Thursday, March 31, 2011

So, what If they do want more Black Owned Businesses in St. Thomas

Well the answer is complex and multi-faceted.

So what's the solution ?? The answer is always the same: a complex combination of long-term capital formation and government policy. It takes a complex, cross functional solution led by government for about a generation(30 years). And it takes playing favorites: like using affirmative action for traditional disenfranchised groups, subsidies for very small business, and workforce skill development.

All of which is opposed by the entrenched business interest.

1) The best and cheapest capital is human capital (education, training and workforce development)

2) Monetary capital formation. Real-estate and home ownership continues to be the number one way to raise business capital. You must own you own home or apartment. It is your savings account.

3) Government policy to support small and native businesses. Government should support those traditional shut out of the banking sector.

4) Business training and development activities to graduate small, subsistence business to the next level as employment generators.

To push such a program forward takes political will and support of the people who say the current situation is bad but we can do some thing about it.

Hey, I did not say it would be easy.

Monday, March 28, 2011

The rich are different from you an me...

They have more money.

Today I walked near $200 million dollars in maga-yachts docked in St. Thomas at while coming back from Pueblo Supermarket where I saved $2.50 on some Ginger Beer. These guys cruise around the caribbean on the mega-ultra luxury yacht so they can drink a crona at different bars around the the region.

Is there some thing more constructive they could do than burn gas sailing around the islands helping the cayman island government steal tax revenue. In fact there is something unsettling about a country like the Cayman islands that has to basic help the rich and criminal class avoid taxes, launder money and avoid international standards for boating.

Apparently, while many yachts sale under the Cayman islands "flag of convenience" they still register with the US coast guard when they are in port in case any real trouble happens. I say let them call the Cayman Island Coast Guard. Or let them pay their fair share of real taxes.

Shopping with the Evil Black Economist

Where I spend my hard earned money, here is what I consider:

1) Black Owned Business (Sylvia's resturant)
2) Black Managed (MacDonalds, Burger King, Starbucks)
3) Black Employer (Wal-Mart, JC Penny, foot). Especially young Black mem
4) Provides quality services in Black Neighborhoods (Pathmark, Kroger, Safeway, Food lion, Winn Dixie)

What does not matter as much:
1) They treat me nicely when they take my money
2) They are conveniently located down the block.
3) Reasonable price. I am willing to pay about a 2-5% more because it helps the community.

On vacation in the Carribean and looking for Black Businesses

Well, I got a cheap package for vacation for a couple days, so I am here in St. Thomas. The population 50,000 and a small island economy(SIE). The unemployment rate is 8.5% according to the VI department of labor. The US national unemployment rate is 8.9%. Interesting place.

So everything seems good in paradise right ?

Well not quite. Few of the private jobs pay more than $7.25, the minimum wage. Blacks have done well in politics, civil service and education. They also make up many of the front line workers in all sorts of food, hotel and tourism businesses. But they are getting creamed when it come to ownership. Like almost all caribbean SIE's Blacks are struggling to own businesses.

The large hotels are chains and employee many Black workers and managers. For example, Marriott's Frenchmen's reef employs about 500 people. However, the small hotels are family owned and white owned. They employee some low-level Black workers but any major management job is reserved for family.

The jewelery and retail stores are owned by people from the Middle East, Jewish and Indians. Furniture and hardware stores are also family controlled by whites of mid-easterners. Whites also control the yacht tendering and maintenance business, major construction and real estate development companies. All of these business are kept in the family,so there is little chance for Black ownership.

Blacks do run the government and the transportation industry. They handle the majority of low-end retail, non management jobs.

However, the level of opportunity "feels" less than in the states. Many Blacks and educated Virgin Islanders leave for the mainland to go to school and never return. Actually, any one with ambition generally leaves; white, Black, young or old, immigrant or native. People from the USVI do well in the US, just like any other immigrant person.

Is the lopsided business situation really that bad ? Are people happy ?

Well, if you really want to change something you have to have a certain dissatisfication with the existing order of things. People have to want to change the status quo enough to make some sort of sacrifice. And that does not seems happening. People, across the board, are quite happy here in the USVI. They also have better health and a longer life span than the average US continental. They have a close network of family and friends to keep them going. Finally, they have basic jobs and government jobs that provide productive activity and a basic wage. All of which combined give a better life than those in the states.

So, I guess we shouldn't rock the boat.

Sunday, March 20, 2011

Black owned businesses grew by 60% between 2002 and 2007

The US census bureau released the 2007 survey of business owners(SBO)on February 8th, 2011. Here.

The report showed that Black Owned businesses increased by 60% between 2002 and 2007. The survey is conducted every five years. New business formation increased by only 18% in the general population, 60% in the African-American community. The number of Black owned business increased to 1.9 Million (2007) from 1.2 Million(2002). However, 1.8 million of the businesses had no employees.

It is important to note that the results were collected right before the largest recession since 1932 hit the US economy.

The rate of Black new business creation was greatest in the south from Louisiana to Virginia. However, the largest number of Black owned businesses remained in the largest cities such as New York City (Brooklyn)(204,000), Cook County (Southside Chicago)(83,000) and LA county (60,000).

Of the 1.9 million businesses only 106,000 had paid employees. These businesses employed 921,000 people with a total payroll of $23.9 billion.

The report is the result of a survey of US business owners conducted every five years. The survey covers type of business (NAICS code), race, gender, ethnicity, revenues, number of employee and geographic location.


Tuesday, March 8, 2011

Black Managers in Starbucks

Black Managers Convention at Starbucks

So nice to see a Black store manager in Starbucks. Pretty heavy volume in a tourist area but they coped well. And Bam! The Black female district manager walks in to check out the store. The go through the usual stuff checking the store displays against the plan-o-gram. Whatching the crowd and flow of the customers. Checking the equipment and the general cleanliness.

I can't help but thinking how tight the job market is, where really sharp people are forced to work in Starbucks. More good potential wasted. Well shoot, I guess I am happy for Starbucks. At least they offer an opportunity unlike the IBEW local number 3 guys sitting at the next table. That's why I support Starbucks, Target, Wal-art, JC Penny and just about any retail-chain. Because they disriminate a lot less in hiring.

When I compare the mangers and the union guys, I cannot help but wonder who makes more money and who is smarter. But the union guys have the hook-up and know how to play the game. Educations has nothing to do with it. The union guys spend all their time talking about this connection or that scam. About how to avoid this jobs, change the paperwork or who is building that condo. They are constantly focus on the next job. All about the business.

And, I always wonder how Trump, Buffet, Gates or the Koch brothers would do working in Starbucks or MacDonald's. That group would do much better in the union.

Anyway, I just hope the Starbucks managers have some sort of training and development program to allow people to progress past district manager. Or find jobs outside of Starbucks. Good luck.

Saturday, March 5, 2011

February Jobs is a great improvement. Non Farm Payroll up 192K.

February Unemployment report is good.

The BLS released the February jobs report on Friday, March 4th, 2011 and it finally showed some improvement in private sector job creation. The report shows that non farm payrolls increase by 192,000 and increase several major economic sectors. Job gains occurred in manufacturing, construction, services, health care and transportation and warehousing.

The employment rate dropped 0.1% to 8.9%. The unemployment rate has dropped 0.9% since November 2010. The black unemployment rate dropped to 15.3% and the Hispanic rate moved down to 11.6%.

The basic unemployment rate(U-3) was 8.9 percent. Down almost one percentage point in the last three months. However a big part of the drop was due to people leaving the labor force.

The labor participation stayed at 64.2% in January 2011. The number of people who are working involuntarily part time also stayed at 8.3 million. The number of marginally attached workers moved up to 2.7 millon (from 2.5 million a year ago). And in a sign that people have left the labor force, there were 184,000 discouraged workers (1.0 million).

Now for the good news, the Non-Farm payroll grew by 192,000 jobs with the private sector creation 222,000 jobs and the state and local governments losing 30,000. The biggest gains were in construction(33K)[I haven’t said that in a while], durable goods manufacturing (+30,000) and transportation up 22,000. In services, the winners were administrative services (+36K) and health services (+34K). Overall, it was a pretty broad jobs picture. The most jobs losses came in the categories of State and local government lost 30,000 jobs and retail lost 8,000.

Non-farm payroll grew by 192,000 which is close to pre-recession job growth.

Below is a graph of the employment increases in non-farm payroll by job category. There were big gains in Whole sale trade, finance and business services. There were also increase in some important categories like construction and manufacturing.

The "Job's Hole" got a little smaller this month with good jobs growth in the private sector. The slow return of jobs has really hurt the middle and lower classes.

As mentioned earlier, the number of people “Not in the Labor Force” increased from 83.876 million in January 2010 to 86.168 million in January 2011 and increase of 2.29 million workers. That’s a huge number of people who are no longer participating in the labor market. The figure includes 6.643 million who want work and 993,000 who are “discouraged”.

People who want work but cannot find it constitute about 15% of the labor force. This groups includes people who are working part-time but want full-time work and people who are marginally attached to the labor force.

While the general unemployment rate (U-3) dropped 0.1% to 8.9%, the Black Unemployment rate was little changed at 15.7%. The rate for Hispanics was 11.9% and teenage unemployment was 26%. Black teenage unemployment was 45%. U-6, the widest measure of unemployment, was 16.1 percent. Basically 16% of the labor force wants to work and cannot.

The standard Black unemployment rates stood at around 15% as measured by the BLS.

The "Real" Black employment edged downward to 22.8% of the Black Population. In other words about 23% of the Black population is unemployed, underemployed or wants work but cannot find it.

Average unemployment duration also increased. The new average duration was 36.9 weeks. However, the old figure from December 2010, 34.2 weeks, is not directly comparable. The BLS will now collect unemployment duration for 5 years rather than two years. The median (half under / half over) decreased to 21.8 weeks. 6.2 Million people (44% of the total) were out of work for more than 27 weeks.

The number of people working part time for economic reasons was approximately 8.4 million. The number of discouraged workers remained at about 1 million. Discouraged workers are people who have not looked in the past 4 weeks because they believe no work is available, could not find work, lack training or employer discrimination.

The ADP employment report on March 3, 2011 which showed an increase of 217,000 new jobs over the January total.

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