majority-black schools, through intensive leadership and management training for school administrators and restructuring the curriculum, with particular emphasis on entrepreneurship education.

Researchers released the study findings at a briefing on the UNC campus. A panel discussion on the study findings followed, taped for later broadcast by UNC-TV’s Black Issues Forum. Panelists were Johnson; Harris; the Rev. William Barber, president of the N.C. Conference NAACP; Julius Chambers ’62 (LLBJD), attorney, former chancellor of N.C. Central University in Durham and current director of the Center for Civil Rights at UNC’s law school; and Julianne Malveaux, president of Bennett College for Women in Greensboro.

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