Race and the Economy by The American Prospect, October 2008

Today, the U.S. economy is facing one of its greatest challenges in decades. The recent seven-year economic expansion netted a record for producing the fewest jobs since Herbert Hoover was president. The median income for American households has not kept up with inflation. So as the economy slows, households are in a weaker position than they were when the expansion began in 2001.

Yet, while the economy has failed American workers — generating more inequality than growth, more debt than income — discussing solutions to America’s economic woes rekindles America’s racial cleavage. White voters are asked to weigh issues such as trade and its effects on wages and jobs, or the complications of providing health care and its effects on take-home pay and retirement benefits, or the rising costs of college tuitions on their children’s futures. But black voters are too often given a lecture on presumed black pathologies — a lack of interest in education and the skills needed to compete, a weak sense of family, and high criminal proclivities.

One could easily assume that white America was doing fine, and if black America would only get its act together, black Americans would be doing just as well. You might almost believe that the hundreds of thousands of jobs America has lost in manufacturing in the last seven years were only lost by lazy, poorly educated African Americans too busy having babies to get the skills to keep their jobs. You might almost believe that gas and food prices were rising only for black Americans, preventing only their wages from keeping up with the rising costs of living.
This bifurcation in the discussion of America’s economic woes blocks identification of the true similarities and differences among workers of different races. The usual frame leads African Americans to experience white views as insensitive to their plight — while for whites it dangerously masks the broader rise in economic inequality.

Whites too easily see the black economic condition as the result of failing lifestyles, not a failing economy. Blacks too easily put the blame on either their own shortcomings or on discrimination.
Properly understood, what has befallen the black community should be viewed as water coming into the steerage section of an ocean liner — special problems for those getting wet but a clear sign the entire ship is in trouble. The current debate on black pathologies is delaying a call for getting out the lifeboats and ensuring a fair distribution of those lifeboats — and building a more sea-worthy ship for the next voyage. So far, the result has been, as with the Titanic, lifeboats for the rich in first class.

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African Americans were worse off in 2007 than they were in 2000

by Algernon Austin

Although the American economy has grown significantly since 2000, African Americans have not shared in America’s prosperity. The current economic downturn and the subprime mortgage crisis bode ill for the immediate future for African Americans.

The overall social well-being of African American communities depends upon strong job growth. The historical evidence shows clearly that strong job and wage growth are the keys to reducing black poverty. Without reductions in child poverty, we can expect continued lower educational achievement, higher rates of teen pregnancy, and a higher than average rate of crime in black communities.

All Americans are hurting from the failure of recent strong productivity growth to translate into wage growth for average workers. All Americans will benefit from a more equitable distribution of the wealth of American society. African Americans, in particular, need policies that will attend to their low employment rates, low wages, and high poverty rates.

For most of the 20th century, increased productivity led to increased wages. Since the 1970s, with the exception of the 1990s, increased productivity has not been matched by comparable increases in wages (Mishel et al. 2008). From 2000 to 2007, although American workers were 19.2% more productive on average, the weekly wages for prime-aged workers declined by $1. The weekly wages for prime-aged African American workers declined by $3. The wealth created by the American economy has been going overwhelmingly to the richest Americans.

Overall, the economic condition of African Americans has worsened since 2000. Wage growth for the median black worker has stagnated, incomes and employment have declined, and poverty has increased. This Briefing Paper shows:

• African American median family income declined by $404 or 1% between 2000 and 2007. This is the first decline in black median family income in a business cycle of this length since World War II. Single, African American, male-headed families saw the largest percentage decline-9.1%-in median family income.

• Worker productivity grew 19.2% between 2000 and 2007, but wage growth for American workers generally and African American workers specifically has stagnated. For black workers 25 to 54 years old, the median black weekly wage fell 0.6% from 2000 to 2007.

• The African American unemployment rate increased by 0.7 percentage points between 2000 and 2007, while the employment rate shows a 2.4 percentage-point decline, or three times the number not working indicated by the change in the unemployment rate.

• The black home ownership rate, after increasing to 49.1% in 2004, dropped to 47.2% in 2007. Because the foreclosures from the housing crisis have continued into 2008 and will likely continue into 2009, the African American home ownership rate is also likely to decline into 2009.

• The tight labor market of the late 1990s led to the largest decline in African American poverty since the 1960s. From 1989 to 2000, the black family poverty rate fell by 8.5 percentage points. In contrast, from 2000 to 2007, the African American family poverty rate increased 2.8 percentage points.

• Crime and criminal justice policies are increasingly entangled with the economic outcomes of African Americans and particularly of black men. If one adjusts the employment rate of African American men by counting men in prison as non-working, the already low African American male employment rate drops by about 3 percentage points.

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Black Economic Fund Strategy

Part I - Leveraging Microenterprise Capital

The revolution of microenterprise development is built on the foundation of a simple truth: Many of the world's poorest people are a good credit risk. A lifetime of struggling just for food and shelter fosters the kind of single-minded drive that it takes to start or build a small business. Rather than being merely victims, the world's poor are the key to their own emergence from poverty. Given a working chance - just a start - they can begin to build their own future.

Blacksonville Community Network's approach provides emerging entrepreneurs with access to small loans and training that will enable them to start or expand their own businesses.

Microenterprise development started as microcredit - the provision of small, collateral-free loans to the poor in developing nations. Over time, this term has expanded to include a broader range of services such as savings and insurance, all encompassed by the term microfinance.

But poverty is multidimensional. Therefore, microenterprise development builds on the foundation of microfinance and adds business training, mentoring, financial planning and leadership development.

By helping a poor family to increase their income, microenterprise development has an immediate and lasting impact on quality of life - the ability to afford food, shelter, education and healthcare. As business income increases, the business is able to expand, and the effect spreads beyond the family into the local community, through employment and contribution to the local economy. Thus, the benefits of microenterprise development help grow not just businesses, but stronger communities as well.

Micro Enterprise Development (MED) is a proven way to strengthen viable, small businesses owned by local residents, resulting in increased economic impact and higher household income and savings, thus, alleviating the crunch of economic poverty. Blacksonville and our Community Partners work alongside enterprising members, helping them realize their economic potential and proving that they have the capacity to build their own, small Micro Enterprise units. Blacksonville facilitates the formation of Self-Help Groups (SHGs) to save, share and build capacity. Small loans for the businesses are provided and collected through individual members in SHGs.

A specialized non-profit company, established under Florida Law, manages the loans and economic assessment. The non-profit company called 'WEALTH WATCHERS, INC.' focusses on MED in target communities identified by Blacksonville. Small loans (ranging from $2,000 to $10,000) are provided for individuals in SHGs, along with training on management, marketing and investments.

As a result of such economic development initiatives, many small businesses and their communities expand and become viable. As a result, poor families have enough to feed their children and send them to school. The marginalized poor develop their businesses and manage to live a decent life in a decent neighborhood. This approach is very powerful in revitalizing communities from economic poverty, ultimately leading the community to be self-reliant and live with dignity.

If you decide to partner with the Blacksonville Community Network in building economically viable communities across Urban America, you would be helping to reach out to millions of impoverished people and adding on to investment funds for people who work where they live. These will be disbursed through various Micro Enterprise Development arms in your city.

Contact us if you would like to conduct research study on the opportunities in your neighborhood. Help us to ensure these funds are not wasted. Call 800.863.9130 for details.