Tag Archives: small business

HBCU Money™ Dozen 9/1 – 9/5


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Did you miss HBCU Money™ Dozen via Twitter? No worry. We are now putting them on the site for you to visit at your leisure. We have made some changes here at HBCU Money™ Dozen. We are now solely focused on research and central bank articles from the previous week.

Research

Code generation: Kids who program before they can read l New Scientist http://ow.ly/B965L

US Electric Car Sales Report: Nissan LEAF Hits Record, BMW i3 Rises Fast l Clean Technica http://dlvr.it/6qKssK

Home Automation’s Next Big Opportunity: Controlling the Water Heater l CIOonline http://trib.al/8ocpJkt

Importance of minerals and protein for bone formation in horses l KY Equine Research http://ow.ly/B98Zk

College Students! Got ideas for sustainable eco-friendly tech solutions? Apply for a grant l EPA Research http://go.usa.gov/yAZx

TV networks are tapping into your personal data to show you ads based on your voting record l New Scientist http://ow.ly/B9bfG

Federal Reserve, Central Banks, & Financial Departments

Report examining small business success references Small Business Financial Health Initiative l SF Fed http://bit.ly/1Cr9Jmh

Here are the states with the priciest homes for sale l Housing Wire http://hwi.re/6qJKmZ

75% increase in Rwanda’s tourism due to the increase in tourists from other African countries l World Bank http://wrld.bg/AZPnD

How did a colonial trade crisis push forward thinking about monetary policy? l NY Fed http://nyfed.org/1t8HQbT

Mexico holds rate on better balance of economic risks l Central Bank News http://dlvr.it/6qHMxn

How is technology changing the global economy? l WEF http://wef.ch/1pwFfoF

Thank you as always for joining us on Saturday for HBCU Money™ Dozen. The 12 most important research and finance articles of the week.

Higher Minimum Wage: An Attack On African American Small Business Growth


By William A. Foster, IV

Labor is the great producer of wealth; it moves all other causes. – Daniel Webster

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As often is the case, anytime the populous conversation about raising the minimum wage comes around you will see a huge rallying from the African American community. This is primarily because the majority of African America is labor and not heavily invested in ownership. African American firms with paid employees represent an appalling 1.8 percent of American firms with paid employees and only 7 percent of all American firms. Not even close to an equitable representation since we comprise 15 percent of the country’s population. We are a far cry from the days of Black Wall Street. These days we spend our time begging for employment and entrance into firms controlled by other communities. Then we appear baffled as to why our unemployment rate is constantly double that of the national average and three times that of Asian America or why all of the capital is leaving our communities.

Despite African America only comprising 1.8 percent of American firms with paid employees, these firms employ almost 6 percent of African America’s working population. In comparison, Asian America has 7 percent of all American firms with paid employees and employs almost 34 percent of Asian America’s employed population. The correlation is obvious that businesses started by a community tend to hire their community. This is true in terms of community defined by ancestry, gender, geography, education level, or socioeconomic status. As a result of this more citizens within that community are earning income, buying power increases, unemployment decreases, and social issues decrease. Psychology 101 tells us that people like to associate with people whom they believe have similar values and interest. The very first thing that every person with eyesight uses to make this judgement is a person’s appearance. The politically correct police will argue that is what we have to work against, but while we are waiting on Utopia the rest of us have to work in reality.

President Obama and his administration are bent on a one size fits all America approach to income inequality. However, it is no secret that high levels of asset ownership increases the level of income that a group can accumulate and it certainly benefits them in terms of lessening their tax liability allowing them to keep more of their money. An example is hedge fund owners who pay 20 percent while making hundreds of millions and LeBron James pays 40 percent for earning tens of millions. Also highlighting that even well paid labor is still just that – labor and does not enjoy the privileges that the tax code bequeaths to ownership. The increase in minimum wage will not make that easier for African Americans, but harder.  According to Keeley Mullis of the National Federation of Independent Business, “Big corporations do not have to absorb the cost of minimum wage increases because most minimum-wage jobs are offered by small businesses.” Given the education reality of African America, only 18 percent of African Americans 25 and older hold college degrees which is second lowest in the country and a 62 percent high school graduation rate which ranks lowest in the country, most of our labor force is low-skilled labor and more likely to work minimum wage jobs than almost any other group per capita.

There is also the acute compounding problem of wealth. African America’s median net worth, according to the Pew Research Center is $5,677 leaving us with 24 times less wealth than European Americans and 14 times less than Asian Americans. Is it no wonder then that in our own communities we tend to only see small businesses owned by outsiders. That is to say nothing of the ownership of medium-sized companies and we are virtually non-existent in large company ownership. To the best of my research thus far, there are no African American owned companies that make up the Forbes’ Largest Private American Companies list. A list that requires a minimum of $2 billion in annual revenues. For an African American family starting a small business, they are already facing the challenge of limited resources at their disposal. Both in terms of wealth to get started, access to support capital which is a result of poorly capitalized African American owned banks & credit unions, and even training which has its own cost to acquire both in terms of human capital and economic capital.

Real power and real wealth in capitalism is created through ownership. A father or mother can not pass a job along to their child, but they can pass a business to them increasing the probability of income stability for generations. Why make that harder for a group that has limited wealth to get started by increasing the already largest burden most small businesses encounter? As a consequence, impacting communities which continue to struggle with acute levels of unemployment and thereby the domino effect toward social issues. You can not just magically expect job creation to come to communities. It is communities who create their own job creation. As a result, it must be made obvious that while an increased minimum wage will not hurt other groups who are wealthier, this will have an adverse impact on African America’s wealth and employment growth prospects.

If Democrats and Republicans really want to do something about income equality, then the solution is to find a way to increase the access for entrepreneurship training through HBCU initiatives and create incentive programs to African American owned banks and credit unions to focus on small business lending. The latter should decrease the amount of predatory lending that African Americans historically have faced with banks like Wells Fargo, Bank of American, and others. It is true that the president is not just president of African America, but all of America. However, African America should be slow to support populous policies just for the sake of without realizing the potential of their cascading effect on our own community.

HBCU Students Need Experience? Try a Start-Up or Small Business


“You can employ men and hire hands to work for you, but you will have to win their hearts to have them work with you.” — William J.H. Boetcker

One of the biggest problems that face HBCU students is getting a job after graduation. This is for a myriad of reasons. One of which is lack of experience. Many students will spend their summer taking summer classes or working part-time jobs unrelated to their field as opposed to doing internships. This is a time when they could be gaining real world work experience to put on their resume. Now in many cases students must work jobs that pay because of a host of financial issues that continuously plague African America. However, that doesn’t change the need for experience in your field and the ways one could go about obtaining it.

HBCUs aren’t typically target schools for European American owned corporations and their recruiters as a whole nor should we expect to be. Some of why that is I tackled in African-American Unemployment: An Easy Answer With Hard Means a few years ago. There are a few exceptions but exceptions (and even those have a quota) and not the rule is leaving most of our students not honing their skills during the summer (or during the semester) in an economic environment where experience is becoming even more crucial to have on one’s resume upon graduation.

To resolve this students and HBCUs can tackle this in a number of different ways. First HBCUs need to make an internship in one’s field a requirement for graduation. Then start to compile a list of start-up companies near the school and by near I mean a 45 mile radius. This would allow for a number of different things to transpire. First it would allow the school to generate new relationships with the private sectors near them which could lead to economic and political influence, future sponsorships, and future long-term employment for their students. It provides free labor for these companies who in many cases are bootstrapping but need workers. It would also generate summer revenue for HBCUs whereby students would need summer housing and transportation assuming the student did not have their own could be an additional service provided by the HBCU. For the student it provides invaluable experience and the beginning of building their network. It could lead to permanent employment immediately upon graduation assuming the company is in position to do so or it could give the student a leg up when they start applying to larger and more established firms. There is also the flexibility that start-ups have for their interns. In many instances the internships can exist remotely, during school semesters, and part-time if no more than just on the weekends. Its all still experience for the student and relationships building with a company and the network of people that the founder(s) of that company know. The beauty of start-up firms is because they have so many holes to fill the students will get experience in many different areas and a chance to contribute in a significant way to the growth of the company even as just an intern something that is not likely to happen at working at more established firms where the chance to work in the office next to the President or CEO is highly unlikely.

There are 1.9 million African American owned companies of which a staggering 1.8 million have only one employee. This is a problem but presents a great opportunity for HBCUs. A minute number of African Americans work for African American owned companies. That means the majority of our labor capital is building up the wealth of someone else’s businesses. It also means our businesses are in need of labor that can help them grow with ideas and energy. With our unemployment always twice what the national rate in good AND bad economies this is in large from our dependency in relying on other communities to supply our employment instead of providing it ourselves. There is also the issue of how long our students are going before they become employed after graduation which has long-term implications on our ability to generate accumulate capital and generate wealth.

I know my company for one is always looking for good HBCU students to serve as interns. The more interconnected a spider web is the stronger it is. We need to build a more interconnected web of African American companies and HBCUs and then reach out to our African Diaspora brethren. Let’s build a stronger web together.

Mr. Foster is the Interim Executive Director of HBCU Endowment Foundation, sits on the board of directors at the Center for HBCU Media Advocacy, & President of AK Companies, Inc. A former banker & financial analyst who earned his bachelor’s degree in Economics & Finance from Virginia State University as well his master’s degree in Community Development & Urban Planning from Prairie View A&M University. Publishing research on the agriculture economics of food waste as well as writing articles for other African American media outlets.