We Need a Black Economic Renaissance

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black business photoWhen the U.S. Census Bureau reported that 46.2 million Americans were now living in poverty, it wasn’t a stretch to guess which group of Americans topped the list: African Americans. This was no surprise, given the black unemployment rate of 16.7 percent, nearly double the 9 percent national rate. The Pew Research Center recently noted that the median wealth of white households is 20 times that of black households. If current economic trends hold, that income gap will likely grow.

Some lawmakers, pundits and academics have insisted that President Obama should come up with an economic plan targeted at helping the hardest-hit African Americans, but it is no fairer to expect Obama alone to fix the problems of black America than it is to suggest that he created the country’s economic dilemma in the first place.

The reality is that the good manufacturing and blue-collar jobs that were once a ticket to the middle class for many people had been drying up for years, long before the recession began. As America redevelops its economy, now is the time to redesign a black economic infrastructure, rooted in innovation, entrepreneurship and global trade — all of which are important for job creation.

President Obama made this very point during his speech at the Congressional Black Caucus gala on Sept. 24. “This is the land of opportunity,” he said. “I want you to go out, start a business, get rich, build something.”

The fact is that over the last three decades, new startups by innovators and entrepreneurs — companies less than five years old — have accounted for nearly all newly created jobs in the private sector. The scarcity of these dynamic, fast-growing companies in black communities has contributed to some of the chronic unemployment we see today.

Rediscovering a Black Tradition

Innovation and entrepreneurship aren’t new ideas in the black community. From Thomas Jennings, the first black patent recipient — for a dry-cleaning process — to Lewis Latimer, who invented a method of making carbon filaments for the electric incandescent lamp, African Americans were prolific innovators and entrepreneurs during the 19th and early 20th centuries.

In 1907 Booker T. Washington said, “Every member of the race should strive to be successful in business, however humble that business might be.” More than 100 years later, African-American men are one third as likely as white men to be self-employed. In addition, African Americans are seriously underrepresented in corporate boardrooms and the upper echelons of fast-growing smaller companies. There are arguably structural factors that have caused this imbalance, such as lack of capital and credit, lack of knowledge about business opportunities and lack of professional networks needed for business success.

The Obama administration has been working diligently to create an environment for businesses to start and flourish in several ways: by working to free up credit, increasing small-business loan guarantees, enhancing opportunities for small firms to do business with the federal government and opening additional markets abroad through new trade agreements. Closer to home, we simply must focus on owning more businesses and creating high-paying jobs in all communities.

I grew up in a small town in South Carolina, where the textile industry was once the mainstay of our local economy. Connected to that textile economy was a vibrant black business district called the Hill. It was our black Wall Street, reminiscent of Sweet Auburn in Atlanta and Harlem in New York City. It was where one could find doctors’ and lawyers’ offices, mom-and-pop retail stores, restaurants, fresh-seafood markets and of course barbershops, beauty salons and funeral homes.

We didn’t have Starbucks, but we had the Nick Nack Café, where friends and family gathered. When we were kids, local businessmen were our role models and taught us important life lessons. The Hill wasn’t just where we bought products and services; it was the epicenter and nucleus of our social organization.

Nonetheless, the textile industry has dried up, and the Hill, as I knew it, is gone. It’s been replaced by empty storefronts and hollowed-out buildings. Unfortunately, this same story has played out in cities and towns across the country, including Detroit, where auto-parts factories have shut down; and Gary, Ind., where steel plants have disappeared.

These communities have been left reeling, with few, if any, good-paying jobs and a dismantled social structure. Consequently, young, capable men end up unemployed and disengaged from the larger society instead of working in advanced manufacturing plants or in local businesses. This chronic joblessness often lies at the root of many of our social problems, such as crime, neighborhood decay and broken families.

No Easy Solution

This is a problem that defies easy solutions. We simply can’t revitalize overnight communities that have lost thousands of jobs. And new corner stores or barbershops certainly won’t make up for the closing of factories. Targeted government programs help, but private-sector investment is critical for sustained community development.

We must think bigger and encourage more black innovators and entrepreneurs to develop high-growth, high-demand companies in industries such as clean energy, biotechnology and health care. That also means investing more in job training and education — particularly in science, technology, engineering and mathematics (STEM) — in recognition that kids from Anacostia in D.C. aren’t competing just with kids from Boston but also with youngsters from Shanghai and Bangalore.

We must understand the global marketplace and be a part of it by selling our goods and services across the world. Consider that 95 percent of the world’s consumers live outside our borders, yet only 2 percent of U.S. companies export to them. I recently traveled to China to help launch a new joint venture that will manufacture car components in Mississippi and sell energy-efficient vehicles in China. We can do business abroad while creating jobs at home.

The combined effect of innovation, entrepreneurship and international trade can create unlimited economic possibilities. Imagine if we had more high-tech companies based in economically distressed areas. Imagine if there were more companies like black-owned Volt Energy, which installs solar panels on churches and homes in urban communities.

Imagine if historically black colleges and universities united to develop and commercialize new health care technologies that provide solutions to diseases like hypertension and diabetes. Imagine if rural black farmers had Internet access in order to market and sell their produce through the global supply chain. If we did more of these things, we could develop a new economy, create high-paying jobs, improve people’s lives and transform communities.

While we may disagree on the means, I hope that we would all agree with President Obama’s end goal: “to out-innovate, out-educate and out-build the rest of the world.” We have a strong tradition of entrepreneurship in the black community, fostered by a history of economic exclusion that forced us to create our own businesses. We can’t afford to let our collective ingenuity lie dormant now. If anything, we have to harness it if we’re going to move ahead.

We’ve done this before when the times called for it; we can do it again. It’s time for a black economic renaissance that includes all people.

Rick C. Wade is senior vice president at GreenTech Automotive. He was senior adviser and deputy chief of staff to Gary Locke when he was the U.S. secretary of commerce.