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Episode #2310
Black Economic Impact Part 1
Brown: In 2006, a report on the economic impact of Hispanics in our state generated talk about immigration and more. Now, there is a similar study out on African Americans. What did it reveal? We’ll share some of the findings and talk about them, next on Black Issues Forum.
VO: This program is a production of UNC-TV in association with the Frank Hawkins Kenan Institute of Private Enterprise. This program is made possible through the financial contributions of viewers like you who invite you to join them in supporting UNC-TV.
Brown: Hello everyone, welcome to Black Issues Forum. I’m Natalie Bullock Brown. In 2006, the North Carolina Institute for Minority Economic Development commissioned the Frank Hawkins Kenan Institute of Private Enterprise to produce a study on the economic impact of African Americans on the State of North Carolina. The study followed one similar in scope about the Hispanic community that was published in January of 2006. In November of 2007, the studies authors, Dr. John D. Kasarda and Dr. James H. Johnson, Jr., presented their findings from the second report before an audience of invited community leaders and media at the George Watts Hill Alumni Center on the campus of UNC Chapel Hill. Black Issues Forum was there to capture an important discussion, with leading African American thinkers, about the implications of the study. In a moment, we’ll bring you highlights from that discussion. Right now, we would like to share with you a few of the statistical findings from the Kenan study.
Overall, the study found that North Carolina’s African American population contributes more than $44.7 billion to the state’s economy through its purchases and taxes, and the authors predict that figure will rise to $60 billion by the year 2009 if current population and spending trends continue. African American cost to the state budget, in terms of healthcare, education and corrections, amounts to approximately $4.5 billion, or $402 per African American resident. Comparatively, the 2006 report on Hispanics revealed a more than $9 billion contribution to the state economy in Hispanic spending and taxes and state budget costs of approximately $102 per Hispanic resident, again, in terms of healthcare, education and correctional services.
Doctors Kasarda and Johnson have been careful to note that the bottom line figures reflecting the costs of African Americans and Hispanics upon the state budget must be viewed in the broader context of other contributory economic factors, such as spin-off jobs resulting from minority owned businesses, an increased cost competitiveness in key sectors. The contributions of African American owned businesses to the state’s economy have been significant. The study documents well over 52,000 black owned businesses in North Carolina in the year 2002, which earned $3.5 billion, created nearly 85,000 jobs and increased in numbers by 31% between 1997 and 2002. Over that same period, Hispanic owned firms increased by 24% to 9,000, and we would like to note that Asian owned firms increased by 73% to 13,695.
While the $44.7 billion economic impact figure for African Americans is impressive, Johnson and Kasarda say the full economic impact has not reached its potential due to a lack of access to retail and service facilities, as well as to employment, particularly in rural counties. The studies’ authors called this dilemma “leakage.” According to the report, the total African American economic impact in metropolitan areas throughout North Carolina in 2004 was estimated at $31 billion, with 8.2%, or $2.6 billion, of business revenue leakage. In comparison, the economic impact of rural counties was $9.2 billion, but the leakage was estimated at more than 21%.
To add to the economic picture, the study outlines other noteworthy statistics. For example, it found that median education levels for blacks and whites were essentially the same, but blacks are earning much less than their white counterparts. There was a more than $19,000 difference in median household income and nearly $12,000 difference in per capita income. This picture becomes clearer when you consider nearly 26% of African Americans are living in poverty compared to about 10% of whites.
Other factors are age and family structure. The study found that, on average, North Carolina’s African American population is considerably younger than its white population, with a median age of 32 compared to 39, due to a higher concentration of African American individuals under the age of 17. Also, there are more black single-parent households than white, and African Americans are less likely to live in nuclear families, 41.1% compared to 70% for whites. And black families tend to be larger: 3.3 persons per household versus three in white families.
What we have outlined are some of the figures at the base of today’s panel discussion, which UNC-TV recorded on the campus on UNC Chapel Hill in November, 2007. As stated earlier, this show featured a distinguished panel of African American thinkers, and you will recognize many of the names. Next, we will here from Dr. James H. Johnson, director of the Urban Investment Strategy Center at the Frank Hawkins Kenan Institute of Private Enterprise and coauthor of the economic impact study discussed today. We’ll also hear from Andrea Harris, president of the North Carolina Institute of Minority Economic Development, Rev. Dr. William Barber, president of the state conference of the NAACP, Julius Chambers, former chancellor of North Carolina Central University and current director of the Center for Civil Rights at the UNC School of Law, and Dr. Julianne Malveaux, president of Bennett College for Women. This discussion in its entirety will be available on UNC-ED, UNC-NC and via podcast on the Black Issues Forum website.
Right now, we take you the first part of that discussion, hosted by our own, Mitchell Lewis.
Lewis: Dr. Johnson, I’ll start off with you. What led you to conduct research on the economic impact of African Americans here, in North Carolina?
Johnson: This study is the second in a series of studies that we’ve done at the Frank Hawkins Kenan Institute of Private Enterprise. The first study dealt with the economic impact of Hispanics in the State of North Carolina, and I think the impetus for both studies is ongoing debate in society today about the impact of immigrants and the notion that immigrants cost the state more than they contribute to our economy. But, if you look at that debate very carefully, what you will see is that it focuses mostly on fiscal impact and ignores the larger economic impact that people of color contribute to our economy. So this—these two studies were very much an effort on our part to try to bring some sound analytical rigor and empirical evidence, the best that we could marshal, on the economic impact and understanding the difference between the economic impact and fiscal impact.
Lewis: And, Ms. Harris, why did your organization decide to commission the study?
Harris: Well, I think we have a responsibility to try to educate as much of the North Carolina public as possible, particularly key decision makers in those local communities. And North Carolina has an increasingly diverse racial and ethnic population base that we should see as an asset, if we want to be globally competitive. So, we have to look at what is happening with these populations economically and what are the challenges and what are the opportunities for us. So, we saw this as a major opportunity for us to further educate North Carolina to the tremendous positive resources that we have, as well as to educate us to how we are under-utilizing those resources.
Lewis: Now, let’s get the other doctors in on this conversation. And, Dr. Malveaux, I’ll start off with you. According to Dr. Johnson’s report, nearly $45 billion in economic impact when it comes to African Americans here, in North Carolina. From your perspective—and Dr. Barber and Dr. Chambers, I would like for you to get in on this, too—Dr. Johnson mentioned it earlier; why does it seem like the economic contributions of African Americans seem to be overlooked or even sometimes taken for granted?
Malveaux: When you tend to look at economic contributions from a macroeconomic perspective, you are not really looking at any ethnic contribution; you’re saying, “This is what the state is collecting, dollars, wages, et cetera.” And I think what the importance of the study is, is that it shows that African Americans give more than they get and have more potential than has been realized for the state.
At Bennett College for Women, we educate and celebrate African American women and other women and transform them into 21st century leaders. A strong Bennett is a strong North Carolina. But the fact is that I don’t think that our school has been viewed as the kind of asset that it should be, and the investment has not come to us. And I would posit that not only Bennett, the Civil Rights Museum in Greensboro, many of the other things that make our state so competitive and so exciting, are things that have been overlooked. Because, when people look at the macro, they don’t pay attention to the micro, but the micro drivers are often the overriding drivers for the state.
Lewis: Dr. Barber, looking at it from the view of the state NAACP, just how important is it to recognize the economic impact of African Americans in this state?
Barber: Well, you know, the scripture says that “where your treasure is your heart is,” and, oftentimes, in North Carolina and America, we have not recognized the great treasure of African American economic contribution; therefore, the heart of our public policy has always been shallow. The reality is, we have 200 years—not just this recent study—200 years, or more or longer, of discrimination. And I think we have to remember, in the Civil Rights Movement, one of the things we talked about at “HK on J” last year is that this school, for instance, was built on the backs of free labor of African Americans. Much of our roads, in the 1930s, DOT used free labor. African Americans contributed $47 billion, less than 1% of all the state contracts.
And, when we talk about civil rights, it wasn’t just a moral issue, slavery was an economic issue. The end of slavery was an economic issue. Jim Crow was an economic issue. Desegregation of our schools was not just about black children sitting beside white children, it was an economic issue. It was about some schools having chemistry books that were 15 years old and some having chemistry labs. All of this turns on economics. Even the March on Washington was a march, if we remember it correctly, not just for some kind of pseudo human relations, singing “We are the World,” it was about jobs and freedoms and economic opportunity.
Lewis: And Dr. Chambers, of course you have been involved in civil rights for quite a while. How does that correlate to economic strength?
Chambers: Well, I think that one of the great contributions of this study is that it helps all of us, as we talk about improving educational opportunities for all children, improving job opportunities or improving opportunities for minorities and others to get into business ventures, and, if we haven’t focused on healthcare, to improve healthcare for all people. I was really interested in this study in terms of the effect of minority spending in the economy in North Carolina, and it’s significant. And what we see is, with the disparities that we have created, minorities could be contributing more if provided the opportunity to work and to earn and to get into business and to make a contribution. And they could do that, it is just we have historically, as Dr. Barber has indicated, limited opportunities for minorities to get into business or to earn. And that discrimination has adversely affected the overall growth and development of the state.
Malveaux: You know, Mitch, if I could just add, it’s not only to the state, but it’s also to the nation. I mean, as we look at the way that our world economy is reconfiguring, the fact that we don’t invest in people of color, African Americans primarily but other people of color, really means that we show up as less than in the international play. China, India and Eastern Europe are producing more engineers than the United States of America are. Now, in fairness to what I have just said, if I had one of my conservative friends here, they would say, “Well, a Chinese engineering degree is not the same as a US engineering degree.” So, there is another statistic that says that there are more people in the United States between 45 and 54 with BAs than people between 25 and 34, which means the elders are doing better than the children are. That’s really kind of frightening.
There is a new piece that’s come out from Brookings, just mid-November, that talks about mobility and says that African Americans are more likely to do worse than their parents because of unequal investment. Some people might see this as an African American problem, but, if you look at shifting demographics, it’s an international problem. How does the United States of America produce what it has produced and maintain the world position it has if you have not invested in the growing population? And we really do see that the lack of investment is talking about just an erosion in what we are doing in the world.
So, Brother Chambers has stated it well regarding the state, I just want to pump it up; it’s not just the state, it really is the world. We count on the United States to be inventors, to be thought leaders, and all of that. If you are not investing in education and in other things, we are really selling ourselves short.
Lewis: And, speaking of education, Dr. Johnson, according to your report, it seemed that blacks and whites were pretty much on an even keel when it comes to a level of education but then that changes when it comes to salary. What are some of the factors involved in that?
Johnson: Well, I think that that is very clear, that the median education level is about 12 years for non-Hispanic whites and non-Hispanic blacks. I think the real challenge for the state is, when you translate that to industry and occupations, what you find is, across industry groups, African Americans tend to be concentrated in low-wage, low paying jobs across those sectors—about a $19,000 gap in median income, about $11,000 cap in per capita income, which means that there is some, probably, discrimination in the labor market and the opportunity structure.
The important question is the “what if” question. If the wages and earnings were more equitable, one would think that the economic impact of African Americans would be even greater than what we’ve found. And, despite discrimination, we’re contributing $44 billion to the economy. It can only be greater if we were to pursue equality in wages and earnings.
Lewis: Go ahead, Dr. Barber.
Barber: Well, you know, we see that. We see that in loans given for housing. We see that same discrimination pattern in loans given for business. It’s one of the reasons with a study like this. What could we be if we really took advantage of what we have in this state? Eleven historically black colleges, five state-supported. But when we see statistics that say, for instance, we put more money in incarceration than we do in all five of our state-funded—not even the private ones—our state-funded schools, we find ourselves in a position where we are just not doing our best. That is why the NAACP, for instance, has said that we need to, in light of this history of discrimination, in light of these facts, there ought to be an increase in the money that goes to those institutions, like the Institute and others that are pushing forward in economic development in our CDC community. We ought to be ratcheting up with our HBCUs and really funding them as they should have been funded all of these years, particularly in the area of business development and helping minority developers.
Those are some very, very practical kinds of things that we have laid out as an agenda. The problem is, I think, sometimes we look at these statistics, or we look at what helped this historical discrimination. And, in our general assembly, we have had this problem recently, where folk want to apologize for past discrimination rather than do reparations, rather than deal with the issues. And understand that if you bless and benefit one community, you bless and benefit the whole.
Lewis: Now, Dr. Chambers, as a former chancellor of a historically black university, compared to white universities, we talk about having more education and having it available, but, as far as the funding issue, how does that work? Like, a historically black university compared to, perhaps, its white counterpart.
Chambers: Well, I think it’s clear that we have not provided the HBCUs with the kinds of monies that we have provided to the historically white institutions. I always use the comparison of Chapel Hill and North Carolina Central, and Central was developed to provide the same educational opportunities as Chapel Hill, but Central never got its vet [ph] school, and it never got its medical school. That’s not being facetious, it’s just pointing out that there is a major difference, and we have accepted it and we have moved on.
But, as the study points out, our failure to provide these kinds of resources for a significant part of our population adversely affects all of us. And I would like to think more prospectively about what we can do now with this study. I was interested in the recommendations, and I would add something to them at whenever you get to that point. But you need to—we have a major problem going now with efforts to promote diversity in the educational program and develop diversity employment.
We have all kinds of reactions to what we call preferential treatment of minorities. We ignore what we have done to create the problems that we are now talking about. We push that aside and, as Dr. Barber said, talk about forgiveness, make some apology, but that doesn’t correct the problem that we have created. We still have these disparities, and I don’t know anyone who can explain the disparities that we have and the earnings that are reflected in the study other than by race. And, if you try to correct it, then you are engaging in preferential treatment. But you’ve got to do something now to improve the opportunities for all people, and you can’t do it unless you provide some special help for the minorities you have relegated.
Lewis: Ms. Harris, I’ll get you in on the conversation. What do you hope that this study will do to help perhaps mold public policy in the forms of bringing the African American economic power more into the limelight?
Harris: Well, I think one of the things that is in the study is there’s information on the leakage, economic leakage in the various communities, and I hope people in the various communities can use that data as at least some base point of—to start, to try to remedy just the leakage in those communities, recognize that there is tremendous opportunity. Secondly, we have to value challenges in North Carolina, just as we do in this country, so that if a community or this state thought that it could recruit firms that would provide 85,000 jobs, what would the incentive package look like? So, if black businesses are providing upwards of 85,000 jobs, then why is there a question about any initiative just to share information on market opportunities? Because there is no preferential treatment.
What we do have, though, are some other barriers. For example, if black businesses and minority owned firms wanted to do business at the federal level, we may have some barriers that say that if you—you can only compete at a certain level, and if your net worth reaches $750,000 or exceeds $750,000, you no longer can play in this arena. And someone says, “Well, where did that $750,000 net worth cap come from?” Somebody arbitrarily picked it out of the air because they said, “We don’t need to create black millionaires.” I mean, those are realities, no rhyme or reason for anything. But it’s also, you know, what we don’t understand sometimes is that how those negative kind of policies that are baseless have inhibited growth and have negative consequences, both economically and socially.
There’s part of that social consequence that comes out of that economic isolation, as seen in incarceration, and North Carolina cannot sustain this growing prison complex that we are building. And, when you look inside that, how many of the people here are people who simply have substance abuse problems or are here because they are guilty of some nonviolent crime. We have to figure out a way to remedy that and fix that because we can’t sustain that. And, one way we can do that, is through building that entrepreneurial talent that exists among many of them and, at the same time, providing them with the kinds of vocational skills that allow them to be employed or self-employed.
Lewis: Ms. Harris, you were talking about the incarceration. According to your report, Dr. Johnson, there are at least 14,000 people who were formerly incarcerated who will be leaving prison every year. Dr. Johnson, how do we get them back into the workforce?
Johnson: Well, I think it’s a common view that, you know, a prison record is a scarlet letter of unemployability in the mainstream marketplace. So, to my way of thinking, the only way you do it, or one major way, is you build upon the enormous entrepreneurial acumen that exists in that population, but you try to bring those skills into the above ground economy, as opposed to the underground economy. But you have to put together the infrastructure to support the young people coming out of the prison system, to support them to facilitate their ability to form small businesses and to grow and nurture those businesses. And I think, at the policy level, we have to do something to give those young people a leg up.
Brown: You’ve been watching parts of a discussion that took place in Chapel Hill last year following the presentation of findings from a comprehensive study about the economic impact of African Americans in North Carolina. Be sure to join us next week as we bring you more from this discussion, plus questions from the audience. For more information about the study, or to view the discussion in its entirety, visit us online at unctv.org/bif. You can also contact us by phone at 919-549-7167. For Black Issues Forum, I’m Natalie Bullock Brown, reminding you to be encouraged no matter what.
VO: This program is made possible through the financial contributions of viewers like you who invite you to join them in supporting UNC-TV.
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