Carolyn Samora’s future is uncertain.
After working 14 years as a teachers’ aide at the John Swett Elementary School in San Francisco, Samora was laid off at the end of the term last year. She received unemployment insurance over the summer, but with no health benefits, she struggled to obtain the medication she needs for her high blood pressure.
Down but not out, Samora reapplied for a position at the school that fall and landed an eight-week assignment as a fill-in for another paraprofessional who is now on leave. But once summer rolls around again, Samora will be out of a job — again — and forced to reapply for yet another position in the new school year.
“It’s hard to start over in a new field in a tight job market. I always expected to retire from the school system,” says Samora, who earned close to $26,000.
But it doesn’t seem as though that will happen. Samora, 45, spends most of her time on temporary status. When she does work, it’s only for six to eight weeks at a time. If she is not rehired in September, her chance at earning retirement benefits will be in jeopardy, as will her day-to-day financial health. As the main breadwinner in her household, Samora depends on a regular salary to support her father, LeRoy; 20-year-old son, Joseph; and 5-year-old granddaughter, Layla.
Samora is one of 300 school paraprofessionals in San Francisco who were laid off last year as part of state budget cutbacks. But her job situation is hardly unique to the Bay Area. In fact, it is a metaphor for the precarious times millions of Americans are facing today.
According to the Bureau of Labor Statistics, 8.4 million people were out of work as of March 2004. The unemployment rate of 5.7%, with 10.2% for African Americans, has remained virtually unchanged in the last year.
Joblessness continues to be a serious issue nationwide. Hundreds of thousands of jobs have been eliminated altogether, while many positions have been outsourced overseas with little chance of returning. But not all of the layoffs have taken place in the private sector, where huge corporations are slashing jobs to save a buck. As state and local governments also look for ways to cut costs, workers providing a variety of public services are being handed pink slips as well.
African Americans seem to have been hit the harder than any other ethnic group. The black unemployment rate is twice that of whites, with college-educated African American applicants experiencing greater difficulty landing jobs than lesser-educated whites.
According to a March New York Times article, one out of every two African American males in New York City between the ages of 18 and 54 are unemployed.
With the 2004 presidential election just months away, African Americans are looking for a candidate who will provide solutions to the high unemployment that continues to threaten middle- and low-income families throughout the country. Black voters are looking for remedies that will stimulate economic growth in a post-war environment. They’re counting on strategies that will help them build financial security and wealth for the future.
Discussing solutions to these current economic problems, particularly their impact on African Americans and how black voters should participate in the political process, the BLACK ENTERPRISE Board of Economists assembled in March at the New York City offices of Earl G. Graves Publishing Co. Inc. Earl “Butch” Graves Jr., E.G.G. Publishing president and chief operating officer, led the discussion. The board participants included: Thomas D. Boston of the School of Economics, Ivan Allen College, Georgia Institute of Technology; National Urban League Research and Public Policy Director William Spriggs; Darrell L. Williams of Economic Analysis L.L.C.; Gerald D. Jaynes, professor of economics at Yale University; Margaret Simms, senior vice president for programs at the Joint Center for Political and Economic Studies; and Andrew Brimmer, president of Brimmer & Co. Inc.
Clearly, a weak economy with little momentum to generate large numbers of jobs is a huge problem for African American employees and employers, but our economists agree that racial discrimination also plays a major role in black joblessness throughout the country. To that end, they offer ways to hold elected officials accountable for fair hiring practices as well as strategies for growing a business amid decreased government support of minority-owned firms.
NO HELP WANTED
With corporate scandals impacting the stock and job markets, a continuing war in Iraq, and many jobs heading out to foreign destinations, many wonder if the country will ever return to the level of employment it enjoyed during the boom years of the 1990s. Spriggs says that in order to do that, the country must make up a shortfall of 7 million jobs in the public and private sectors.
Layoffs in public-sector jobs, like that held by Samora, are due in large part to local and state governments wanting to trim the fat from budgets. However, layoffs in the private sector are caused by other factors.
Brimmer found in a study he conducted that a huge portion of the layoffs corporations experience are a result of either corporate restructuring and mergers of viable companies or firms that went out of business due to financial distress or bankruptcy.
“Every merger of any note saved expenses by laying off people,” Brimmer says. “Regrettably, to use an old-fashioned term, these are truly labor-saving devices.”
Brimmer also notes that in recent quarters, more productive companies have increased output and generated surpluses. A Wall Street Journal
index of more than 1,400 companies indicated that the lion’s share of revenues generated by increased productivity went to profits instead of workers’ salaries and new hires.Surprisingly, results of research on outsourcing to foreign countries revealed that off-shoring, foreign competition, and imports combined accounted for no more than 500,000 of the 2.7 million jobs lost in manufacturing. Still, the consensus was that once companies found that they could be as productive with fewer employees, they had little incentive to hire new workers, dashing many laid-off workers’ hopes of ever regaining their old jobs. The economists agree that the situation is not likely to turn around soon. In fact, Brimmer forecasts that by the end of 2005, the unemployment rate will still hover around 5.5%.
It was believed that President George W. Bush’s $1.6 trillion tax cut would jump-start the economy, but it has yet to deliver. Jaynes says that the money from the tax cut went to wealthy families, but it didn’t get reinvested, produce growth and prosperity, or, more importantly, generate higher incomes for everybody else. So as a result, the signs concerning employment still read “NO HELP WANTED.”
“Labor-saving devices” aside, the economists believe that African American workers have yet another obstacle to overcome in their pursuit of employment in today’s economic climate — racial discrimination.
“If you don’t look at race, it’s hard to explain why you get a 2:1 unemployment rate for African Americans compared to whites,” Spriggs says.
“The losses in manufacturing don’t account for it. We lost so many manufacturing jobs during the last recession that whites were more likely than blacks to be in manufacturing as this recession began. The black-white 2 to 1 jobless ratio also held in the recessions of the 1960s, when the education gap was huge and about 28% of blacks were high school graduates and whites were 49%. Today the ratio is much smaller — 79% to 82% — and the jobless ratio is still 2 to 1. In one generation, the numbers totally [changed], but that didn’t change the unemployment ratio. Race must be a factor.”
So what are black job seekers to do, especially during an election year
when candidates from both camps are pushing platforms that suggest job creation over the next several years but offer no guarantees?
The Board of Economists also point out that African Americans need to find ways to employ one another instead of depending on someone else to do it for them. Spriggs and Williams suggest pressuring newly elected officials to incorporate “meaningful enforcement of civil rights at the hiring decision.” Jaynes agrees but cautions African Americans to consider how discrimination has changed with regard to the workplace.
“If we went back three or four decades, who
paid the highest cost for discrimination? It would be the most highly educated, well-trained black people. They are the ones who were shut out from any kind of employment that was anything like their capabilities,” Jaynes says. “[But] that has flipped now. Opportunities are available for the most educated, the best trained people.”KEEPING BUSINESSES AFLOAT
The economic challenges facing African American entrepreneurs are just as daunting as those facing black workers. Boston says two hurdles confronting black businesses are the skyrocketing cost of providing healthcare to their employees and access to bonding — a basic requirement of business owners to secure contracts.
The government, at one time poised to extend sizable financial support to black businesses, has now retreated from policies focused on assisting small and minority-owned enterprises. Williams says most corporations still have affirmative action programs in procurement contracts. Nevertheless, the courts have struck down minority set-asides and affirmative action programs at all levels of government.
“There has been a declining share of minority contracting, [such as] the 8(a) program,” Williams says. “Part of that has to do with changes in priorities, [but] part of it is just the continued effects of bundling of contracts, making it harder for minority firms and all small firms to get in. And that’s because the government has downsized its procurement staff in order to handle more procurement for fewer people.”
Bundling of contracts puts most black businesses out of the running, since 95% of black businesses are sole proprietorships. But one entrepreneur who has managed to not only stay afloat, but also thrive in this inclement business environment is Stephen Powell, CEO of Powell Steel Corp., a Pennsylvania-based structural steel fabrication and erector company that provides steel frames for schools, bridges, prisons, and skyscrapers.
Powell, 54, started out as an employee of the company — then named SS Fisher Steel Corp. — in 1985. But when the former owners filed Chapter 11, he purchased the company’s assets in 1994, growing it from $800,000 in sales to $22 million in revenues and 90 employees.
Of course, success didn’t come easy. Powell had no problem putting up his house to raise capital. But when he applied for a $3 million loan to buy the plant, rolling stock, equipment, and other assets, a dozen banks turned him down cold.
Luckily, it was the 1990s, a period when government was more responsive to small and minority businesses, so Powell was able to secure a $2 million loan guarantee from the Federal Rural Development Agency. He was also awarded two grants of $250,000 each from the now-defunct Pennsylvania Minority Development Authority to provide working capital so that he could make payroll and pay for receivables during the company’s startup phase.
The B.E. board of economists: Boston, Simms, Williams, Spriggs, Jaynes, and Brimmer.
Over the past 11 years, Powell’s company has built more than a dozen school and university buildings, as well as bridges, airport extensions, and other structures for state and local governments and corporations in Pennsylvania, New Jersey, Maryland, and Delaware. Despite his success, Powell says he continues to fight racial stereotypes and skepticism about his business acumen, the quality of his work, and whether he will complete the job on time.
He says it’s harder now than five years ago to submit the winning bid for contracts because bigger companies can “buy work” by underbidding smaller firms. He also points the finger at the Bush administration for not having government induce prime contractors to take on minority subcontractors. The picture is not much different for startups and emerging companies.
To overcome the obstacles of starting a business during these turbulent economic times, the BE economists suggest identifying the fastest growing businesses, which include architectural and engineering services, professional business services, and maintenance services, to name a few.
If you are already in business, Boston recommends forming strategic alliances with other enterprises to gain access to business opportunities that might otherwise be closed to you.
The economists also point out that black entrepreneurs, particularly young entrepreneurs, must be flexible and develop a different mind-set about doing business.
GET OUT THE VOTE
Although the fighting in Iraq continues to seize newspaper headlines, the BE economists agree that unemployment and economic growth are issues that are more likely to decide the election. These hotbed issues have African American workers and business owners scrutinizing the platforms of each candidate to pinpoint which one will offer realistic solutions to the financial concerns of the black community.
Brimmer says African Americans need to generate large black voter turnouts in battleground states — places such as Arkansas, Florida, Michigan, and Pennsylvania that can swing the election one way or the other. But Simms cautions black voters against focusing all of their attention on just the presidential nominees.
“This isn’t just about electing one man,” Simms says. “It’s about looking at all of the men and women who are candidates in the jurisdictions where you vote and asking them the same kinds of questions or looking at their platforms from the same perspective.”
The economists say this election year, as should be the case with any election year, is about African Americans participating in the political campaign process before the balloting takes place. Black voters need to press the candidates, they say, to adopt positions on social and economic issues. But voting is not enough. Sometimes black voters need to reach into their pockets to help achieve the goals of the community.