The hidden “black tax” that some professionals of color struggle with
The hidden “black tax” that some professionals of color struggle with
Many black professionals feel pressure to share their income with struggling family members, making it difficult for them to build generational wealth.
By Brittney Oliver
There are plenty of obstacles for professionals and entrepreneurs of color: a wage gap, a funding gap, and plenty of discrimination. But for many there’s also an unspoken challenge while trying to build their companies, their career, or their wealth. A common phenomenon that some refer to as the “black tax”–money they give to family members each month. When Sheena Allen, founder, and CEO of tech companies CAPWAY and Phocal expressed the stress of “black tax” in a viral tweet recently, she started a conversation of what “black tax” looks like for black founders and professionals.
“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 said. 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.
Many blacks in my peer group are making good money but because they’re the first person in their family to “make it”, they are still living paycheck-to-paycheck because their money isn’t just their money. Their money is mom’s light bill money, little bro’s football money, etc.
— Sheena Allen (@whoisSheena) December 10, 2018
WeUnifyTech founder Thomas K. R. Stovall agrees that no one talks about the effect of what he calls the “reverse friends-and-family funnel.” “I believe that the numbers of folks in my network who are dealing with this privately are much higher than we realize. Many who are, are not willing to discuss it publicly, for fear of embarrassing their [family],” he says. Of course, because it’s an issue that’s so often kept secret, there are no numbers on how many black professionals give a portion of their income on a regular basis to family members. But considering that the median net worth of white families in the U.S. remains nearly 10 times the size of African Americans, and that nearly 1 in 5 black families have zero or negative net worth, the number is likely significant.
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. “Instead of passing [money] down, saving, and investing, we have to pull it back because we have to help our family. It is one of the reasons that we don’t build generational wealth,” says Allen. A recent report by the Institute for Policy Studies shows that black household wealth is on track to reach zero by 2082.
Allen’s tweet was a result of frustrations she and her colleagues have experienced while building their companies with a lack of financial resources and understanding from family and friends. “I didn’t go to my uncle and say, ‘Hey, I need $15,000 to explore this app idea. If anything my uncle may ask me for money.'”
The black tax also affects Latinx founders and tech professionals who have a similar experience with sharing their income with family members. Heli Prilliman, the founder of Lacquerbar, raised capital for her nail salon with $100,000 of early angel investment and an SBA loan. She came across Allen’s tweet and commented about her experience with “brown tax.” “At that time, my parents couldn’t put in any money. My dad was an undocumented immigrant farmer. My parents eventually put in money here and there this past year to help us stay afloat while fundraising my seed round,” Prilliman, who is Mexican-American shared. While preparing to open Lacquerbar, she took on the responsibility of caring for her brother after he graduated from college.
“Even before he graduated college, he moved in with us for a summer for an unpaid internship at another startup in San Francisco. In both circumstances, we were paying for his food and living expenses,” she explained. Once her brother got on his feet and gained a tech job, he eventually helped Prilliman with making payroll, rent, and bills.
Marsha Barnes, a certified financial planner, social worker, and founder of The Finance Bar believes that the tech boom means wealth for many black families and is often glorified and misunderstood. For those who don’t live in a world of startups, there may be a misconception of what being a founder or professional looks means. “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.
Prilliman, who lives in San Francisco, says she stays afloat with support from her family. “I’m still not able to take a paycheck. People don’t realize that many startup founders can’t afford to take a paycheck; your employees’ paychecks are the priority–you eat last, if at all. Being able to rely financially on both my husband and brother is a privilege that many founders (of color) don’t have,” she says.
Allen has seen how social media has made many people think she was wealthy. Her early media attention and press mentions for her apps lead many to believe that she had millions of dollars in her bank account, but in reality, she says, “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.”
Founders of color often experience challenges finding capital for their businesses when funding cannot be funneled down from family and friends. They usually have to work other jobs and have a fixed income while building their company.
The most challenging aspect of the black or brown tax that the founders I spoke to shared was deciding whether to help the family out even if they do not have it to give. The decision to help family leaves many black and Latinx founders wondering if it’s their responsibility or a burden to support their family. “I didn’t always know how to say no, and for years I would put myself in peril, trying to help other people. I think it is extremely important for folks who find themselves in this situation to learn how to say no, without guilt. We have to collectively learn how to ‘put our oxygen masks on first’ as a community,” Stovall says.
Barnes believes that this challenge doesn’t come from a place of guilt, but rather a cultural preference of putting family first. “It just doesn’t seem like the right thing to do to tell our parents no. Psychologically that’s not easy for us,” she explained. Many founders and tech professionals assume the financial responsibilities, leaving them in a recurring position to have to write checks. Barnes suggests founders and tech professionals should evaluate their roles within their families to better understand their “black tax.” “I want us to take a deep look at self to say, ‘Does it make me feel good to be the check writer of my family? Does it make me feel good that everyone depends on me?’ Because now I almost feel like the boss of my family, the one passing out the checks. It almost gives you a sense of power,” she says.
For some black and Latinx founders and professionals, investing in their family that once invested in them is how they view building generational wealth. New York Times creative technologist Lisa Godwin says “Black tax should be a responsibility, as it is vital to continue to build generational wealth for my loved ones. I am not suggesting taking on the financial responsibility of the family, however teaching financial literacy is imperative,” she says.
Barnes believes those impacted by “black tax” need to have uncomfortable conversations about their family members’ financial situation and help them manage their money instead of simply writing checks. “Once we have more knowledge of what our family is dealing with, then I think it helps us to understand better why they are asking for money and discover they may not need the money,” Barnes says.
Godwin agrees that when young professionals understand how to deal with “black tax” that they can help with breaking the cycle within their families. “The proper advice will also empower them with knowing how to broach the issue of budgeting, saving, and living within your means with their families. This will enable everyone to be on the same page and perpetuating it for the next generations,” Godwin says.
The hidden “black tax” that some professionals of color struggle with
Many black professionals feel pressure to share their income with struggling family members, making it difficult for them to build generational wealth.
By Brittney Oliver
There are plenty of obstacles for professionals and entrepreneurs of color: a wage gap, a funding gap, and plenty of discrimination. But for many there’s also an unspoken challenge while trying to build their companies, their career, or their wealth. A common phenomenon that some refer to as the “black tax”–money they give to family members each month. When Sheena Allen, founder, and CEO of tech companies CAPWAY and Phocal expressed the stress of “black tax” in a viral tweet recently, she started a conversation of what “black tax” looks like for black founders and professionals.
“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 said. 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.
Many blacks in my peer group are making good money but because they’re the first person in their family to “make it”, they are still living paycheck-to-paycheck because their money isn’t just their money. Their money is mom’s light bill money, little bro’s football money, etc.
— Sheena Allen (@whoisSheena) December 10, 2018
WeUnifyTech founder Thomas K. R. Stovall agrees that no one talks about the effect of what he calls the “reverse friends-and-family funnel.” “I believe that the numbers of folks in my network who are dealing with this privately are much higher than we realize. Many who are, are not willing to discuss it publicly, for fear of embarrassing their [family],” he says. Of course, because it’s an issue that’s so often kept secret, there are no numbers on how many black professionals give a portion of their income on a regular basis to family members. But considering that the median net worth of white families in the U.S. remains nearly 10 times the size of African Americans, and that nearly 1 in 5 black families have zero or negative net worth, the number is likely significant.
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. “Instead of passing [money] down, saving, and investing, we have to pull it back because we have to help our family. It is one of the reasons that we don’t build generational wealth,” says Allen. A recent report by the Institute for Policy Studies shows that black household wealth is on track to reach zero by 2082.
Allen’s tweet was a result of frustrations she and her colleagues have experienced while building their companies with a lack of financial resources and understanding from family and friends. “I didn’t go to my uncle and say, ‘Hey, I need $15,000 to explore this app idea. If anything my uncle may ask me for money.'”
The black tax also affects Latinx founders and tech professionals who have a similar experience with sharing their income with family members. Heli Prilliman, the founder of Lacquerbar, raised capital for her nail salon with $100,000 of early angel investment and an SBA loan. She came across Allen’s tweet and commented about her experience with “brown tax.” “At that time, my parents couldn’t put in any money. My dad was an undocumented immigrant farmer. My parents eventually put in money here and there this past year to help us stay afloat while fundraising my seed round,” Prilliman, who is Mexican-American shared. While preparing to open Lacquerbar, she took on the responsibility of caring for her brother after he graduated from college.
“Even before he graduated college, he moved in with us for a summer for an unpaid internship at another startup in San Francisco. In both circumstances, we were paying for his food and living expenses,” she explained. Once her brother got on his feet and gained a tech job, he eventually helped Prilliman with making payroll, rent, and bills.
Marsha Barnes, a certified financial planner, social worker, and founder of The Finance Bar believes that the tech boom means wealth for many black families and is often glorified and misunderstood. For those who don’t live in a world of startups, there may be a misconception of what being a founder or professional looks means. “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.
Prilliman, who lives in San Francisco, says she stays afloat with support from her family. “I’m still not able to take a paycheck. People don’t realize that many startup founders can’t afford to take a paycheck; your employees’ paychecks are the priority–you eat last, if at all. Being able to rely financially on both my husband and brother is a privilege that many founders (of color) don’t have,” she says.
Allen has seen how social media has made many people think she was wealthy. Her early media attention and press mentions for her apps lead many to believe that she had millions of dollars in her bank account, but in reality, she says, “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.”
Founders of color often experience challenges finding capital for their businesses when funding cannot be funneled down from family and friends. They usually have to work other jobs and have a fixed income while building their company.
The most challenging aspect of the black or brown tax that the founders I spoke to shared was deciding whether to help the family out even if they do not have it to give. The decision to help family leaves many black and Latinx founders wondering if it’s their responsibility or a burden to support their family. “I didn’t always know how to say no, and for years I would put myself in peril, trying to help other people. I think it is extremely important for folks who find themselves in this situation to learn how to say no, without guilt. We have to collectively learn how to ‘put our oxygen masks on first’ as a community,” Stovall says.
Barnes believes that this challenge doesn’t come from a place of guilt, but rather a cultural preference of putting family first. “It just doesn’t seem like the right thing to do to tell our parents no. Psychologically that’s not easy for us,” she explained. Many founders and tech professionals assume the financial responsibilities, leaving them in a recurring position to have to write checks. Barnes suggests founders and tech professionals should evaluate their roles within their families to better understand their “black tax.” “I want us to take a deep look at self to say, ‘Does it make me feel good to be the check writer of my family? Does it make me feel good that everyone depends on me?’ Because now I almost feel like the boss of my family, the one passing out the checks. It almost gives you a sense of power,” she says.
For some black and Latinx founders and professionals, investing in their family that once invested in them is how they view building generational wealth. New York Times creative technologist Lisa Godwin says “Black tax should be a responsibility, as it is vital to continue to build generational wealth for my loved ones. I am not suggesting taking on the financial responsibility of the family, however teaching financial literacy is imperative,” she says.
Barnes believes those impacted by “black tax” need to have uncomfortable conversations about their family members’ financial situation and help them manage their money instead of simply writing checks. “Once we have more knowledge of what our family is dealing with, then I think it helps us to understand better why they are asking for money and discover they may not need the money,” Barnes says.
Godwin agrees that when young professionals understand how to deal with “black tax” that they can help with breaking the cycle within their families. “The proper advice will also empower them with knowing how to broach the issue of budgeting, saving, and living within your means with their families. This will enable everyone to be on the same page and perpetuating it for the next generations,” Godwin says.
