How The Black Community Can Own It’s Economic Fate In 2022

Black Corporate Leaders can inspire millions, but they can only touch hundreds perhaps thousands of us directly to “have our backs!”  The work to improve the economic stakes of +42MM blacks in America, and the nearly 1.4B on the planet, must be led by Black people; primarily outside the confines of the C-Suites.  We are obliged to create our own C-Suites; nonetheless.

How The Black Community Can Own It’s Economic Fate In 2022
How The Black Community Can Own It’s Economic Fate In 2022

Black Corporate Leaders can inspire millions, but they can only touch hundreds perhaps thousands of us directly to “have our backs!”  The work to improve the economic stakes of +42MM blacks in America, and the nearly 1.4B on the planet, must be led by Black people; primarily outside the confines of the C-Suites.  We are obliged to create our own C-Suites; nonetheless.

 

How Applying Lessons From Past Recessions Benefits The Black Community Today

I spent fourteen years working in the commercial banking industry.  Most of that time was spent at a top ten (in assets) commercial bank.  While there, the organization promoted its first African American Regional President for the institution circa 2005.  He now represents the financial services provider as the leader of the Retail Community Bank and Marketing Department.  This individual is a member of an exclusive club, roughly 8% of America’s Corporations include Blacks in their C-Suite, “The Striking Race Gap in Corporate America.”  When you add top ten commercial bank to the equation, the air gets thinner, and the number of African Americans dwindles further.

I consider this leader to be an unofficial mentor of mine.  He gained that title in 2005 when I was a young Branch Manager and he initially ascended to a prominent leadership role at the bank.  The mentorship became ‘more-direct when I worked indirectly-for’ him in Panama City Beach, Florida in 2013.  In 2015, I failed to heed his sound advice to come work more directly for him in Atlanta, Georgia.  I opted to head to Dallas, Texas due to prior relationships with some of the leadership there.  A lot of Corporate America is about who you know and who has your back!  This leader has the backs of hundreds if not thousands of African Americans within the banking network as he fights the good fight with deft intellect, grace, and superb strategy.  Nevertheless, the numbers say he needs more soldiers.  For every C-Suite African American fighting for enhancement of Black wealth within the confines of Corporate America, we need thousands duplicating these efforts outside of “Corporate America.”

 

The Black-White Wealth Gap & 1870’s Economic Decline

Examining the Black-white wealth gap,” indicates that in February 2020, the net worth of the average White family was $171,000.00 while their Black counterparts had an average net worth of $17,150.00 or 10% of the average White family.  As we head for a likely recession, defined as two consecutive quarters of Gross Domestic Product (GDP) decline, America’s financial hardship has a propensity of becoming Black-Americans’ financial catastrophe.  There are several reasons why the global markets cycled through a Recession/ “Great Depression”/ “Long Recession” from 1873 - 1877 to perhaps 1879 (The Wiley Online Library, Andrew Kilman 3.19.2015).  Inflation due to rampant speculation in railroad investment, Great Fires of Chicago-1871, Boston-1872 and the resulting strain placed on banks and insurance firms, and finally the demonization of silver in Germany, all contributed to global recession that saw massive economic decline in the 1870s. 

 

How did the globe bounce back? 

In the U.S., the Republican Party (the Reconstruction Party), was weakened.  This culminated in an unwritten compromise by Rutherford B. Hayes (19th U.S. President), for Southern Electoral Votes.  He removed federal troops from states like South Carolina and Louisiana, effectively ending Reconstruction while ushering in what was known as the Jim Crow Era: 1877-1965.  As a sidenote, the promise of 40 acres and a mule to now freed slaves never occurred and is still yet to take place which is a stark contrast as compared to other aggrieved populations. 

Blacks found themselves in a de facto police state in the South, where Share-Cropping became Slavery 2.0, and the Great Migration to the North was in many cases, the only logical solution.  Black re-population in Northern Civic Hubs like Chicago, New York’s Harlem, Detroit, and so-on was buffered by Southern and Eastern Europeans migration to the U.S.A.  Roughly 20 million immigrated to the United States from those sections of Europe in the time frame of 1880 until World War I. These new citizens, by two short generations, found their plight in America far superior to that of the more indigenousness African Americans.        

 

How did Europe respond? 

They converted their appetite for U.S. railroad expansion to carving out the continent of Africa via colonialism.  From 1881-1914, the ‘Race for Africa’, resulted in the over 90% of the Continent’s resources being controlled by Western Europe to include arbitrary or economically driven borderlines between African States.  The economic impact of the “Long Recession,” is still felt by the Black community today. 

 

How can the Black community respond to this pending recession?

During any recession it becomes buying season.  This is when assets become available for pennies on the dollar and positioning yourself to take advantage is key.  Yes, we have money Black America; we just need to adjust our budgets.  Rather than rent, with the cost of rent escalating at a feverous pace, buy your first home.  If you’re a Veteran, you can do so with 0% down via the VA (Veteran Affairs).  Instead of buying a Mercedes, buy a Honda and invest the difference.  When I attend NorthPark Mall (Northeastern Dallas, Texas), 80% of the individuals waiting to enter Louis Vuitton (new Covid protocol) are African Americans.  Dallas’, Black citizens represent 23% of the population; and anecdotally, NorthPark Mall patrons are not 80% Black! 

This pending recession is unique; yes, inflation is as high as we’ve seen since the Carter Administration, however, real estate values are unlikely to recess due to the housing shortage borne from 2008’s Housing Crisis that lead to our last recession.  Real Estate went effectively undeveloped from 2009-2012 (Charles Williams, Pioneer Realty).  We are still woefully short of the housing needed to meet demand.  Developers (those who speculate and create new real estate) have a lot of power, but they also expose the market to a lot of risk.  “The Greatest Generation,” (1947-1964) continue to cycle through retirement.  These established Developers are not being replaced in-kind as they matriculate through retirement.  The opportunity: the door is open for new parties to thrive in real estate.  The risk: the experience gap may create a chasm for these new Developers to weather the inevitable storms headed our way. 

 

What should we do as a community? 

Black people understand this, we cannot rest our fate solely in the hands of larger society.  Yes, real estate is risky but that does not mean you should not enter the game.  Educate yourself, YouTube University is free, and it’s pretty expansive!  Mentorship is necessary, it is an investment in yourself, and you are worth the expense.  You do not have to develop a 250-unit apartment to get the ball rolling.  Piggyback as a Limited Partner on the first few runs and learn the process.  How can you potentially buy an existing real estate adjacent business? All this real estate needs air conditioning (A/C), especially in Texas.  During my banking career, I had a White client who owns an A/C firm.  That firm grosses over $3MM annually with healthy margins (over $700M in EBIDTA or +20% Net Operating Income).  I am confident that his education stopped after high school.  Does a license and certification help?  Yes.  Nonetheless, this is something one could do with just a little bit of YouTube University Research. 

You can also certify your business as a “Disadvantaged Business Enterprise.”  This opens the door to a plethora of contract opportunities with government agencies and larger corporations who are incentivized to sub-contract with “Minority-Owned” firms.  (Don’t start a business - buy one)!  It proves to be less expensive in the long run.  Buying an existing business or franchise allows you to take advantage of an established system and proven cash flow.  Shameless plug, my firm, Come Correct Consulting, can help you navigate this process (Book a consultation today).  How can you help solve the supply chain challenge as it pertains to real estate?  Trucking still has a low barrier to entry and many of these freights travel with less than full capacity loads.  Let’s not wait around to be the mark.  Let’s get solution oriented.  By the way, there are grants waiting for your consumption.  Be on the lookout for them. 

10 Small Business Grants For Minorities: https://www.forbes.com/advisor/business-loans/small-business-grants-for-minorities/

If you have not done so already, get your hands on the following reads:

 

 

Black Corporate Leaders can inspire millions, but they can only touch hundreds perhaps thousands of us directly to “have our backs!”  The work to improve the economic stakes of +42MM blacks in America, and the nearly 1.4B on the planet, must be led by Black people; primarily outside the confines of the C-Suites.  We are obliged to create our own C-Suites; nonetheless.

 

Obi Chukwumah

Founder, Space_&_Equity Corp.