Building wealth in black America doesn't come from family estates

White families are four times more likely than African-Americans to inherit wealth.

December 12, 2012

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Ron Lofton owns five thriving McDonalds on Chicago’s West Side. He proudly shows off the kitchen at his highest-grossing location on West Madison Street. Employees hustle to make burgers in 17 seconds.

"We make every sandwich for you. Nothing sits under the heat lamp," Lofton said.

Next Lofton opens the walk-in freezer and points to boxes upon boxes of frozen hamburger meat.

"[We go through] probably about nine cases a day. There’s 300 patties in a case. French fries, we get probably 70 or 80 of these on every truck. We get a truck twice a week."

Fifty-nine-year-old Lofton became a McDonald’s franchise owner just 20 years ago.

Before that he was a well-paid executive at a hospital equipment company. He traveled five days of the week. On the job, Lofton witnessed blacks move up the ladder but get less-prominent titles than their white peers.

Meanwhile, Lofton says he brought in two-thirds of the company’s business.

"Yet I was paid the same or less than the other guys and my stock options were significantly less than what a division manager should’ve been getting," Lofton said.

So Lofton asked himself: "whether I was going to stay in corporate America and make them lots of money. Of course in corporate America there’s always that glass ceiling for people of color. So I didn’t want that to happen. I wanted unlimited ability to determine my own destiny."

That led him to the golden arches.

Lofton used savings and cashed out those stock options to further his wealth. He plunked down several hundred thousands dollars to purchase his first McDonald’s franchise.

Yes, a corporate chain. But as an owner operator, Lofton has built a good life, far from the one he knew as a child.

"I don’t even play the lottery," he said. "I figure if I’m gonna get rich, I’m gonna have to work for it."

Lofton and his family shuttled between the steel town of Erie, Penn. and rural Mississippi looking better opportunities.

His grandparents raised him along with 17 children. His grandmother outslicked the Mississippi sharecropper to buy the family’s 40 acres of land.
The routine growing up meant toiling on the farm by 5 a.m.

"We grew cucumbers, black-eyed peas, they call them crowder peas down South, okra, sweet corn," Lofton said.

And they picked cotton.

"I did know I didn’t want to pick cotton for a living," he said. "When I asked my grandmother if I could go to school that day because I had a basketball game to play, in the South in mid-September, early August, that’s cotton-picking time and that’s what I was told. It’s time to pick this cotton; we’ll have to get school later. So I determined then I ain’t gonna do this for a living. I don’t want to knock my grandparents I think they’re great people."

A strong work ethic and love of school served young Lofton well. People in the farming community would often slip him 50 cents or a dollar, encouraging him to keep up the good work in school.

He did make his grandparents proud by being the only one they raised to go to college. Lofton attended Clarion University in Pennsylvania on a full basketball scholarship. He earned a sociology/anthropology degree.

"After that (I) got into social work for a couple of years and found out how depressing that was and got into Corporate America," he said.

It was hard to break existing paradigms. Lofton is 6 feet 3 inches tall and has the girth of a football player.

"Being a person of color and big at the same time, there’s always a thought process that one, you’re too aggressive, two you’re angry about something," he said.

Research backs Lofton up.

Robert Livingston is a professor at Northwestern University’s Kellogg School of Management. Livingston does diversity training with white executives. The exercises he leads show executives that they are vulnerable to biases.

He said it’s not that people are being mean.

"A lot of these stereotypes that people have that may be unaware of are non-consciously affecting their evaluations of people's merit and people’s potential to function in a particular role," Livingston said. "Ditto for African-Americans. They may be perceived differently than whites. Now if you tell people that, at first they deny it, right? The immediate knee jerk response is to say ‘oh, I’m not biased, I’m not racist, I don’t have stereotypes.’"

That’s part of the reason Lofton chose to strike out on his own. He’s been in Chicago since 1985, right at the end of the city’s peak as a black business metropolis.

Chicago has historically been a mecca for black-owned businesses that help people fulfill the American Dream -- from Afro-Sheen to Ebony Magazine to Ariel Capital.

But the metropolis has declined as the recession hit the black community in Chicago and other urban areas hard. The housing crisis disproportionately affected blacks, who historically dip into homes for collateral and savings.

Black businesses have fallen on especially hard times in this recession. Studies show that in 2011, there were half as many black-owned car dealerships, for example, as there were three years earlier.

Still, the city known as the black metropolis is faring well compared to other American cities. Last year, Chicago was home to 18 of the nation’s top-grossing black-owned businesses, according to Black Enterprise Magazine.

Gospel music blares in a ballroom at Apostolic Church in Chicago’s Woodlawn neighborhood.

The Chicagoland and Northwest Indiana Black McDonald’s Operators Association is sponsoring a holiday free breakfast for the homeless.

Lofton is president of the group. The association is committed to leadership, education and developing partnerships within the African-American communities they serve.

Lofton takes the mic to welcome the crowd.

His five McDonalds earn millions of dollars each year. He lives in Plainfield, Illinois, in a big house surrounded by chirping crickets and fresh air. It makes the country boy in him feel at home.

Lofton doesn’t like to talk about material things when he talks about wealth.

Wealth is providing tutoring for school children at one of his West Side eateries. Or helping his staff get scholarships for college.

"The responsibility to give back is a natural thing that was embedded in me by my grandparents," Lofton said.

He learned that back on the cotton farm in Mississippi, where wealth was measured with lots of children, land and love.

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