Ken L. Harris serves as the President/CEO of the Michigan Black Chamber of Commerce with access to more than 79,000 black-owned businesses in Michigan. Commissioner Harris was elected to the Detroit Charter Commission in 2009. Harris currently serves on the U.S. Black Chamber of Commerce Board of Directors in Washington, DC and as Midwest Director for the US Black Chamber over 12 states. Harris is an active life member of Omega Psi Phi Fraternity, and a 33rd Degree United Supreme Council Prince Hall Mason. Harris received the U. S. Small Business Administration (SBA) 2007 Minority Business Advocate of the Year Award in Michigan and was inducted into Crain’s Detroit Business Class of 2007 40 under 40. Harris was also featured in DBusiness Magazine 30 in their 30’s Most Influential and Ebony Magazine in 2011. Harris a former NCAA Basketball Academic All-American point-guard for Clark Atlanta University graduated with a B.A. in Psychology and M.A. in Counseling Psychology from Clark Atlanta University (HBCU) in Atlanta, Georgia and an Educational Specialist (EDS) Degree from Wayne State University in Educational Leadership and Policy Studies. Ken Harris is a PhD candidate at the Michigan State University in African American and African Studies and the Eli Broad School of Business Program.
During the presidency of Barack Hussein Obama, the Commerce Department’s Minority Business Development Agency (MBDA) and U.S. Census Bureau released new data from the U.S. Census Bureau’s 2007 Survey of Business Owners showing that the number of African American-owned firms in Detroit grew to more than 32,000; in the entire United States, the number increased by 60.5 percent between 2002 and 2007 to 1.9 million firms. African American-owned businesses also drove job creation over the five-year period, with employment growing 22 percent, which exceeds that of non-minority-owned businesses.
“We are encouraged by the overall growth of the minority business community, including African American-owned businesses, but we still have a lot of work to do,” said MBDA National Director David A. Hinson. “Creating new businesses and new jobs on a path to entrepreneurial parity in size, scope and capacity is our primary goal.”
With more than 32,000 black-owned firms, Detroit is ranked 4th in the country, behind New York, Los Angeles, and Chicago. Detroit is also amongst the top cities for producing black women-owned businesses. Catherine Clifford of CNN Money reports that, among large cities, New York City had the most black-owned businesses (154,929, or 8.1% of the total); however, Detroit had a higher percentage of firms that are black-owned (64%).
As part of any economic plan for the City of Detroit, black-owned businesses are an untapped economy ready to explode. If programs, resources, and capital would be directed to these firms, Detroit’s revitalization would not be far behind. Small businesses are job creators, and entrepreneurs refurbish desolate environments. It is surprising that economists, economic development agencies, philanthropic foundations, and private corporations that believe in corporate responsibility haven’t noticed the low-hanging fruit right in the city’s back-yard. If the 32,000 black-owned firms were to hire just 2 additional people per enterprise, 62,000 jobs would be created in Detroit.
Although Detroit’s key stakeholders and leadership lack the focus to develop under-severed urban economic centers, entrepreneurs find a way to—or make one. Black-owned firms grew faster—both in number and sales—than U.S. firms did as a whole over a five-year period, according to the latest data available from the Census Bureau.
"Black-owned businesses continued to be one of the fastest-growing segments of our economy," said Thomas Mesenbourg, deputy director of the Census Bureau, in a written statement.
Michigan’s recession had a tremendous impact on Detroit’s economy and its private sector; many corporations began to see demand sink and sales plummet. This was a wakeup call for black folks in Detroit, which has the largest density of black people outside of the continent of Africa in the U.S., with a black population of more than 500,000. The unrestrained corporate downfall in Michigan forced layoffs and shortened hours, work, and pay, which has inspired many African Americans to go back to their post-slavery roots—entrepreneurship.
“At the same time, layoffs have inspired many African Americans to leave the corporate world to start businesses,” said Alan Hughes, editorial director of business at Black Enterprise magazine. Because of these competing trends, "it is tough to say at this point whether you see a net gain, loss, or a wash" in black-owned businesses since 2007, said Hughes.
This was a time when African Americans—who are usually the first to fire and last to hire—sought refuge in small business ownership, which allows for more flexibility in controlling their own financial destinies.
What is alarming about the tremendous growth of black businesses in Detroit is the fact that African Americans start businesses but don’t have the necessary resources, capital, or networks to stay in business. Out of the 32,000 black-owned businesses in Detroit, 90% of them have between 1–4 employees. Thus, capacity is an issue, as is growth.
Black businesses were hit extremely hard during the recent recession. In particular, credit dried up. This hit black-owned businesses particularly hard, said Lucy Reuben, a professor at Duke University's Fuqua School of Business. "There is no lack of ideas and talent," said Reuben. However, "lack of capital continues to be a very, very difficult challenge for black business growth."
African American-Owned Firms Drive Job Creation, Outpace Growth of Non-Minority-Owned Firms
As the nation’s demographics continue to change, the U.S. Census Bureau’s 2007 Survey of Business Owners shows that the African American business community is changing as well. Highlights include:
- In 2007, about 1.9 million African American firms in the United States generated $138 billion in gross receipts and employed 921,000 workers.
- African American firms with employees (106,824) represented 6 percent of all African American firms and had average receipts of $925,000, with an average employment of 9 workers.
- The African American population had an estimated buying power of about $910 billion in 2009, which is larger than the purchasing power of all but 16 countries worldwide, including Australia ($824 billion), Taiwan ($718 billion), and the Netherlands ($654 billion).
- Between 2002 and 2007, African American-owned firms outpaced the growth of non-minority-owned firms in gross receipts (55% African American growth), employment (22%), and number of firms (61%). In comparison, non-minority-owned firms’ gross receipts grew by 21%, employment by 0.03%, and number of firms by 9%.
- African American firms are an engine of job creation, with paid employment growing by 22 percent between 2002–2007, from 754,000 to 921,000.
- Average gross receipts generated by African American firms decreased by 3 percent from $74,000 per firm in 2002 to $72,000 per firm in 2007. However, African American firms generating receipts of $1 million or more grew their average gross receipts by 19 percent, from $4.6 million in 2002 to $5.4 million in 2007.
- Average payroll per employee increased by 12 percent, from $23,000 in payroll per employee in 2002 to $26,000 in payroll per employee in 2007. The average payroll per employee for non-minority-owned firms was $35,000 in 2007.
- Average employment per firm for African American-owned businesses with employees also increased from 8 employees in 2002 to 9 employees in 2007.
- African American-owned firms are, on average, much smaller than minority-owned firms, with $179,000 in average receipts, compared to $490,000 for non-minority-owned firms.
- The African American population increased by 7 percent between 2002–2007, compared to 1 percent growth for non-minorities.
Detroit’s economy is on the cusp of innovation, an entrepreneurial revolution, and diversification of its economic future. Detroit’s future can thrive by developing and assisting its entrepreneurial communities. We can’t ignore a city that is majority African American, nor can we disregard the communities that make Detroit great. Black businesses have a future, but will the powers that be nurture its potential or just follow history’s course of doing nothing? Entrepreneurs create green, no matter if white, black, brown, tan, or yellow produced it. Detroit is the Black Mecca.
Ken Harris is President/CEO of the Michigan Black Chamber of Commerce and former Detroit Charter Revision Commissioner. Harris was appointed to the U.S. Black Chamber of Commerce in Washington, D.C. He serves as the Midwest Regional Director over 12 states and is a Ph.D. student at Michigan State University in African American and African Studies, specializing in Entrepreneurship within the Eli Broad School of Business. To contact Ken Harris, visit www.MichiganBlackchamber.com or (313) 309-3316 (office).
Hello Mr. Emergency Financial Manager,
Welcome to the City of Detroit. The financial review team and State Treasurer Andy Dillon will be making a recommendation to Republican Governor Rick Snyder to appoint an Emergency Financial Manager (EFM) over Detroit. The citizens of the great state of Michigan voted to disband the controversial state takeover law, but Gov. Snyder and the Republican legislature passed another version opposite of the Michigan electorate faster than the ink could dry.
Detroit, with a budget deficit of more than $300 million, has struggled with cash flow and a deficit plan to eliminate the possibility of depleting its currency for more than a year. This makes the possibility of appointing an EFM and eventual managed bankruptcy imminent, if proposed solutions do not work. The question becomes, will the state go against the will of Detroit and the referendum solved at the ballot box, or is the EFM the best option, due to the lack of vision, solutions, and political constraints on the part of elected officials?
The majority of the African American cities of Flint, Pontiac, Benton Harbor, and Ecorse, and the school districts in Detroit, Highland Park, and Muskegon Heights have been taken over by financial czars in pursuit of eliminating deficits. However, many voices in Detroit’s community are calling it a colonialist form of exploitation and control of economic resources, assets, and infrastructure with no taxpayer consent or approval mechanism. The new EFM law does address certain aspects of taxpayer engagement, but functions under a totalitarian form of approval and forces all power within the control of one person, similar to colonialist regimes.
The Wikipedia defines Colonialism as an establishment, exploitation, maintenance, acquisition, and expansion of colonies in one territory by people from another territory. The Merriam-Webster dictionary describes Colonialism as control by one power over a dependent area or people. The ultimate goal of colonizers is to claim complete control over the colony, the social structure, government, and most important, the economics of the colony to benefit colonists and their economic systems, relationships, and processes against the indigenous population.
European powers, such as Spain, Britain, Portugal, the Netherlands, and France, established colonies throughout Asia, Africa, and the Americas from the 1400s into the 1900s. Exploitive colonialisms primary goal was to extract economic resources to benefit the few in power over the masses. Most colonialist regimes ended due to uprising, revolt, and revolution from the indigenous people. Many in Africa and the Americas gave generations of sacrifices, and remorsefully their lives, to end such economic exploitation, apartheid, and slavery.
Is the Emergency Financial Manager (EFM) beneficial to the City of Detroit and the thousands who pay for taxes for basic services and a certain quality of life? The 82.7% majority population of Detroit is of African American descent. The city’s residents are in trepidation of a complete takeover, the outside exploitation, and the fear of returning to conditions inflicted upon Black people before the civil rights movement.
If and when Republican Gov. Rick Snyder appoints an EFM, we pray and hope that the intent is to protect the rights of its tax-paying citizens, economic opportunities, and services to ensure a certain quality of life for all Detroiter’s, not just downtown to New Center and those operating behind closed doors in Lansing. The appointed EFM should involve, engage, and build coalitions, fending off any perceptions of a colonialist mindset or agenda. The historical ramifications of “Disaster Capitalism,” perpetuated by the state and the lack of vision from our elected leadership in Detroit, have brought the city to its knees. Decisions made over long periods have inevitably caught up to Detroit. We have no choice now but to face reality, the reality of welcoming Detroit’s first Emergency Financial Manager.
Let us hope that the EFM will help Detroit’s economic situation, eliminate the deficit with a plan, and save its residents from a financial apocalypse. We hope the EFM will do the right thing, and set the city on a new course towards economic prosperity. However, if it is a takeover of the city’s economic means, resources, assets, and infrastructure, only for the means of exploitation, Detroiters will respond, just as they did in November of 2012 at the ballot box.
The purchasing power of African Americans has experienced exponential growth despite a severe economic recession, which continues to rejuvenate the U.S. consumer marketplace. The State of the African-American Consumer Report found that black buying power is projected to reach $1.1 trillion by 2015, The Louisiana Weekly reports.
“If we just start supporting our own, my people might have the economic foundation we need to solve our problems,” says Maggie Anderson, who makes sure that she practices what she preaches. (The Network Journal, 2009)
A report released by Nielsen and the National News Publishers Association highlighted that the Black Buying Power of African Americans is “Still Vital, Still Growing,” which also identified African American consumers as potentially underserved by marketers.
The report found other notable findings, which include:
With a buying power of nearly $1 trillion annually, if Blacks were a country, they would be the 16th largest country in the world.
Blacks make more shopping trips than all other groups, but spend less money per trip. Blacks in higher income brackets also spend 300% more in higher-end retail grocers, more than any other high-income household does.
There were 23.9 million active Black internet users in July 2011—76% of whom visited a social networking/blog site.
Thirty-three percent of all Blacks own a smart phone.
Black Americans use more than double the amount of mobile phone voice minutes compared to whites—1,298 minutes a month vs. 606.
“Unfortunately, when African-Americans make money, we spend it. We don’t use it to invest or produce,” a black consumer told BlackAmericanweb.com. “When we get our tax refund, we go straight to the store.” (Black America Web, 2009)
- Estimated Expenditures by Black Households - 2009
- Apparel Products and Services $29.3 billion
- Appliances 2.0 billion
- Beverages (Alcoholic) 3.0 billion
- Beverages (Non-Alcoholic) 2.8 billion
- Books 321 million
- Cars and Trucks - New & Used 29.1 billion
- Computers 3.6 billion
- Consumer Electronics 6.1 billion
- Contributions 17.3 billion
- Education 7.5 billion
- Entertainment and Leisure 3.1 billion
- Food 65.2 billion
- Gifts 9.6 billion
- Health Care 23.6 billion
- Households Furnishings & Equipment 16.5 billion
- Housewares 1.1 billion
- Housing and Related Charges 203.8 billion
- Insurance 21.3 billion
- Media 8.8 billion
- Miscellaneous 8.3 billion
- Personal and Professional Services 4.1 billion
- Personal Care Products and Services 7.4 billion
- Sports and Recreational Equipment 995 million
- Telephone Services 18.6 billion
- Tobacco Products 3.3 billion
- Toys, Games, and Pets 3.5 billion
- Travel, Transportation, and Lodging 6.0 billion
Source: Target Market News, "The Buying Power of Black American - 2010"
A community’s health directly correlates to how many times money circulates or recycles within that community, Jim Wyatt told listeners during a recent African-American chamber membership drive. (Texas Association of African American Chambers of commerce, 2011)
“Much like the blood in your body, the more it circulates the healthier your body. The less it circulates the more problems your body will have,” said Wyatt, chairman of the Texas Association of American Chambers of Commerce and former Victoria city councilman. “African-American businesses and consumers have a catch-22 so-to-speak.”
Blacks have a significant influence on the U.S. economy and in the private sector. Not only are African Americans an emerging consumer market, they spend a tremendous amount of money outside of the community. The dollar is estimated to circulate in the black community once before it exits into the global marketplace.
African Americans should be careful where they spend and consume. They should support private sector or fortune 500 companies who value the black dollar in community/corporate responsibility, hire African American executives, and contract and procure opportunities from blacks who supply commodities, goods, products, and services. Once Blacks are able to concentrate and hold the private sector accountable for patronage using the African American dollar, so shall the black community encounter economic growth and opportunities.
Support those who support you! African Americans are a purchasing power.
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