By Mahari A. McTier
I read an article last month by John Archibald of the Birmingham News that piqued my interest to look deeper into his points. I have to say that I often disagree with the comments of Mr. Archibald, but his comments in this article are true about the lack of black business cultivation in the City of Birmingham.
Here is an excerpt from his article titled “Birmingham’s failure was not ‘gentrification’”:
Birmingham’s biggest failure, since the Civil Rights era, has been its inability to cultivate black businesses.
Seven out of 10 residents in the city of Birmingham are black, and about half the businesses in the city – not counting publicly traded companies – have black owners.
But it’s an illusion.
Because even though the number of black-owned businesses has grown, they still account for only about 2 percent of all sales in Birmingham.
Two percent. Or two cents on the dollar.
Think of that. The city charges twice that in sales tax alone.
And while the total number of black-owned firms is a respectable number, 61 percent of them have no paid employees. Black-owned businesses with paid workers account for only about 8 percent of all companies in Birmingham.
Of course there is frustration.
Think about this. Blacks make up 73 percent of Birmingham’s population and Asians make up 1 percent. Yet sales by black businesses and Asian businesses are virtually the same. There is less than a percentage point difference.
While white-owned business in Birmingham on average top $1 million in sales, black-owned businesses averaged $34,270, or about 60 percent of the national average, according to a 2012 Census Bureau survey of business owners.
Archibald concludes his article by saying that Blacks should have anger, but not at those who would improve a decaying city. Basically he’s saying that ‘gentrification’ is not the problem and Blacks need to stop blaming the problems on this. Gentrification is defined as the buying and renovation of houses and stores in deteriorated urban neighborhoods by upper- or middle- income families or individuals, thus improving property values but often displacing low income families and small businesses.
Before I give my thoughts on the article, let me address these appalling statistics. The reality is this, numbers don’t lie. It makes me sick on the stomach to see how pitifully black businesses are performing in comparison to our white counterparts. Blacks are 73 percent of the population and black businesses make up just 2 percent of sales. It’s hard for me to digest this, when I see politicians fighting for power over who is going to be in charge. In charge of what, is where my mind goes. Part of the fight has been over board appointments. Yes, to be honest government contracts have been the only way many black businesses have made a few crumbs over the years. But as Archibald pointed out, the problem with boards in Birmingham that have contracting power is they box black businesses into being ‘minority firms’, which results in small fees that are not enough to build capacity. So if you are a firm that seeks to be a lead contractor, the chances are small to none. As I stated in a previous article, we give away our economic empowerment power at the government level and auto demote ourselves to a minority role in a City that is majority black. I just don’t get it.
The problem is not just government, there are many systemic issues that make it challenging for black businesses to grow, like lack of access to capital. Blacks are three times more likely to be declined for a loan than whites and it’s definitely harder for blacks to get money to start a business.
In conclusion, there are a lot of things that we can do to better our financial status in this city. Remember, he who has the gold holds the real power and everyone else are just pawns in the game. Some of them include: support our black businesses, get government to not look at black businesses as inferior which leads to crumbs in contracts, create a real economic agenda that works for everyone at the government level, and stop blaming others for what we can do for ourselves. We are 73 percent of the population, remember. So who can we blame?
(Mahari A. McTier is a Financial Advisor with Tier 1 Advisors, LLC and can be contacted at 205-379-1052 or via email at mahari@tier1advisorsllc.com)
