CHICAGO (NNPA) - President Barack Obama's economic stimulus plan has proposed several initiatives that should increase job growth in the professional services sector—including information technology, engineering, legal and financial services—but a recent report warns old barriers to Blacks in the professional services industry could limit benefits from the new government investment.
According to a Chicago Urban League report, the failure of White firms to hire Black workers or Black firms for professional services and unequal treatment of Blacks in the industry is already costing the city's Black community some $1.2 billion in lost income.
The report, "African-Americans Navigating Chicago's Professional Services Sector: Facing Challenges, Seizing Opportunities," noted that the professional services sector represents "high level, high wage earning jobs."
Institutional barriers create obstacles to future acquisition of Black wealth and could be the death knell for many Black professionals still employed, it warned.
The professional services sector represents those skills offered by specially trained individuals that are licensed and certified, such as lawyers or accountants, or who work in areas such as information technology or real estate. These are also areas where Black entrepreneurs have historically staked out business, but many are now struggling to stay alive.
Still Struggling
"Blacks have not recovered from the recession of 2001 where during the good years of the 2000's Black employment decreased by about two per cent and income declined about two per cent. Blacks only have about fifteen per cent of wealth of White Americans with a disproportionate amount of wealth accrued in home values. These facts have led to projections that almost a third of the Black middle class could fallout of their middle class status," observed Dedrick Muhammad, a senior organizer and research associate for the Program on Inequality and the Common Good at the Institute of Policy Studies in an e-mail interview with The Final Call.
"Black businesses nationwide are some of the least capitalized so the tightening of the lending market and the decline in consumer spending disproportionately puts Black businesses in jeopardy," Muhammad said.
In his Saviours' Day 2009 keynote address on March 1, the Honorable Minister Louis Farrakhan said that Blacks earn $744 billion annually, and must unite to survive America's severe economic trial.
Instead of seeking economic benefits from a system that is falling, the Minister said Blacks should sacrifice some of a reported $2.7 billion spent on leisure and entertainment, some of the $2.8 billion spent on harmful vices such as tobacco products, on the $2.5 billion on alcohol. Black America could deposit the money in a national treasure that could be used as a catalyst for building the community, he said.
"Now we as leaders, so called, have to form a national trust of leaders, maybe they ought to be bonded because we don't know who to trust these days," said Min. Farrakhan.
"All of our artists, all of our entertainers, all of our sports figures, they're all doing something to give back. You have to give them credit for that. However, no matter what we do, it's not big enough, but if we were a part of a national pot and everybody put in what they could afford to sacrifice, how short a time would it be that we would have $30 million, $40 million, $50 million, $100 million, $200 million, $500 million, a billion dollars? America is for sale but how much of it do we own?" Min. Farrakhan asked.
Loss Underestimated
According to the Chicago Urban League's report, "Together, underrepresentation and unequal earnings among professional services workers result in estimated annual losses in African American personal income of $1,163,143,694. This figure does not take into account additional losses for entrepreneurs due to unfair business practices."
Among solutions urged by the report were increasing the skills of businesses and their employees; more combined effort from professional groups; increasing the numbers of Blacks who hold partner status in corporate firms; greater transparency and accountability for public agencies and companies; joint action by legislators and policy makers to combat the problem; creation of new resources and finance tools; and more shared research and analysis.
President Obama announced changes March 4 in the way government contracts are awarded. His first move was instructing budget director Peter Orszag to work with cabinet officials and agency heads to develop more stringent guidelines by the end of September. According to the president, these reforms save Americans up to $40 billion annually.
"We will stop outsourcing services that should be performed by the government, and open up the contracting process to small businesses," said President Obama.
During the Bush administration, many no-bid and other highly financially lucrative contracts went to companies and corporations that were already connected to the internal Washington, D.C. lobbyist network.
In Chicago, the professional services sector represents one-third of all employment in the region generating average monthly wages 42 percent higher than the economy and "generating new firms at a faster rate than the broader economy," the report said.
For example, in the first quarter of 2007, the average monthly wage in the overall economy was $5,069. During the same time period, the average in the professional services sector was $7,193.
Professional Blacks are often not members of the very influential "old-boy" network that leads to lucrative business contracts and favorable business arrangements. The problem is multiplied with the country in the grips of a recession.
Worry About Stimulus
At a community stimulus package discussion meeting sponsored by Rep. Bobby L. Rush (D-Ill.) on Chicago's south side, community activist Eddie Read expressed concern that some Black organizations and businesses could miss out on the $787 billion package championed by President Obama.
"I see the resources have been put there like they always are," Read told The Final Call. "The thing that many of us are working for now is to make sure that those resources find their way to the grassroots level," he said.
"We need to know what is there so that we can develop a game plan, and an overall agenda to make sure this money does not fly over our community but flows through our community," said Rep. Rush.
In a recent column, Harry C. Alford, president and CEO of the National Black Chamber of Commerce, mentioned the group will form at least three committees to pursue opportunities outlined in President Obama's stimulus package. A Transportation Committee will deal with infrastructure projects from the U.S. Department of Transportation, an Energy Committee will monitor funding for energy related projects from the U.S. Department of Energy and special committee will look at the Department of Housing and Urban Development. They will monitor awarding of contracts and jobs produced in cooperation with Black organization and community leaders, Alford added.
Cedric Muhammad, publisher of BlackElectorate.com and founder of CM Cap, an entrepreneurial advisory firm, recently returned from Nairobi, Kenya after participating in the First Congress of African Economists at the invitation of the African Union Commission.
He said in a previous interview that Obama's plans for job creation could positively impact Blacks in large cities such as Chicago, and those working for the government might be able to make it to the other side of this economic storm.
"Because we heavily depend upon the government for employment, the stimulus will provide somewhat of a 'safety net' (and) we won't be losing as many jobs in that sector. And the newly-created jobs such as in the area of weatherization is one area where I think, people in the inner-city will do well," the economist told The Final Call. He also saw possibilities for Black-owned firms and contractors in the area of construction and with the creation of new "green jobs."
Cedric Muhammad said, "We have an opportunity (in construction) if we get back in that game, and unite. Some of our firms need to really come together, I think, to maximize that opportunity. I like the construction area (and) I like the weatherization. I think we have a shot with the 'greening' of the economy, because a lot of that is going to take place in inner city and distressed areas."
