Finally...An Optimistic Outlook for Philadelphia's Black Businesses

For the first time in a very long time, perhaps since the day in November 1999 when John Street was first elected mayor, I am actually optimistic about the prospects for black and minority business growth in the city of Philadelphia.

I don't want to "jump the gun" and just assume that Michael Nutter will be the next mayor, but I do happen to agree with the Republican candidate, my friend, Al Taubenberger, who, when asked by the Philadelphia Inquirer, recently, to rate, on a scale of 1-to-10, his own prospects of winning the General Election, gave himself a "three-and-a-half." It's looking, more and more every day, that "Mayor Nutter" is an inevitability--even to Al Taubenberger.

The fact is that people seem to be "bending over backwards" to be respectful to Al Taubenberger. After all, he doesn't appear to have an enemy anywhere in the City and we do have to hold that General Election in November, don't we? But, the reality is that Philadelphia has a five-to-one, Democrat-to-Republican registration advantage and the City hasn't had a Republican mayor since 1952. There's a tangible, overwhelming sense that people are impatient to move on to something better, something more hopeful, and nowhere is there more impatience than in the African-American business community.

Beyond that, there are several reasons why I'm optimistic about African-American businesses finally being fully included in the City's economy under a Michael Nutter administration. First, Michael Nutter would not only be the first businessperson to be elected mayor in the City's modern history, he would also be the first investment banker and the first Philadelphia mayor to have been employed by an African-American business. Early on in his career, he was an investment manager at Pryor, Counts & Co., a firm founded by Philadelphia's own Malcomn Pryor.

With all of that as background, it would appear that Michael Nutter will assume office being better prepared to finally create an inclusionary Philadelphia economy than any of his 123 predecessors as mayor ever were.

As a businessperson, I believe, Nutter truly understands that Philadelphia has "no shot" at being economically competitive if it continues to exclude the majority of its population from full economic participation.

I'm sure that, by now, I don't have to recite the abysmal track record for black and minority business inclusion by Philadelphia's city government. What we're still trying to get a handle on, even in the Year 2007, is why, in God's name, that had to be the case.

As a blatant example, there is absolutely no way to justify the fact that the City's last minority business disparity study, in 2003, pointed out that black businesses participated in just .7 percent of the City's contract revenues over the period 1998-to-2003, that there were no African-American-owned businesses that held a prime contractual relationship with the City over the same period, and that the minority business participation reports issued by the City government's MBEC offices were consistently, grossly overstated.

To make matters even worse, without strong government leadership making the business case for private sector inclusion over recent years, our City's mainstream business community, with few exceptions, has also had a dismal record for management- and policy-level inclusion, and for supplier diversity. This, in a city wherein African Americans are 45 percent of the population and wherein more than 10,576 black-owned firms constitute nearly 16 percent of the City's 67,000 overall businesses.We know, for example, that, according to Census Bureau data, about 85 percent of the employees at black and minority-owned firms are, themselves, minorities. So, if we have a black unemployment problem in Philadelphia, it would seem that one clear way to address it would be the creation and nurturing of the black business sector in our city.

In a city with a 24.5 percent poverty rate and wherein only 50 percent of the members of its black male workforce have jobs, this is a recipe for economic and social disaster; not just for African Americans, but for the City, as a whole. Given the immensity of that challenge, it's been reassuring to hear Nutter talking about ensuring, finally, that African Americans and other minorities in Philadelphia will have opportunities to participate, at representative levels, in the local construction industry workforce, among other things.

Don't get me wrong. This would not be some leftover Affirmative Action/Equal Opportunity plan
from the 1970's or 1980's, this is just plain, good economic sense, perfectly suitable for building a stronger Philadelphia, for the Year 2007 and beyond.

Because he has been a businessperson, Michael Nutter understands that this is a strategy that both city government and its private sector leadership needs to embrace as an absolute prerequisite to Philadelphia becoming the "Next Great City."

Michael Nutter also knows that if you are a mayor and you are truly interested in job creation, you can not afford anymore to simply focus on providing tax breaks and incentives to large, national or multinational corporations to attract them to the city. This is increasingly a failed strategy--not just in Philadelphia, but in virtually every other major city in the country. In just the past few weeks, we have seen Dell Computers announce a reduction of 8000 jobs, or 10 percent of its workforce. This happened on top of similar, massive layoffs and outsourcing announcements from IBM and Motorola. Let's not even mention the auto industry and the dramatic, recent layoffs at both Ford and General Motors.

By comparison, the "probable next mayor" knows full well that, as early as 1995, businesses with fewer than 19 employees accounted for approximately 70 percent of jobs created nationwide, and that nearly 6 million jobs were created by firms that employed between one and four emplyees. Another 2.3 million jobs were created by businesses that employed between five and 19 workers. He may also be aware that, in a 2002 report, it was disclosed that minority firms and sole proprietors had created 400,000 jobs in New York City, constituting 12 percent of the city's 1997 job base.

Michael Nutter also knows that the most recent Economic Census data showed that, while the number of U.S. businesses grew 10 percent overall, the number of Hispanic businesses grew by 31 percent, from 1997 to 2002, and that the number of black businesses grew by 45 percent, to 1.2 million firms, nationwide, over the same period.

Given that Philadelphia has so thoroughly ignored this vital business segment in recent years, it is no wonder that the 2005 Kauffman Index of Entrepreneurial Activity ranks Philadelphia 14th out of 15 metro areas, with regard to our rate of entrpreneurial growth. We are only ahead of the Detroit Metropolitan Area in this ranking.

Coincidentally, when the FBI ranked cities of 500,000 or more as to per-capita murder rates, recently, Philadelphia was again keeping close company with Detroit, whose murder rate was 47 per 100,000, as compared to our 27.8 per 100,000. Both cities have very similar poverty and unemployment rates. Once again, it seems to be difficult to separate social maladjustment and crime from poverty-stricken environments.

Despite our virtual lack of government support and marginal levels of private sector inclusion, Philadelphia's black-owned businesses continue to adapt, to compete, to add employees and to provide valuable services to the economy.

In my personal conversations with the man who will likely become our next mayor, I have gotten the distinct impression that he clearly understands the critical importance of black-owned businesses and how essential it will be for the City, as a whole, to finally add black and other minority firms to the City's front-burner economic development stategy. It looks like we are in for at least four good years for African-American businesses in Philadelphia.

It's about time.



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