Many groups are outraged over the City of Boston’s report that 97.5% of the $2.1 billion the city has spent over the last five years has ONLY gone to white firms. So few dollars from the corporate and public sectors made it to the Black community, it’s as if there were an economic blockade, similar to the ones imposed against North Korea and Iran. It should be no surprise, then, that report after report from The Boston Foundation, The Federal Reserve and The Brookings Institute show growing income and wealth disparities between Blacks and whites in Boston.
Harry Wachtel, a New York lawyer and businessman representing companies such as The McCrory Corporation, the Rapid American Corporation and the Lerner Stores Corporation, was a friend of the Rev. Martin Luther King Jr. One of the many things he did was use his influence to integrate the lunch counters and snack bars in the McCrory stores. As vice chairman of a Fortune 100 company, he was able to use his resources, legal and financial, and his network to help the civil rights movement.
Jewish business owners have played a very important role in the civil rights movement. An example is the Zimmerman’s Men’s Shop in Atlanta that let Blacks try on clothes and receive credit. While unremarkable today, it was at the time when everything was segregated, i.e. “For Whites Only” or “For Blacks Only,” and Blacks trying on clothes was not accepted.
There is a need for Jewish business owners to help economic development in the Black community as they helped with the civil rights movement. But first, there is a need to understand the barriers to Black economic development and wealth creation in Boston.
In summary, the barriers are as follows: Blacks have a hard time getting into the high-paying unions, and if they do get in, getting training for the highest-paying jobs versus being a general laborer, or getting called last because they have so little seniority. Procurement from Black businesses in the public sector is poor, as can be seen in the City of Boston’s most recent report, and the private sector isn’t much better. While there are more senior-level diversity, equity and inclusion professionals, there are still too few Black Americans at senior positions in corporate America. Finally, Blacks buying from other Blacks is a challenge because of the limited number of things Blacks produce, internal racism and some have labeled that behavior. In terms of jobs of the future, less than 1% of venture capital goes to Black founders.
Unions and Developers
Black and brown people constitute a disproportionate number of workers in low-wage unions, such as janitorial, and too few in high-wage unions, such as construction. Blacks in unions find themselves not getting called to work on union jobs because they are too low on the list. To address this barrier, we have seen commercial real estate developers and universities insist that a certain percentage of the workers on the jobs are Black. Developers from the public sector, e.g. universities, hospitals and the private sector, can insist and demand the unions hire “out of order” or lose the work altogether. Given the choice, unions have found a way to get Blacks on the job.
Public and Corporate Procurement
The City of Boston’s latest commissioned report shows the city bought only 0.4% of its procured services and products from Black businesses over the past five years. To put it another way, in a city such as Boston, a majority-minority city, the city spent 97.5% of its $2.1 billion with white businesses and the remaining 2.5% with ALL businesses of color!
This is not new. The final cost of the Central Artery Project was estimated to be $24.3 billion, yet that project did not lead to one new Black millionaire in Boston—even with mandated set-asides for women- and minority-owned businesses. Over the years, this poor example has been repeated countless times at the city, state and federal level.
Boston is now at 7% of contracted purchases from women and minorities, compared with New York (19%), the Chicago area (29%) and Philadelphia (31%). With only voluntary commitments, the private sector hasn’t done much better increasing procurement from minority vendors.
Diversity, Equity and Inclusion
Diversity consulting, including recruiting, compliance and training, is a growth industry across all institutions, but the number of Blacks holding senior corporate or professional positions has barely moved. The only growth seems to be in hiring diversity consultants. What I have seen work is succession planning: A company says the next C-level opening will be filled by a Black professional. They build bench strength and have a pipeline ready to go. That’s better than saying they will consider a candidate without regard to race, gender, etc. Diversity has to be a goal. When challenged about the lack of partners at a professional services firm, the answer too often is what they are doing at the associate level. The answer should be that they’ll find partners from another firm or industry.
Buy Black, and Start Black Businesses
There is a strategy calling for Blacks to buy only from Blacks, and to hire Blacks, which would help Black businesses. This is documented in Maggie Anderson’s book, “Our Black Year: One Family’s Quest to Buy Black in America’s Racially Divided Economy.”
Jeffrey L. Boney, author of “From Black Wall Street to the Black Dollar Project,” writes that the dollar circulates almost 10 times within the Jewish community before it reaches the outside. The dollar circulates almost six times within the Asian community before it reaches the outside. The dollar circulates an infinite number of times within the white community—more than all other groups. “Sadly, the African-American dollar does not even circulate one time within its own community,” Boney writes. “As a matter of fact, the Black dollar only stays in the Black community less than six hours. This must change if we hope to address the issues of high unemployment, recidivism, crime and other critical issues impacting the African-American community.”
African Americans’ buying power totals $1.1 trillion, according to Nicole Kenney, NAACP economic program specialist, yet only 2 cents of every dollar an African American spends in this country goes to Black-owned businesses.
While this seems simple, it has been hard to execute. There are not Black suppliers for every commodity or service. There are Blacks who have internalized racism and believe the “white man’s ice is colder.” And some whites have said the explicit call for Blacks to buy only from Blacks is racist.
Increasing Black participation in the high-tech economy is a strategy to create both high paying jobs and wealth. New ventures will solve much-needed problems narrowly defined as those faced by people of color or more broadly defined as societal needs, such as clean energy.
In addition, new venture-backed businesses will provide jobs and create wealth for their founders, employees and investors. The problem is, less than 1% of all venture dollars go to start-ups founded by Blacks. Although Boston rivals Silicon Valley for innovation and venture capital spending per capita, it does less to support Black venture founders than much smaller metro areas across the country.
Solving this problem has a huge upside, but the solution is complex. Part of the solution is access to early-stage capital, but a larger challenge is building a supportive ecosystem for Black-founded ventures that includes all aspects of the venture community.
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