(Excerpted from Newbos: The Rise of America's New Black Overclass, to be published Sept., 2009 by Gotham/Penguin.)
Americans have a deep penchant for classifying people, including by race and socio-economic categories. Blacks historically have not fared well in either of those schemes and young black males have been especially stigmatized.
The media portray them as uneducated dropouts, irresponsible absentee fathers, sellers or users of drugs and criminals destined for prison. And it isn’t an accident that many blacks, both male and female, fall into the lower end of the traditional low-class, middle-class and upper-class distinctions of socio-economic standing.
The lines differentiating those classes tend to blur, influenced not only by income or assets — difficult enough standards for many blacks — but also by occupation, geography and heritage, a sorting and sifting process that is, overall, unfavorable to blacks. So strong is the appeal of classifying one another that we can lose sight of tectonic shifts taking place among us. Such is the case with the rise of what I call the New Black Overclass, or Newbos.
Video: One of America's first black billionaires Newbos are young African-Americans who rely on working-class values, a capitalistic philosophy and entrepreneurial instincts to create wealth and fame that would be unimaginable to their forebears. Largely male, they are using entertainment, professional sports, and media as foundations upon which to build diversified enterprises, some already worth hundreds of millions of dollars.
Droves of other young blacks are building businesses and careers in industries that have sprung up around these sports, entertainment and media figures, including sports and entertainment agents and lawyers, producers, financial advisors, publicists, composers, choreographers, stylists, personal trainers and security professionals, among others.
Unlike previous generations of blacks striving to succeed in a white-dominated world, these young moguls and their retinues have found their economic power in refusing to assimilate. Recognizing that institutional racism and other social and cultural barriers often block their way forward in a traditional white-dominated economy, they embrace and commercialize their interpretations and versions of black style and culture, a trend that reflects the emergence of non-traditional, creative leadership — think Bill Gates and Steve Jobs — in every aspect of the American economy. Their rapid rise from almost nothing represents a shining new aspect of the American dream, but also creates unprecedented challenges in their lives.
Video: Cash Money cashes in The statistics are astounding. Black athletes and hip-hop CEOs like 50 Cent and Sean “P. Diddy” Combs are outperforming and out-earning most Fortune 500 CEOs, usually without the benefit of Ivy League educations, exclusive pedigrees, or generations of familial wealth. Today there are only three African-American CEOs running Fortune 500 companies.
In 2004, the highest-paid black CEO, American Express chairman and CEO Kenneth Chenault, earned a total compensation package of $21.4 million. That same year Bad Boy Records CEO Sean Combs, earned $36 million, Tiger Woods pulled down $87 million and Atlanta Falcons quarterback Michael Vick was paid $37.5 million as part of a 10-year, $130-million contract. The top three highest paid African-American athletes earned a combined $141.9 million in 2004, while the three African-American CEOs working in the Fortune 500 that year earned a combined total compensation of $56.5 million.
By 2007, the disparity in the earnings of the two groups had widened. In fact, two of the three black Fortune 500 CEOs, Time Warner’s Dick Parsons and Merrill Lynch’s E. Stanley O’Neal, were no longer in their CEO posts. Today’s three African-American CEOs in the Fortune 500 earned combined total compensation of $97 million, while the three highest-paid athletes earned a total of $192 million.
Collectively, young black athletes bring in billions of dollars a year in salary alone, not counting the money they earn from endorsements. According to Forbes, 31 of the 50 highest-paid professional athletes in America were African-American.
Video: Kirk Franklin's fortunes Researchers at the University of Wisconsin-Madison compiled for this book statistics that show black players in the NFL, the NBA and Major League Baseball earned about $3.98 billion in their 2007-2008 seasons alone. Beyond that, the 19 highest-paid black rappers in America earned about $503 million in 2007. The combined $4.5 billion brought in by professional athletes and top rappers last year easily justifies the appellation of “overclass.”
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As with most socio-economic categories, there is no hard-and-fast rule for what constitutes a Newbo. Newbos are, it goes without saying, black and wealthy. But wealth is an ephemeral concept. While the most famous and successful Newbos are millionaires many times over, their lesser-known compatriots may have far less, although their incomes are in the top 10 percent of all Americans.
Many of the most successful Newbos reach celebrity status at a young age and often hail from backgrounds that do not always value education. They seldom have more than a high-school diploma, in contrast to their lesser-known Newbo colleagues, many of whom pursue education to become lawyers, agents, financial advisors or producers.
Video: T.O's talents translate to big bucks The lack of education among the most popular Newbos also fuels widespread scorn from society at large, which considers them a major reason that thousands of black children over-invest in dreams to become professional athletes or rap stars and under-invest in the educations that would backstop those often-unsuccessful dreams.
No single individual ever personifies perfectly the characteristics and life of a class of people. Combs comes close. But the person who comes closest to being the quintessential Newbo is the basketball star Lebron James. Anyone who knows the sport stands in awe of James’ phenomenal skill.
Basketball has, of course, provided James with immense wealth, not only in the form of his multi-million-dollar contract with the Cavaliers, but also through extremely lucrative endorsement deals, most notably with Nike, which signed him to $90-million shoe contract even before his NBA debut. But for all the fame and money that basketball brought to James, the game has been not an end in itself, but the path to a life that embodies many of the much lesser known aspects of being a Newbo.
James is acutely aware of the brand value of his name and persona and goes to extraordinary lengths to protect and promote that brand. The most successful Newbos understand personification of a brand — their public conduct, image and identity — and how it is directly connected to their commercial value.Video: Lee Hawkins on ‘NEWBOs’
The Newbo phenomenon embraces the concept that people who establish notoriety doing one thing well can then leverage that success into other businesses. The brand becomes more valuable than the talent, whether for sports or entertainment. Newbos take their brand very seriously.
James had the foresight to realize that he had to build his brand while still in the NBA so that he could build a strong business to carry him past the eventual end of his basketball career. Today, he considers himself 80 percent basketball player and 20 percent businessman. Over time, that balance will gradually shift to 70 percent and 30 percent and eventually to almost entirely businessman.
“I realized early that this is the shortest career that you can have. I don’t know what the average career is for a player, but you can get maybe 15 years or less years out of this. And then, what are you going to fall back on? When I thought about it that way, it was easy. I didn’t want to be 16 years into the NBA and when it’s time to retire then I try to get into business.”
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