I live in the 30310-zip code made up primarily of Atlanta’s West End neighborhood. There is a population of approximately 26,062 people with a median income of $24,604. 79.9% of the residents classify themselves as African American or black, while 12.4% of residents classify themselves as white or Caucasian.
The unemployment rate hovers around 4.6%. There are a number of branches of major national and regional banks in the area. They include Wells Fargo, Bank of America, and Fifth Third Bank. Over the past ten years there has been growth in the number of eateries and drinking establishments in the West End area. Atlanta’s much bally-hooed Beltline puts pedestrians smack in the middle of these establishments.
Low interest rates, I suspect, have not only fueled the creation of the new businesses but have also financed the rehabilitation of older homes in the area.
Some could argue that while development in this area is behind other neighborhoods, there is, in the end, development. The above average unemployment rate and low income tells me, however, that the current economic activity is either not enough to raise incomes or that revenues generated in the area from business are not staying in the area. For example, my eyeball assessment of individuals frequenting and vehicles in the parking lots of the entertainment businesses in the Wet End tells me that the revenues come from outside the neighborhood and likely leaves the neighborhood at closing time.
At $24,604, the portfolio of the low to middle income resident here is likely made up of two assets: depreciating time, which is likely exchanged for low wages; and depreciating skills, with a low value that likely contributes to low wages. Based on these income levels, the aforementioned banks look more and more like glorified cash checking operations with the only counterparty risk being whether the paycheck being cashed has the funds in the account it is being drawn on.
Allow me a side note. In my Instagram feed a question was posed asking the viewer to choose from a montage of African American “finfluencers” who you would choose to help you earn $1,000,000 in thirty days. My response was I would pick the individual that had access to $11,764,705.44 of capital, which would include cash, land, machinery, and intellectual property, accompanied by a solid business plan. At the prime rate of 8.5%, the target income should achieved. (I’m a lawyer. Please check my math.)
And this avenue to generating income and wealth is missed, in my opinion, by the Community Reinvestment Act of 1977 and the rules promulgated to implement it. While the Act aims at developing low to moderate income communities, there has to be a permanent, viable resource in those communities to develop in the first place. Capital abhors a vacuum and the West End still has black holes in empty space.
The likelihood today of the Federal Open Market Committee changing the federal funds rate is very small. Even if that influential rate were to increase thus impacting other lending rates, does the West End or any other low to middle income community have a resource that would create a premium for taking investment risks in low-income neighborhoods?
Alton Drew
20 March 2024
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Alton Drew 