Monthly Archives: September 2012

Public Sector Dependency: African America’s Employment Problem

There can be no freedom of the individual, no democracy, without the capital system, the profit system, the private enterprise system. These are, in the end, inseparable. Those who would destroy freedom have only first to destroy the hope of gain, the profit of enterprise and risk-taking, the hope of accumulating capital, the hope to save something for one’s old age and for one’s children. For a community of men without property, and without the hope of getting it by honest effort, is a community of slaves of a despotic State.  — Russell Leffingwell


It is no secret that the African American middle class (net worth between $50,000 and $499,000) was built primarily by the public sector after events like desegregation and Black Wall Street massacre virtually wiped out the African American private sector ownership and wealth. The apex of African American wealth still arguably coming in the 1920s and having been on a precipitous decline since the 1950s as the Civil Rights Movement gained traction. In the last recession African America lost 83 percent of its median net worth.

The public sector now accounts for more than 1 in 5 African American jobs which is 30 percent higher than any other ancestral group in the US. That 30 percent premium also is telling as to why the income gap is so pronounced between African Americans ($34,218), European Americans ($55,530), and Asian Americans ($65,637) given public sector jobs have always and will always be lower than those in the private sector. Couple that with public sector slashing jobs, benefits, and pay to deal with growing deficits and the income gap will only expand. It should say something that even with this dependency on the public sector our unemployment rate is 14.1 percent while the overall unemployment rate is 8.1 percent, European American unemployment rate is 7.2 percent, and Asian American unemployment is 5.9 percent. It should also be a warning to us that a country with $16 trillion in debt will be forced to eventually dramatically reduce the size of government. This will obviously disproportionately impact African America.

Here is a statistic one might need to consider. Of the 400 richest Americans 0 percent made their wealth via the public sector. Let me say again 0 percent of the richest Americans made their wealth via the public sector. In fact the only place in the known world where public sector employees make great sums of wealth are dictatorships where the country’s wealth and dictator’s wealth is intertwined. The pursuit of wealth is oft perceived as something “evil” in our community instead of a necessary tool to protect and develop our social, economic, and political interest.

There are 1.9 million registered African American owned businesses according to latest census numbers. Unfortunately, 1.8 million (95 percent) of those businesses have no paid employees and are considered nonemployer firms. The current employable labor force for African America is at approximately 30 million with only 18.3 million (61.3 percent) of it employed and participating in the labor force which is the lowest percentage among all groups. If each of those 1.8 million businesses hired just one person our participation rate would jump from 61.3 to 67 percent and give us far and away the highest participation rate as well drop our unemployment rate from 14.1 to 4.3 percent. Yes, just by them each hiring one person. It would be an understatement to again stress that as America’s economy overall adjust itself to emerging economic powerhouses around the world competing for the resources of the world both natural and capital that the public sector here will have no choice but to shrink to compensate. The strategy of public sector dependency has not served us well in any economic aspect. Maybe it is time we revisit the private sector independence strategy that our forebears used coming out of slavery that saw us at our most economically prosperous. I often wonder sometimes if it was not broke why did we break it.

Virginia State University Moves To Become Leading Producer Of African American Economist

A science of economics must be developed before a science of politics can be logically formulated. Essentially, economics is the science of determining whether the interests of human beings are harmonious or antagonistic. This must be known before a science of politics can be formulated to determine the proper functions of government. — Claude-Frédéric Bastiat


It seems every day for the past few weeks there are new emails to review for Virginia State University’s Barton Blanks who is a Stewardship Administration Manager for the university from a set of thirty-somethings economics alum. It all started when a donation that the university received was designated for the Department of Economics. However, there was no endowment or fund that was designated for the department. Mr. Blanks contacted the alum who made the donation and a trail of email conversations sprang up with several suggestions brought forward by Mr. Blanks. The alum then contacted other alums to get their feedback on the feasibility and commitment for an endowment based with the university’s foundation specifically for the Department of Economics. As it turned out there was much interest and so they began the outline of what would begin to establish the endowment and its purpose.

Virginia State University is one of the few HBCUs that offers pure economics as a major and just one of five that offers it on the graduate level. Like most HBCUs that offer economics they have a very small department, a very small budget, and usually never graduate more than ten undergraduate students a year. Economics is no major for the faint of heart but its possibilities and needs are endless in terms of developing the economic infrastructure of African America not to mention the power it produces. There has never been an HBCU Federal Reserve Governor and only two African American Federal Reserve Governors. A position that is nominated by the President and confirmed by the Senate. It appears this group of alumni is out to change that.

The endowment currently being set-up will go by the name The Sadie T. Mossell-Alexander & Eric E. Williams Economics Endowment. A clear ode to two African Diaspora economic pioneers. Dr. Sadie Alexander was the first African American woman to receive a PhD (economics) in the United States and while not an HBCU graduate herself her sister was the Dean of Women at Virginia State College, the forerunner to Virginia State becoming a university. Dr. Eric Williams was a prominent Economics professor at Howard University and wrote the book Capitalism and Slavery during his tenure there which is considered as important of a book about capitalism as Wealth of Nations by Adam Smith.

The endowment seeks to focus on a number of objectives. It will provide operations funds to the department, undergraduate and graduate scholarships, faculty awards, and the establishment of an institute. The unique thing about the undergraduate scholarships is that it gives funding to any and all economics majors who have at least a 2.0 GPA which the group hopes will eventually graduate undergraduates debt free. A move that should both increase enrollment in the program and create long-term wealth for the students, their families, and community. The groundbreaking institute being proposed will be the Marcus Garvey Institute of Diaspora Economics focused on the economic movements of different Diasporas and sub-Diasporas. This could be the first of many institutes that the group hopes to launch through the department.  Lastly, there is a provision in the endowment that would allow the university should it ever face a financial crisis the ability to access the endowment both principal and earnings as a short term loan. The economics alums behind the push are said to have a 25 year horizon to fulfill all of its initial goals which they plan to evaluate every 5-10 years and add on to the 25 year plan.

With only 2 of the top 10 ranked economic programs coming from public universities and no HBCUs in the top 100 this group faces an immense uphill battle. Especially given most top economic programs have budgets in excess of $60 million dollars and at least 50 faculty – Virginia State currently has approximately a $135 million total university budget and 6 faculty in the economics department for perspective. Ultimately, this group of alum has taken ownership of their department’s future with the establishment of this endowment. The success of it will eventually produce the largest number of African American graduates in the economics field annually as well as possibly create a new sub-field of economics research in Diaspora economics. There is no doubt that eventually not only will there be a Federal Reserve Governor coming from this group but eventually a Federal Reserve Chairman. Alums taking ownership of the future of their departments as de facto “shareholders” and strategist from the front lines is what we need to promote more of. Hopefully the traditional way of doing things where alums have been excluded from the strategy sessions often times will give way as alums not only seek to have their voices heard but are doing so by putting their money where their mouth is.

The HBCU Endowment Feature – Roxbury Community College

School Name: Roxbury Community College

Median Cost of Attendance: $27 059

Undergraduate Population: 2 681

Endowment Needed: $1 450 903 520

Roxbury Community College needs approximately $1.4 billion for all of its students to attend debt free annually. The only HBCU in New England it has the potential to be a truly impactful institution were it not for a number of seemingly social and political obstacles in its way. It is odd that in a city with more four year colleges per capita than anywhere else in the United States that the one college located in a socially controlled African Diaspora community is no more than a two-year institution. The actual endowment of the school was unavailable to obtain but as you can see its endowment needs seem fairly high for a two-year institution. This is in large part because as a two-year with no residence halls the cost of attendance is factored in by adding the tuition and the U.S. median income according to the U.S. Census data. Housing has become a much higher driving cost and if a two-year student is not staying on campus they obviously still have housing needs. With Boston being one of the highest cost of living cities in the nation the median income is the best barometer we could determine in giving an accurate picture of the total cost to have a student fully committed to their studies. Were Roxbury to make the conversion to a four-year institution it would truly have a competitive advantage in growing its endowment by being the only HBCU in the New England region which although not a huge African Diaspora population it would certainly have a monopoly in terms of recruitment. It is also based in an area of the country which has a higher median of income and over the long term this too could work in RCC’s favor. The school had its first capital campaign starting in 2008 but even today it is unclear how long it was suppose to last or if they ever reached their goal. A more engaged RCC with its alumni and with HBCU media outlets would serve it well to get the word out that this is a school with a vital strategic geography that needs to be supported and funded.

As always it should be noted that endowments provide a myriad of subsidies to the university for everything from scholarship, faculty & administration salaries, research, and much more.

HBCU Money™ B-School: Inholding

An inholding is land inside the boundary of a national or state park/forest, or similar publicly owned, protected area that is privately owned. Inholdings result from private ownership of lands prior to the designation of the park or forest area into public domain, and are then grandfathered within the legally designated boundary.

HBCU Money™ Business Book Feature – The World Without Us

If human beings disappeared instantaneously from the Earth, what would happen? How would the planet reclaim its surface? What creatures would emerge from the dark and swarm? How would our treasured structures–our tunnels, our bridges, our homes, our monuments–survive the unmitigated impact of a planet without our intervention? In his revelatory, bestselling account, Alan Weisman draws on every field of science to present an environmental assessment like no other, the most affecting portrait yet of humankind’s place on this planet.