Black business matters: Why black America needs more investment

The largest depressant on American growth is the credit crunch for African-American households and businesses.

As co-founder of the 14th National Black Business Month with Frederick E. Jordan Sr., I annually assess the state of black business each May. 

Since the 2008 recession, business lending to African-American businesses has fallen 75 percent. Although small businesses employ 70 percent of all workers, only six percent of African-American workers are hired by black-owned businesses. 

Of the close to 3 million such firms, only 100,000 have employees. 

Raising that number from 300,000 to 500,000 would eliminate the two-to-one unemployment disparity between African-Americans and the general population. 

What would it take to make that happen?


Meet the $50 billion annual credit requirements of African-American businesses. This is a priority that faith-based investors, program-related investors, pension funds, university endowments and merchant banks must move to the top of their agenda.


This is not a narrow agenda. The $900 billion that African-American families would otherwise make would generate twice as much in economic activity for the rest of the economy. That's more impact than the 2009 stimulus act.

When officials in west Contra Costa County, California closed Doctors Medical Center two years ago because some did not want to pay taxes to keep a facility that served a large minority population open, it meant the largest employer in the region was shuttered, losing more than 500 jobs and creating crowded conditions at other hospitals for 50 miles around.

Similar arguments are made in attempts to change the Affordable Care Act. Some imply that reducing spending on African-American healthcare will save money, when the actual result has been the creation of jobs across the entire healthcare industry. 

Twenty percent of all black businesses are in healthcare, the largest sector. Reducing access will have negative employment consequences in the communities which need it the least.

There are things policymakers can do that do not require legislation.

In a 2014 submission to the Federal Reserve, I was joined by Timothy Bates, emeritus professor from Wayne State University, and Anthony W. Robinson, founder of the Minority Business Legal Defense Fund, in calling for the central bank to allocate one-tenth of its quantitative easing, approximately $3 billion monthly towards facilities for providing credit to businesses in communities most impacted by the 2008 recession, and predatory lending. 

I urge the Senate Banking Committee, on a bipartisan basis, to join that simple request. The current stimulus has had the impact of accelerating income inequality and rising housing prices in communities which have not had corresponding economic growth. 

Equally unfair is the distribution of settlement funds from federal and state enforcement actions against financial institutions for questionable transactions. The communities most affected have not benefited from those settlements. Again, significant proportions should be allocated to the institutions which make the majority of business and residential loans in communities shattered by predatory lending. 

In Our10Plan: State of Black Business, our analysis indicates that sufficient credit allocation would bring liquidity to communities such as Chicago, which would have a very positive impact on the fiscal status of cities, counties and states, and improve the ability of families to afford to educate their children, ensure their health and maintain their homes. 

In Silicon Ceiling 15, we noted that not one of the 174 "unicorns" that have achieved billion-dollar status is led by an African-American. 

Contrary to stereotype, African-American businesses are more likely to be run by college graduates, who have more than 20 years of experience in their industry. But the majority of black businesses surveyed in Texas have never even gotten a bank loan. 

Imagine a card game in which only one side had funds. They would win no matter what hand they played. 

In the Journal of Black Innovation, we chronicle companies every two months which have innovations which are competitive on the global market. But those firms do not get the access to capital for global growth. 

With 20 percent of black businesses in healthcare, your decisions on healthcare access are supremely important. The initiative of New York Gov. Andrew Cuomo (D) to invest $1.4 billion in Brooklyn, primarily in expanded health clinics, is a model for national policy. We rank New York, which has 10 percent of all black businesses nationally, as the No. 1 state for African-Americans to do business in the new edition of Our10Plan.

National health policy should also direct greater resources into health research at historically black colleges and universities so that they can provide the same employment impact as the likes of the Cleveland Clinic, Johns Hopkins and UC-San Francisco. 

The current financial markets resemble major league baseball before Jackie Robinson. Addressing the liquidity needs of African-Americans as an ongoing indicator — just as important as the monthly employment, trade and consumption indices — will allow the committee to create the same kind of growth in the overall economy that Major League Baseball has experienced since Jackie Robinson. 

Forty million African-Americans want to play ball in the economic coliseum, just as we do in the college arenas and domed stadiums. Raising African-American income from six percent of GDP (for 13 percent of the population) to 10 percent creates a stimulus greater than the response to the 2008 recession.

A new exhibition at the Brooklyn History Museum on Jackie Robinson is entitled "Until everyone has it made." 

Today's leaders must aspire to be economic Branch Rickeys of the new millennium.


John William Templeton is the former editor of the San Jose Business Journal, Richmond Business Journal and the Winston-Salem Chronicle. He's a regular contributor to the San Francisco Chronicle.

The views expressed by contributors are their own and are not the views of The Hill.