Ujamaa - Cooperative Economics

I was looking for Kwanzaa resources on the web especially relating to economics.

Fifty years ago, Dr. Maulana Karenga created Kwanzaa as a holiday to build African American culture and community. The secular, cultural holiday has seven days.  We, of course, are interested in the fourth day known as Ujamaa - Cooperative Economics.

According to Dr. Karenga the purpose if Ujamaa is "To build and maintain our own stores, shops and other businesses and to profit from them together."

However, there are few actual sources on the internet related to Black or Kwanzaa cooperative economics.

The official Kwanzaa guide has the best details of the fourth day of Kwanzaa: Ujamaa from the Official Kwanzaa Website

Ajowa Nzinga Ifateyo offers 21 economic proposals that capture the spirit of Ujamaa on the GEO:Grassroots Economic Organizing website.

One United Bank has a Kwanaa Ujamaa promotion

Here is a general guide to Kwanzaa
Kwanzaa Guide

Here are some historical resources related to concepts in Kwanzaa.

Ujamaa - Economic brotherhood. A political and economic program of Julius Nyerere

Harambee - Pull together

Beth Macy covered the loss of Furniture Jobs in Factory Man

We know the corporate press does a terrible job of covering unemployment and poverty in the Black community.  Sadly, the press has done the same poor job covering economic issues that effect poor and working class people. Regardless of race. Way to go, press.

So it's refreshing to see a reporter, who covers the issues in detail, and still gets ignored.

Beth Macy worked for the Roanoke Times. She has become a noted speaker and writer on the impact of furniture imports on small, rural towns.

In Factory Man, Beth Macy writes about life in the Basset Furniture factory and the effect of the Chinese import shock.

Here is an article from the Roanoke Times about Bassett Furniture.

From 2013, A Factory town with no more Factories.

In 2012, John Bassett, 3rd tries to offer some advice for staying competitive after the furniture industry was crushed. Furniture magnate Bassett offers 5 keys to remaining competitive.

Here is Beth Macy at the Columbia Journalism School discussing why the important story was missed. Dart Center Interview with Beth Macy about Journalism and Trauma.

But even Beth Macy came to the story late.  Here is an opinion piece about TPP in the NY times.

Black Lives Matter announces Black Business Directory. Here are some others.

Backing Black Business

The Black Lives Matter(BLM) movement supports economic justice.  During the election they released a comprehensive economic justice proposal. You can read the BLM economic and political policies at "The Movement for Black Lives: Economic Justice". Now they have released a Black Business Directory called Backing Black Business.

To further support Black economic justice they are launching a Black Business Directory website. You can visit the site at Backing Black Business.  The site is very limited compared to current Black business directories. But it could potentially create a large national Black business list that encourages spending within the Black Community.

It will be interesting to see if the BLM "Brand" has the recognition to drive the business directory forward.

Adweek has a story on BLMs work with J Walter Thompson. The ad and creative industries centered in NY and LA, are notoriously White and non-diverse.  Over the years they have shifted to a higher percentage of female staff.

Here are some existing Black Business Directories.

Name                                                             Home base

Black Mall                                                     Chicago

Black Trade Lines                                          Los Angles

Buying Black                                                 Columbus, OH

National Back Guides                                    Delaware

   Delaware Black Guide                                                             
   Afro Philly Black Guide

                                                                           

I Am Black Business                                    Atlanta

St. Louis Black Business                              St. Louis              

DC, MD and VA Black Business                 DC, Maryland and Virginia

Izania                                           

Support Black Owned                                  National               

Black Owned Business                        
Maggie's List                                                Chicago, National
South Florida Black Business Directory      South Florida


                            

Crowd funding websites

BBnomics crowdfunding                         Black crowd funding site

Apps

Several of the directories also have apps for mobile Black business directory use.

http://www.blacktradelines.com/

https://iamblackbusiness.com/

v4

"China Shock" is one of the best economics papers of the year

"China Shock: Learning from Labor Market Adjustment to Large Changes in Trade" is a great economics paper.  The authors develop a model to predict the labor market effect of the large increase in trade with China between 1991 and 2011. They look at the devastating effect of the concentrated loss of good paying manufacturing jobs on communities.

Three well-known economists David Autor(MIT),  David Dorn(U of Zurich) and Gordon Hanson(UCSD), analyzed the effect of Chinese imports at the industry sector and county level in the US. They show that Chinese imports contributed to major and concentrated  drops in employment and income in hard hit areas as whole industries were wiped out.

The authors split the period of analysis into three periods: Pre-WTO (1991-1999, WTO (1999-2007), and Recession (2007-2011). China joined the World Trade Organization in December 2001. The pace of Chinese imports started slow in the pre-WTO period, accelerated after China joined the WTO and peaked during the last recession.

Findings

For each manufacturing job lost to import competition in a community, there was also a reduction in wages and incomes and an increase in government support.  The shock is felt through out the supply chain (suppliers) and in local dependent businesses (the coffee shop and auto repair). The authors were able to construct a model showing the effect of import exposure on manufacturing communities. They show the down side effects of trade with China are concentrated and sustained.

The authors estimate that about 10% of the total job losses were due to Chinese imports. That’s about 560,000 jobs from 1999 to 2011. Actual US manufacturing declined by 5.8 million during that period.

However, industries are linked to each other in buyer-supplier relationships.  These upstream suppliers also get hit. So the overall manufacturing job losses direct and in related industries are estimated at 985,000 jobs and 2 million total jobs in the whole economy.

Finally, workers who lose jobs cut their spending and consumption.  Some of those workers may find replacement jobs but at lower wages. So the total jobs losses, direct and indirect, are 2.4 million.

The authors also show that the workers who lost jobs due to imports relied on social security, unemployment and government medical programs for support.  They received little help from TAA – Trade Adjustment Assistance Act.

The October 2016 trade deficit with China was -$29 billion and -$289 billion year to date. It was -$308 billion Y-T-D in 2015. 

Discussion

The paper is also important for many other reasons. First, the rise of Chinese imports may have shifted key swings states to the Republicans. A common reason people gave for voting for Donald Trump was economic suffering. A separate analysis by the authors shows that the Democrats would have won several key swing states if there were a lower level of Chinese imports. You can read the election paper here:  "The effect of trade exposure on the 2016 presidential election"

Second, it seems like the economics profession is waking up to the idea that trade is not always good. The benefits are diffuse but the costs are concentrated. The authors show that certain US counties lost huge numbers of jobs during the Chinese import period.  The counties then shifted to a large increase in government aid such as such as Social Security, Unemployment Insurance and government medical benefits.

Third, the article refutes some of the basic beliefs about trade: that trade is always good for both parties.  Economists are finally recognizing what everyone else already knew: trade that destroys good paying manufacturing jobs is bad for the United States.

Economic trade theory supports free trade. The theory says the more trade the better for overall society. In economic trade theory, countries specialize in goods and services where they have a comparative advantage. Both trading parties are made better off by exchanging goods. The benefits from a larger number of people being able to afford more lower priced goods exceeds the economic losses from local job cuts and lost corporate income. These principles are summed up in David Ricardo idea of trade and comparative advantage.

For example, everyone has a smart phone and flat screen TV.  But to keep the price low. they might have to work in a hospital for $20.00 an hour instead of a machine shop for $30.00 an hour.  If they kept the machine shop job, the smart phone would cost $1200 and a flat screen $1000. Ricardo said overall we would be better off as a society.

There are a couple big assumptions: 1) No country has an absolute and permanent comparative advantage.  Time will correct the imbalance. 2) Workers can move to other equally well paying jobs. Workers will relocate geographically.  Workers can quick learn new skills. And firms can find other lucrative investments. 3)
Benefits, while diffuse out weigh the costs.

Finally, the authors note, China's comparative advantage in labor cost, technology, and government policy may be coming to an end.  US imports from China are down for the first time in 20 years. This paper may mark the end of the China Shock.

In the end, politicians and government should have done more to counter the effects of Chinese trade with the US.

The authors have also set-up a web site with links to the papers and data sets. Chinashock.info

The chart below shows the loss of jobs in the furniture industry around Hickory, NC. Manufacturing employment dropped from 80,000 to 40,000 during 2000-2010.

Recent trade figures with China show a step decrease in 2016 after a huge increase. In 2015, the trade deficit with China was -$367 billion. The 2016 trade deficit is forecasted at -$320-$330 billion.

Kwanzaa Crawl Brooklyn on December 26th, 2016

Kwanzaa Crawl is an event to support Black business and bars in Brooklyn.  The event is December 26th in Fort Greene, Bedford-Stuyvesant and Prospect Heights. Meet at 1pm at Restoration plaza.

For more information visit Kwanzaa Crawl.

CNN & Time/Warner face discrimination suits

Two former employees of  CNN and TBS, respectively, have filed a class action discrimination lawsuit against TBS, CNN and holding company Time/Warner.  In the suit they allege a pattern and practice of racial discrimination in evaluations, compensation and promotion.

They also charge CNN and TBS with having a "glass ceiling," where African Americans were blocked from promotions and a "glass wall," where Blacks were discouraged from working in certain divisions.

BET.com has a story by Paul Meara here.

Dominic Pattern writes on Deadline.com about the suit. Deadline also has the actual court document for the suit that was filled with the norther district of Georgia on their website.

Hollywood Reporter has a story on the suit by Ashley Cullins.

November Unemployment Report: Unemployment drops to 4.6%. Wages Sink 3 cents

In November, the BLS reported that the unemployment rate declined to 4.6% as 178,000 new jobs were created.  Wages dropped $0.03 cents. The number of unemployed person dropped -387,000 to 7.4 million people.  There were large increases in payrolls in the industry categories of business services, healthcare, leisure and construction.

The labor force participation rate stayed at 62.7% and the employment to population ratio was 59.7%. Both rates have leveled off and are largely unchanged in the past two years. LFP measures how many people participate in the job market.  It has dropped significantly since the recession. 

There were  a couple of positive long-term trends. The long term unemployed (out of work for more than 26 weeks) decreased to 1.856,000. The level is well below 2 million. The number of people working part time for economic reasons also dropped -220,000 to 5.67 million workers.

The Big Story

The big story is the continuing lack of wage growth for workers.  If the economy is near full employment, there should be wage growth and wage inflation.  There is none. So the US economy has failed to deliver good paying jobs to its citizens. 

The chart below shows the national unemployment rate.

In November, 178,000 jobs were added by US business establishments. The 4 month moving average has dropped to 170K during the fall slowdown in job creation.   

The Black unemployment rate dropped to 8.1% from 8.6% last month as 154,000 more people reported working. The unemployment rate for Black men, 20 and order, was 7.7% while Black women in the same age group were unemployed at a rate of 7.1%.  Black men participate in the labor market at a 67.5% rate while the participation rate for Black women is 62.6%. Black teenage unemployment was calculated at 26%. 

The real Black unemployment rate was pegged at 12.6% in November. Both the Black unemployment rate and the US U-6 rate declined during the period.   U-6 is the broadest measure of unemployment. U-6 is basically anyone who wants to work and has looked for a job in the past 12 months.

 Blacks has an unemployment rate of 8.1%, the White rate was 4.4% and the Hispanic/Latino rate was 5.7%.

The business survey showed the usually job growth categories: Business Services, Healthcare and Leisure.  Manufacturing lost -4,000 jobs.

There were big gains in business services, health care and leisure. Construction added 19,000 jobs.

 The united states continues to move toward a service economy.  Only 19% of new jobs produce goods (15% if you include government as a service).

Hourly wages declined by $-0.03 cent in November to $25.89.  Hourly wages are up about 2.5% (1.2% when adjusted for inflation) in the past year.

The average growth in wages has been below 1% after inflation between 2006 to 2016.

ADP reported 216,000 non farm payroll jobs were created.  The jobs were split among small businesses (+37K), medium sized businesses (+89K) and large businesses (+90K).  According to ADP goods producing business shed -11K jobs while services hired 228K workers. Manufacturing lsot -10K jobs.

Paychex small business jobs index was flat at 100.38; a completely neutral value.

Donald Trump wins the presidency. What's his economic plan ?

Donald Trump won the US presidential election. Donald ran on a platform of economic populism. He ran a wild campaign of slogans and untruths that attacked the economic establishment.  And he won.

He is in the unique position of owning very little to the existing economic order: Democratic or Republican. He does owe a great debt to working class Whites in key states that voted for Trump in larger than expected numbers.

He will try to focus his economic programs on their needs.  However, short of a government jobs program, no one is quite sure how to help working class Whites.


Let's look at some of Donald Trumps economic policies:

Likely to Pass Quickly

Two to three trillion dollar federal tax cut. Higher deductions and lower rates for the middle class.
$500 billion to $1 trillion in Infrastructure spending tax credits over 10 year
Reduced funding for regulatory agencies
Cut government spending 1% for non-defense

Likely to Pass Longer Term

Child care tax credits
Business can repatriate off shore profits at 10%
Energy Policy changes
ACA (Obamacare) replacement

More difficult to pass

$25 Billion dollar wall with mexico
Trade agreement changes
Tax changes beyond tax cuts
Changes in immigration policy


Election Year Promises only

Renegotiate NAFTA
Limit cuts to safety net
Eliminate corporate subsidies except for R&D
Eliminate carried interest

v2

How to handle an Affirmative Action Brownie Sale

Houston Chronicle: Bake sale at University of Texas

Occasionally you will see a conservative group selling cookies or brownies at different prices to make a point about affirmative action.  They will offer the same brownies at different prices for male, female, Black, Hispanic/Latino and White customers. For example, the brownies is $1.00 for White men, $0.50 for Hispanic women and $0.25 for Blacks.

They are trying to make the point that Affirmative Action gives people "free" things they did not deserve. They are wrong for three reasons.

1) They are making broad generalizations about groups of people while ignoring the fact that each individual had a unique struggle to make it to the University of Texas

2) They also miss the idea that a diverse student population increases the richness of the campus experience. Diversity improves debate, strengthens ideas and encourages understanding.

3) Finally, they are also ignoring the long history of educational, political and economic oppression of minorities in the US.

Most people see how mean spirited and shallow the brownie sale argument is and do not take the young conservatives seriously.

How to respond

The best way to respond is a large anti-racism protest. The more people the better.  A large show of numbers is critical. You need, as the police say, "An overwhelming show of force."  Chanting "no to racism, yes to unity" and "racist" works great.

Try not to ridicule the anti-affirmative action protesters since it breeds resentment.

Short of jumping up in someone face and screaming "You don't know me," the second best response we found was is to set-up an alternative stand near by with free food items.  The stand would promote an alternative point of view. For example:

1. The graduate and professional students of color at University of Illinois organized a White privilege popcorn sale.  White males get a full bag and everyone else get a 1/3 of a bag. You can read the story in the Daily Illini.

2. You can also give away free cookies while also promoting "Cookies under Socialism."  While giving away the cookies, explain that racism, class, ignorance and selfishness are natural byproducts of capitalism. And that capitalism encourages racism.

Other alternatives are:

3. A booth on slavery or murders by police with graphic photos. A photo of a lynching or a whipped slaves' back is pretty effective.

4. A booth on poverty in the US, the minimum wage or income inequality.

5. Bake White privilege cookie which is costs 4 slave hours in 1860; 3 Jim Crow hours in 1930 (15 cents); 1 hour at incarceration wage (UNICOR 0.23 cents)

Note: Price Discrimination is when he same supplier charges different groups different prices for the same item.  For example, reduced drink prices on "Ladies Night". Price discrimination is illegal when based on race, gender, nationality or religion

v4

No change in key rates ahead of election: Unemployment stable at 4.9% with 161,000 new jobs

October Unemployment Wrap-up

Every major unemployment indicator has been "little changed" over the past 18 months. This report was no exception. The unemployment rate dropped to 4.9% as the 161,000 new employees found work in October according to the BLS monthly unemployment report. The report, which was released four days before the election, was ignored by both candidates. Wages rose $0.10 cents to $25.92 per hour at an annual rate of 4.6%. The unemployment rate has been 5.0% or below since October 2015.

The Labor Force Participation(LFP) rate was 62.8%. The figure has been flat since December 2013.

The Black unemployment rate rose to 8.6%, the second straight month of increase. The long term unemployed was also unchanged at $2.0 million.

Establishment Survey

Business reporting hiring 161,000 new workers in October. Both the business services (+43,000) and the healthcare sector (+39,000) added the highest number of new jobs.  The federal government add (+12,000) while manufacturing lost (-9,000) positions.

Black Unemployment

The Black unemployment rate was calculated at 8.6% after hitting a recent low of 8.1% in August. The Black LFP was 62% overall. Black men 20 and over participated in the job market at a 67% rate while 62% of Black women were in the labor force.





The national unemployment rate was 4.9%.




The Black labor force participation rate was a low as 60% in December 2013 but has since rebound to nearly 62%. Black unemployment was measured at 8.6%.

The Black unemployment rate continued to be significantly higher than the White or Hispanic/Latino rate.

Government added 19,000 jobs in October 2016.

Every category was up except manufacturing and retail trade.

We are adding a new chart which shows where the jobs are being created: in the good producing sector or in the service providing sector.   Service jobs are being created at a ratio of about five service performing to one goods producing jobs. The number of manufacturing jobs has steadily dropped since the recession due to the growth in imports and the efficiency of the manufacturing sector.

Laundry List of Hillary Clinton's and Donald Trump's Economic Policies

I have to vote tomorrow in New Jersey. I went from Bernie to Hillary to Jill Stein and then back to Hillary.  Hillary needs a mandate to govern.

To prepare for voting I went through every economic policy from the websites of both Hillary Clinton and Donald Trump.  No judgments were made about the quality of the proposed programs. 

Economic Policies of Hillary Clinton

Taxes

- Ensure the wealthy and corporations pay more
- 4% surcharge tax on $5 million or more
- 30% minimum tax rate on incomes of $1 million or more

- Close tax loopholes used by the rich like stepped up basis on estates, offshore tax avoidance schemes and using derivatives trading to reduce taxes

- Eliminate the carried interest tax loophole

- Restore estate tax; eliminate stepped up basis

Child Related

- Double child tax credit to $4000

- Provide tax credits for affordable housing

- Limit child care expenses to 10 percent of income

Corporations, Financial Institutions, Small Business, and Manufacturing

- Additional risk fees on large financial institutions

- End overseas inversions. Pay exit tax when they leave the US. Stop Earning stripping

- Use Treasury department to stop inversions

- Offer manufacturing tax credits

- Reward companies that invest in the US or bring back jobs

- Close tax loopholes for oil and gas. Promote clean energy

- Allow small businesses to immediately deduct some expenses. Simplify small business returns

- Support small business, advanced manufacturing, and startups

- $1500 tax credit for apprenticeships

- Spend $275 billion over five years on infrastructure investments: Roads, public transit, airports, energy and internet networks.

Education

- Make college debt free. Eliminate current student debt

- Make college free now, if you make less than $85,000. Free public college tuition for those making $125,000 or less by 2021. 

- Free tuition at community colleges

- Provide $25 billion for HBUCs and Hispanic Colleges

Minimum Wage and Labor

- Raise the minimum wage and get rid of tipped minimum wage

- General support for unions and labor

- Tax relief for working families

Other

- Support public investment in R&D

- Refinance students loans at  current low rates

- Have companies share profits with workers

- Give green cards to STEM masters and Ph.D. degrees graduates and visas for entrepreneurs

Economic Policies of Donald Trump

- Create a booming economy. Boost growth to 3.5% on average

- Create 25 million new jobs

Individual taxes

- Pro-growth tax plan. Reduce taxes across the board especially for working and middle-class Americans.

- Reduce tax brackets from 7 to 3: 12%, 25%, and 33%

- Proposed a tax cut of $4.4 Trillion ($2.6 Trillion with growth). $1.8 trillion in trade, energy, and regulatory reform savings. $800 billion in other cuts.

- Carried interest is treated as ordinary income

- Repeal 3.8% tax on investment income. Repeal alternative minimum tax(AMT).

- Increase standard deduction to $30,000 for married filers and $15,000 for singles.

- Repeal estate taxes. Capital gains over $10 million would be taxed. Repeal special treatment of appreciated assets donated to charity.

- Offer spending rebates for child care expenses for people receiving the EITC

- Ensure the rich pay their fair share.

Child Related

- Eliminate special interest loopholes. Reduce business taxes

- Deduct average child care or eldercare costs from taxes

- 50% match of child savings accounts

Regulatory Reform

- Create a modern regulatory framework. Reduce anti-growth regulations

- Impose a moratorium on new regulations. Agency and department heads will remove needless, job-killing regulations.

- Scrap clean power plan regulations

Trade Policy

- Promote an America first trade policy

- All trade agreements must increase the GDP growth rate, reduce the trade deficit and strengthen US manufacturing base.

- No TPP

- Actively enforce trade agreement violations

- Renegotiate NAFTA

- Enforce WTO rules against china for currency manipulation and industry subsidies using tariffs and taxes

Energy

- Energy plan

- Support coal and fracking. Support energy development on federal lands.

- Ease energy regulations. Streamline permitting process.

- Allow the free market to determine energy technologies, not government

Business Taxes 

- Lower business taxes from 35% to 15%.

- Bring back off-shore profits at 10% rate

- Eliminate corporate tax subsidies except for R&D

Other

- Reduce non-defense, non-safety net government spending by 1% each year for ten years.

Big Econ Story of the Week: Shrinking Global Trade

Global Trade is Shrinking (by Binyamin Applebaum in the New York Times)

This weeks most talked about economics story is that global trade is shrinking.   The drop in trade is clearly linked to the slowdown in global growth.  Political sentiment against trade may also be playing a part. Some believe the trade explosion was a one time event (you can only hollow out American factories or off shore jobs once) and we have reached a new norm.

You can also read the story here

http://www.nytimes.com/2016/10/31/upshot/a-little-noticed-fact-about-trade-its-no-longer-rising.html

Blacks struggle to build wealth according to National Association of Real Estate Brokers

Home ownership has been the primary means of wealth building for the majority of Americans. Now its taking a beating.  All major groups in the US, except the wealthy, have lost homes since the peak ownership year of 2004. The trend accelerated during the last recession with the mortgage loan and foreclosure crisis.

Black home ownership continued to fall as the sub-prime/foreclosure crisis took its toll. Black home ownership has decreased to 41.3% in 2016 down from a high of 49.4% in 2003. That's a 16% decrease. Whites has a corresponding drop of 8%. The percentage is the second lowest ever measured for Blacks since the Census Bureau started keeping track in 1994. The lowest point was 41.2% in 1995.  The sharp decline reflects the disaster in sub prime loans and the crisis in foreclosures.

There are also been a huge shift from conventional mortgages to Federal Housing Administration(FHA) backed mortgages for Black mortgages.

Here is the press release from the National Association of Real Estate Brokers (NAREB) that discusses the issue in detail.

In addition the NAREB funds an annual study of Black home ownership called the State of Housing in Black America (SHIBA). The report is a detailed examination of trends in Black housing. The report gives a significant amount of detail regarding the home loan process, historic discrimination in the real estate market and recommendations for fixing the loan process.

Highlights in the report include:

* Spotlighting a virtual halt in mortgage lending to Blacks since the recession in 2007.

* The huge drop in Black mortgage applications and loan origination after the recession. The number of loan applications dropped from about 750,000 in 2005 to 120,000 in 2010 and the number of loans dropped from 400,000 to 75,000 during the same period.

* Blacks receive fewer conventional loans as compare to White Americans (30% Black vs. 44% White) and are more reliant FHA backed loans. (46% vs. 19%).

Here is a chart of US home ownership rates by race.  You can see the 17% drop in ownership by Blacks versus 8% drop by Whites. In the 3rd quarter of 2016 all rates posted improvements expect Black owner ship.

Black/White Wealth Gap Remains in Spite of Black Celebrities

In a great article posted on Inequality.Org, Antonio Moore writes that the small number of wealthy, highly-visible  Black celebrities serves to hide the huge racial wealth gap in the US between Blacks and Whites. Black sport figures and celebrities are about 5% of the top 0.1% of earners in the US. Yet their constant media presence deludes both Blacks and Whites about the lack of Black wealth.

The story, called: "Black Wealth in America Hardly Exists", discusses the real lack of progress in closing the Black/White difference in wealth.

The Institute for Policy Studies has found that it would take about 228 years to close the racial wealth gap in a previous study. The report is called "The Ever Growing Gap"

No News in September Labor Report. Unemployment Rate Steady at 5% and 156,000 Jobs Added

The Labor department released the September unemployment report on Friday, Oct. 7th, 2016.  There were zero surprises in the report. The official national unemployment rate was reported at 5.0%. The establishment survey report 156,000 new payroll jobs. Yawn. There were 7.9 million people unemployed, about the same as last month. Wages increased 6 cents for the month.

The unemployment rate has averaged about 5.0% for the past year.  Labor Force participation has hovered around 63%.

About 200,000 jobs per month have been added over the past year on average.




The Big Story that Wasn't

There were two big stories non-stories. First, the job report had zero impact on the presidential election. Usually one candidate screams that the report is biased or manipulated. Mitt Romney made a similar claim during the 2012 election.  This time the report was ignored.

The second big economic story is how little movement has occurred in all the large macroeconomic levels in the US. The unemployment rate is flat.  So is the inflation rate.  The GDP growth rate remains below 2.0%. Absent some shock, we are going to continue like this for a while. Some economists are calling this period: Secular Stagnation.  Economists and policy makers fear that the US has entered a long period of low growth and zero inflation. This slow period makes it difficult to solve problems like poverty, unemployment and income inequality in the US.

Black Unemployment

The Blacks' (thanks Donald) unemployment picture continued to improve. The rate has dropped 1.0% in the past year after peaking in 2011.

Black unemployment remains well above the national average.  It is nearly double that of White workers.

The number of Black people who want jobs or additional hours remained high at 13%. U-6 is the total of the unemployed, discouraged workers and workers who want extra hours. National U-6 was reported at 9.7%.

Establishment Survey and Non Farm Payrolls

As mentioned earlier the economy added 156K jobs as reported by the establishment survey. 

Jobs By Category

The biggest job gains were in business services (67K), healthcare (33K) and eating and drinking places (30K).  Retails sales also add 22,000 reported positions.

Construction add 23,000 workers while Manufacturing lost 13,000 sports (11K of which were in durable goods).  Temporary Help increased by 23,000 workers. Government lost 11K employees.

ADP reported 154,000 new payroll jobs split between 34,000 small business jobs (1-49 employees), 56,000 medium sized payroll jobs and 64,000 large corporate jobs(500 or more employees). The report has a surprising number of large company jobs.

The Paychex small business employment index declined from 100.70 to 100.52.  The index has status neutral.

Spendefy.com Black Business Directory

A friend gave me tip on a web site called Spendefy.com. It's a Black business promotion site along with a Black Business Directory.  The directory is currently for New York and Atlanta.

What makes the web site different is the design quality and graphics. They have a great visual appeal. Spendefy.com has a cohesive and consistent design lots of graphics and photos. The interface is easy to use.  It's also easy to find what you want. Spendefy.com is also loaded with great photos that catch your eye. Thanks to WordPress, the site  also has a full set of modern tools that are typically available on a mainstream web site. And the usually links to social media.

Sprinkled through out the site are news stories, interviews, and advice. One credit mentioned on the site is a photographer Enrique Morgan: Designer. We want to spotlight his web-site because it gives you an idea of what typical photography in the creative industry does. He does mostly web stuff and content not photography.

Spendefy.com has also received some press coverage.

MadameNoire has a story here.

CNN Interview is here.

Spendefy.com show what a great creative team can do with a good web site development tool

We also wanted to look at one aspect of the web site that is usually not covered: Web Technology. We used public source information and reviewed the content of the individual web pages on the site.

The site is primarily a WordPress site. The site, Spendefy.com, really shows how far web-site development tools have evolved. We went through the whole web-site and there is not a lot of content or business listings yet. But they do have the key players in the New York Resturant market. 

There are several tools that will analyze the public HTML tags and codes of a website.  We sed builtwith.com and also looked at code in the browser->tools->developer section of chrome. 

The built with full report is here.

Builtwith reports

Web Server:                      Apache (assumed at Godaddy)

Hosting, Domani                Godaddy

Email                                Godaddy

Content Management         Word Press

E-commerce                     WooCommerce

Ads                                  Double-Click (not clear if there are any actual ads)

Analytics and Reporting     Google

We have not tried the site on android or iphone.

Overall a very nice site. 

The Census reports: Income up 5%; Poverty down 1% between 2014 and 2015

On September 13, 2016, US Census Bureau released three important yearly reports. The first covers US incomes and the poverty rate, the second reports on health insurance coverage and the third is an alternative poverty measure.

The reports show positive increases in incomes and health coverage between 2014 and 2015. However, since 1999 household incomes have been flat or declining. Incomes are 2.4% below the 1999 peak.

Income Data

The median household income increased by 5.2% from 53,718 to 56,516.  It was the first increase since 2007. Crazy huh? 2007! The report also noted that real median income in 2015 was 1.6% lower than in 2007 and 2.4% lower than 1999. Basically, incomes have stagnated for 16 years.

Black household incomes rose 4.1%, Hispanic family incomes by 6.1% and White incomes by 4.4% during the 2014-2015 period. Asian income did not increase.

Men saw their income increase by 1.5% and women by 2.7% percent.

Poverty and Health Insurance Rate

The poverty rate in 2015 was 13.5%. 43 million people in the US live in poverty. There were 3.5 million fewer people in poverty than in 2014. The 8% drop is the largest drop in the poverty rate since 1999. 

The poverty rate for families was 10.4% with 8.6 million families in poverty.  The poverty line was defined at $24,257 for a family of four. Again crazy.

The racial break down of people in poverty was as follows:

                       Number (Million)          Rate
Whites            17.8                               9.1% 
Blacks            10.0                               24.1%
Hispanic         12.1                               21.4%

Health Insurance Coverage

The number of people without health insurance fell to 9.1% from 10.4%. About 29 million people do not have health insurance.

The information is contained in the two US census reports:

Income and Poverty in the US: 2015

Health Insurance Coverage in the US: 2015


Supplemental Poverty Measure

The Census also released a third report which calculates poverty in a slightly different way.  It includes additional benefits from government programs but is more realistic about what people spend money on: Food, Clothing, Shelter, and Utilities. The report is a more accurate and detailed way of measuring poverty in the US.

The Supplemental Poverty Measure:2015 (SPM) calculated a poverty rate of 14.3% with 45.7 million people in poverty. 

The Second Richest Black Person in the United States is...Robert Smith. Who is Robert Smith?

The second richest Black person in the United States is...Robert  F Smith. Who is Robert F Smith ?

Robert Smith is supposed to be worth about $3 billion according to Wikipedia, 2nd to Oprah at $3 billion plus. He recently gave gave $20 million to the African American museum.

Robert Smith is the Founder, Chairman and CEO of Vista Equity Partners. The company uses leveraged buyouts to take over specialized software companies that dominate small, niche markets such as auto dealers, event management, fleet management, and government compliance. None of the companies are large outside of their specific markets. The most widely known company on the list is TIBCO, a data and interface integration company.  

Vista Equity buys and/or invests in niche market software leaders.  The company then brings in corporate (conglomerate) benefits such as human resource management, legal, financial reporting, executive development and consulting while letting the individual companies handle development, technology, and growth. Strategically, they are moving their portfolio of software to the cloud model of Software as a Service (SaaS). 

Vista Partners is also making a lot of acquisitions lately.  They are hoping to benefit from the consolidating software market and reduced competition. They buying market share and wiping out competitors.

The Washington Post had a nice story on Robert Smith. Here. 

Here is a link to Vista Equity Partners. Robert Smith has famously not put his picture on the web site. He is concerned about driving away business. Vista Equity Partners is raising money for it's fifth equity fund.

If you want to better understand how Vista works, I recommend looking at their list of software companies, here, and open positions, here. The opens positions are mostly in sales.

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Black Banking is a Great Idea. Are Black Consumers Finally Waking up ?

We support the Bank Black Movement !!! And we are moving some of our money from the local credit union to OneUnited Bank. We have long championed Black Economic Empowerment. Now it is time to do something about it. We hope it is a sign of a larger awakening by Black consumers.

Black consumers spend and estimated between $1.1 and $1.2 trillion dollars a year.

The Bank Black movement started when rapper and activist Killer Mike (Michael Render) gave a radio interview after the killing of Philando Castile and Alton Sterling.  During the interview Render called for Black people to withdraw their money from banks and corporations that "don't speak on our behalf."

Here is Killer Mike interview on 107.9 in Atlanta. Call to Bank Black starts at 2:07

Eight thousand people heard Mr. Render, took his advice and opened a bank account at Citizens Trust Bank in Atlanta, GA. The call to action moved an estimated $1 million dollars. Other Black banks have also benefited from the #bankblack movement. Ebony has the story.

There are several Twitter accounts and web site discussing the Bank Black movement.

#bankblack
BlackoutCoalition

The mainstream press also likes the idea. There has been a lot of coverage.  Here are some sample articles. All are supportive.

The Takeaway: Black Banks could help narrow the wealth gap
Forbes (a conservative view)
Huffington Post


Quick History of US Banking since the 1980's

Banking has changed drastically since the 1980s when bank deregulation was passed. Banks could no longer lend to their traditional corporate customers, so they began to seek new customers and charge new fees.  Many unprofitable banks went under. Larger banks consolidated into the big four large US banks we have now.  The big four control 80% of the US banking market.

In the new, degregulated environment, banks searched for profitability, Some tried sub-prime real estate lending. Other sell investments and insurance. During this time, retail banking exploded and so did the pressure to sell financial products to new customers. Banks shifted to making money from fees and financial products rather than loans. They added or increased fees on account maintenance, overdraft, and ATMs and on debit and credit card use.

Current Bank Environment

Banking today is like any other such mass market consumer business. It is much more like fast food and retailing than traditional banking.  The goal is to minimally service the low profit customers using technology and cheap labor while lavishing personal service on high profit customers. Retail banks also use their geographic monopoly to squeeze out competitors. In my small town in New Jersey we have over 10 banks and Chase has three banks with 1/2 a mile.

Banks have another thing is common with fast foods restaurants: low pay. and part-time hours. On, GlassDoor, starting pay was $16.00 for tellers at Chase. The next level job at a bank branch is "Personal Banker." PB's are really salesmen work on low salaries and high incentive sales commission plans. Banks are no longer great places to work. If you want more details, go to  GlassDoor, enter Chase, Citibank, Wells Fargo or BOA and read the reviews.

 Current Black Bank Environment

There are 24 Black banks in the US according to the FDIC Minority Depository Institutions Program. You can read more about the FDIC program here.

My experience with Black Banks

I have long supported Black banking.  The results have been mixed.

I have banked at a number of Black Banks over the years.  I have used Citizens Trust Bank, Industrial Bank, City National Bank, Carver Savings Bank, and Amalgamated Bank(Union). And, if I can brag a little bit, one of my ancestors help found the first Black bank, Consolidated Bank and Trust, in Richmond.

However, Black banks have failed to keep up technically with mainstream banks and failed to compete with check cashing and money transfer services. They seem to be one-step behind as competitors, like the RushCard, check-cashing business and Western Union.

Over the years, I have been charged high fees and had limited access to my money at Black banks.. Fees ate up the balance at two locations. And ATM surcharges used to hit me all the time.  It was hard to get access to my money or talk to someone at the bank during none working hours.

What do consumer want in a bank ?

Consumer want the traditional bank where the teller knows you along services such as check cashing, easy ATM access, a debit/credit card for electronic payments, low cost banking services, and on-line banking and bill payment.  No one expects a free bank with no fees.  They do expect reasonable fees.

Investment options are few for Black Banks

In banking, there is a supply side and a demand side. Banks are in the middle trying to make a balance.

Unfortunately, there are limited investment options for Black banks. No bank(Black or otherwise) can hold a full portfolio of mortgages in a community. The number of mortgages would exceed the banks risk/capital ratio. And the loans are too geographically concentrated.  Instead bank sell their loan portfolio to other banks. Selling the loan requires the loan meet a certain standard and quality. Many Black home owners do not meet the basic lending criteria.  So only by bundling together lots of mortgages can the risk be reduced to meet bank standards

There are also relatively few Black business to invest in.  They are concentrated in certain industries such as clothing, restaurants and food service. Those industries are highly risky and unprofitable. Concentration means risk. So even when a Black bank has excess funds to invest, it still may not invest in the Black community.

OneUnited Bank

Hopefully, OneUnited Bank will bring Black banking into the modern age. One United Bank see a market opportunity.  One United Bank, is a local and online bank available in all 50 states. They are using the #bankblack movement to increase deposits. The link to OneUnitedBank is below.

OneUnited


EBE proposals for the future of Black banking

1) Recruit top talent and be open to change. Give options to employees and shares to customers.
2) Give long time customers special treatment.  Use a CRM to ID "good" customers.
3) Build the brand.  Advertise, Marketing and Sell the Black bank brand !!!
4) Tackle check cashing head-on with longer hours
5) Make micro-loans. Make people earn their credit rather than use rating agencies.
6) Give business advice.(Clients can sign a waiver)
7) Look for sub-prime mortgage loans that are really prime
8) Set-up personal banking for sports starts, celebrities, and high net worth individuals
9) Focus on HBUCs and educational loans

I believe in Blacks working together to control their financial future. Black people in the US spend an estimated $1.2 trillion dollars a year.  Its obvious we should try to use some of that money to build up the Black community.  We support the Bank Black movement.

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