Freeze Frame Memo: Time for an Inclusive Economy

FREEZE FRAME MEMORANDUM: BLACK BOSTON 2015, Time for an Inclusive Economy

 

OVERVIEW

The specter of Boston hosting the 2024 Olympics provided the context for robust discussion about Boston’s future.  Much speculation ensued before the bid went bust regarding the potential for Boston to reap billions of dollars in the lead-up to, and eventual execution of, the 2024 Games.  Absent from any meaningful participation or discussion was the habitually-ignored issue of the role and benefit for Boston’s sizable minority community.

The decision that led to Boston’s withdrawal from consideration to host the Olympic Games has unfortunately resulted in the cessation of any further incisive discussion of Boston plans for 2024 and into the future.  As such, the harsh reality for the City’s Black and Latino communities – which includes negative indicators in income, employment, education, wealth-building, health, criminal justice, housing, and other measures of prosperity, or the lack thereof – is there are no prospects for meaningful, transformative change.

Even in the absence of the 2024 Olympics-inspired growth, Boston is nevertheless enjoying a very strong economic boom which appears on track to continue and shows no sign of abatement in the immediate future.  The questions remain then: With all of the business and economic development activity taking place in the City of Boston: (1) How will Boston's Black and Latino communities benefit? (2) Is there something that can be done? (3) Are there economic, political, and social interventions and policies that can be employed to alter the paradigm that has resulted in the paralysis in advancement of Boston’s communities of color?

We start here with a snapshot of the current state of affairs of some of the key and important metrics of the neighborhoods of Roxbury, Dorchester, and Mattapan, i.e., the heart of the Black community in Boston.  The snapshot tells the story of where things are today; and our portrayal will give one a better understanding of the “what” and the “why” of these unsavory and unfortunate circumstances.   It, however, is not a document of remedies, although some will surely jump off the pages for you – but a statement of the some obvious steps that can be taken to ameliorate this seemingly unmalleable malaise.

DISCUSSION

The neighborhoods of focus are Roxbury, Dorchester, and Mattapan (“RDM”).  These three vital segments of the City of Boston represent the center of the City’s Black community.  The neighborhoods represent a combined 98,568 (71%) of the total 138,073 Black residents of the City.  (In addition, there are 107,917 Hispanics or Latinos in the City – a group that is not the central focus of this presentation, but nevertheless mentioned herein.)  With the City’s overall population being 617,594, the Black population constitutes 23% of the City, the Hispanic/Latino is 17.5%, and the combined total is 40.5% of the City.

Earlier this year, the Federal Reserve Bank of Boston issued a report, Color of Wealth in Boston, providing some unsettling and sobering findings of financial disparities in the use of traditional financial services and the accumulation of assets.  Among other things, the Federal Reserve reported that 27% of Boston’s Black residents are “unbanked” compared to 8% of whites.  The report also indicated that white families had an average of $256,500 in assets in Boston while their Black counterparts held assets averaging only $700.

Concurrently, the Brookings Institute issued a report on the income inequality between what is becoming more regularly referred to as Boston’s “haves” and “have nots”.  The Brookings study, Some Cities Are Still More Unequal Than Others, disclosed that Boston’s average highest income earners have incomes 15 times higher than its lower income earners, thereby signaling a grossly unequal distribution of incomes.  According to the report, those income inequities do not appear to be on-course to reverse trend anytime soon.  Boston is ranked the nation’s third worse major city on this measure, only behind Atlanta and San Francisco, and worse than New York City and Los Angeles.

The statistics for Black unemployment are no more encouraging.  Boston’s official statistics report a 12.5% unemployment rate for Blacks in the City. As the unemployment rate only tracks those who are out of work but looking for work, the 12.5% unemployment rate is misleading.  Most observers who pay attention to such things would probably argue that the percentage of unemployed Blacks is much higher, particularly for working-age Black and Latino males 18-44, many of whom have CORIs.

A recent report, Family Assets Count, issued this year by the City of Boston and various partners on Boston’s home ownership numbers tell a story as well.  The 31.6% Black home ownership rate in the Boston MSA pales in comparison to the 68.4% Boston white homeownership rate. It is even well below the 43.5% statistic for Black homeownership in the U.S.  

The statistics on educational attainment continue the story with Boston's Black high school and college graduation rates at 79.7% and 17.3%, respectively, while white high school and college graduation rates are 9l.l% and 32% respectively. Embarrassingly, while Boston is often referred to as the Mecca of education because of the sheer number of academic institutions in the city and state, its Black high school and college numbers lag behind Blacks on a national level with graduation rates of 82.5% and 18.4% respectively. In essence, Boston is NOT the educational capital for its Black population.

Massachusetts is in an economic boon with exploding growth sectors in food service, education, technology, financial services and health care. Those same educational statistics are impacting negatively on Black residents in these areas as well. Only 3% of Massachusetts Black high school students are in Advanced Placement science class. Massachusetts Black public college students comprise only 4% of computer science majors and 7% of IT majors. Black employment in a long list of well known high technology companies is abysmal, none higher than 2% at Google, Face Book, Twitter, Yahoo or LinkedIn.

We turn now to the status of Boston’s minority businesses.  The SDO (Supplier Diversity Office) reports that in FY 2014 it spent $991,590,145 in state-initiated business done with WBEs, MBEs, and SBPPs. Of that total, MBE spending accounted for $247,150,817 (6.19% of total spending) and WBE at $547,818,148 (14.40% of total spending). Most would be hard pressed to identify any evidence of such spending in the capital city of Boston or by any MBE's doing business in the targeted urban communities of Roxbury, Dorchester or Mattapan. Further, despite recent activity by the Executive branch announcing major changes to the SDO process, including partnerships and certification streamlining for minority businesses, the SDO office within the Executive branch has been without a director for several months.

The highly publicized BIG DIG is often pointed to as an example of a huge business opportunity because the endeavor eventually ended with a $24 billion price tag – the most expensive public works project ever undertaken in the history of America.  Data collected by the UMass Labor Resource Center (“LRC”) reports that of the total 64,998,624 construction work hours on the Big Dig, 9,328,053 (14.35%) overall hours were worked by minorities.  The percentage of MBE minority work hours was reported at the higher rate of 22.7%.  By the process of extrapolation, the LRC finally calculated that MBE’s share of Big Dig contracting was approximately 2% or $480 million.  It is important to remember that, like all the various local/state and federal projects, the Big Dig was paid for with taxpayer dollars; and it is disconcerting that: (1) there is little transparency or accuracy about the participation of minorities in such a large public works project; and (2) the residual robust experience, capabilities, capacity, and wealth that should have been left behind in Boston’s Black community by a huge project such as this is non-existent.

Several major projects in-queue in Boston in the next 3-5 years offer yet more opportunities for Black residents and businesses. Such opportunity can only be had with a sea change in behavior.

Private sector opportunities for inclusion:

  • Seaport Development – a $6B investment planned in next few years
  • MBTA Capital Spending
  • Tall Ships – 2017
  • IndyCar Series – 2016
  • 2 Licensed Casinos (2018)
  • Keolis Commuter Rail ($2.5B contract)
  • 20+ new hotels in Boston in next 3-5 years
  • Higher Education & Health Services Capital Spending
  • Over 350 developable lots in Roxbury alone (more than any other City neighborhood)
  • Innovation Economy Initiatives

Boston has engendered some sporadic history of successfully mounting projects with major MBE participation.  The important point to remember is that these successes all have one thing in common: committed, demonstrative, effective, and unshakeable LEADERSHIP.  Where that is present, there is no need to get bogged down with discussions about numbers and quotas.  The Parcel 18/One Lincoln project in 1984, the Boston Convention and Exhibition Center completed in 2004, the MBE policy utilized in 2004 for the Democratic National Convention in Boston, and the 2015 MassPort/MCCA Convention Center Expansion and Hotel plan all had bold goals, the first three (3) having already achieved their designed potential, and the fourth (4th) one well on-track for success.  We believe it to be indisputable fact that leadership at the top is the singular, immutable factor in the success of these projects. Success dictates that those who can must do what is necessary to affect the result.  When leadership is clear, consistent, and unwavering in the directive to support minority participation, those receiving the message get it!

One area where such leadership appears to have been lacking is in the massive development that has occurred in the facilities of all three major Boston sports teams.  TD North Garden, Fenway Park, and Gillette Stadium have all enjoyed major public infrastructure support that has greatly enhanced the value of those facilities; and yet, there was little or no requirement to include minority participation in return for the public money contributions. Where public dollars are used to support private development, a growing phenomenon in Massachusetts, public goals need to be attached.

One can also look at the lack of Massachusetts Black businesses on the Black Enterprise 100 annual listing.  For the past several years, only two Bay State businesses appear on the list: One United Bank of Roxbury, one of the largest Black-owned interstate banks in the U.S. (ranked No. 2 on the 2014 Financial  Services List), and Westborough Buick (ranked No. 52 on the 2014 Automotive list).  In the 1990’s, Massachusetts boasted several Black businesses on the list.  Those numbers have consistently dwindled and stagnated at two – a case for concern and embarrassment for Boston’s entire business and political communities.  This is an even bigger travesty given the approximately $40 Billion spent herein over the last decade in public works projects, courthouse and jail construction, the Big Dig, and highway and transportation infrastructure.  Add to that $40 billion figure the enormous spending done by the City’s Higher Ed and medical institutions, very little benefit from which inures to City residents who live beneath their umbra.  Notwithstanding the billions spent, Boston has not created one single multi-million dollar minority business.  If Black and Latino businesses are not given an opportunity to thrive, then Boston cannot attain and retain the status of “world-class city”.  It is this simple reality – this grave sense of continuing disrespect and disenfranchisement – which contributed mightily to the lack of support from the minority community for Boston 2024 Olympic Bid.

THE RATIONALE

We continue to emphasize and focus on the creation and expansion of opportunities for Black businesses because that is the major course to reducing unemployment, poverty, and crime in the Black community.  Black businesses hire Black people and provide philanthropic support to community agencies; and jobs are the foundation for wealth creation for Black residents.

 

MORE DISCUSSION

The Freeze Frame presentation accompanying this document provides examples of spending for both goods and services, including construction and human service spending.  The human service spending is telling in that it provides a snapshot of approximately $12 - $15 million spending on youth programs in Boston. Ironically, two of the major youth services programs targeting at-risk Black and Latino males boast white suburban female agency heads.  While we are not suggesting as a general proposition that white women can’t run agencies primarily serving Blacks and Latinos, in these specific instances, they have not demonstrated any ability to successfully redirect the lives of the young people in their charge.  And whenever – in the light of escalating crime and violence plaguing these Boston neighborhoods – the floundering programs are confronted on the merits by the community to discuss (1) how the resources for the targeted population are being spent, and equally important, (2) who, in terms of talent, awareness, and knowledge, is directing the spending and leading the strategy formulation and implementation, the Black community has not been able to have that candid conversation without being instantaneously accused of saying that suburban white women can’t effectively run an agency serving youth of  color.  However, without drawing a general conclusion about the impact of race and social status on a program’s effectiveness, the ineffectiveness of these three specific programs does beg the question in these instances.

An August 28, 2015 article in the Boston Globe written by Matthew Rocheleau, Builders in Boston Missing Diversity Targets, provides a list of the City’s top 50 developers and the degree to which they met goals for hiring Boston residents, minorities, and women in 2014.   While the article and ensuing discussion centered on how close the listed developers were to the 50% residents, 25% minority, and 10% women employment goals, there is a much more telling conclusion that was never mentioned, i.e., the fact that only one MBE made the list of the top 50 developers – Cruz Construction, Inc.  All of the remaining organizations from Roxbury and Dorchester that made the list were non-profit Community Development Corporations (“CDCs”).  This item clearly supports the long-standing argument that communities of color are the only neighborhoods where the preference exists to do business with non-profits rather than for-profit Black businesses.  The statistics confirm the damaging consequences of focusing business investment on institutions that do not have wealth-building as their goal:  For all of the hundreds of millions of dollars granted to, and expended by, non-profit CDCs in RDM, the overall economic health of the Black community residents have little to show for it as their wages and wealth-building ability have stagnated.  There is no other section of Boston where CDCs are on the “top developers” list.

While the City, State and federal funders often boast of the hundreds of millions of dollars expended on economic development activities RDM, a closer look at the work of the CDCs raises another serious issue. Almost to a project, a cursory look at  four of the larger economic development projects by three of the larger CDCs in RDM demonstrate that not one of them chose a Black business as development consultant, contractor, architect, engineer or law firm, all areas where substantial fees are paid. Further, the employment opportunities provided tend to be one shot opportunities and generally come only after major advocacy from within the community to secure them. Contrarily, Cruz Construction, the only Black business on the list, provides continuing employment opportunities to Black residents as demonstrated by the fact that Cruz has the highest percentage of minority workforce numbers. Which makes it even more distressing that like many/most others Black contractors and others professionals, Cruz Construction was not even invited to bid on any of these major projects. It is impossible for Black residents of RDM to ever get on a path to economic stability, let alone wealth building, under these circumstances. This reality screams for a totally new way of thinking and new strategy to achieve change. It cannot happen by tweaking around the edges of the current process.

The real estate development sector is not the only challenge or opportunity. In 2015, the Massachusetts Technology Leadership Council (MATLC) produced a report, Growing 100K Tech Jobs: Trends, Insights, and Opportunities within the 2020 Challenge. This report noted the importance of the technology industry to the Massachusetts economy including being a leader in employment (214,600+ jobs compared to 164,900 in finance & insurance). According to the report, “Accelerating momentum will drive greater innovation and growth in every technology sector during the second half of this decade. The Massachusetts technology ecosystem with its combination of research, academia, industry, finance, investment and supportive government will fuel much of it.” Yet the report also notes the lack of diversity in its workforce with these statistics: Massachusetts Workers in Computer & Mathematical Occupations by Race, 2013: 90,500+ White, Not Hispanic or Latino; 24,700+ Asian; 6,600+ Hispanic or Latino; 5,000+ Black or African American; 1,600+ Other. In other words, Black workers only comprise 4% of the technology workforce, despite the millions of public sector dollars that have been invested in its ecosystem. The MATLC’s recognition of the need to increase the diversity of the technology workforce is a start, but there also needs to be recognition that supporting Black businesses in the technology sector, in addition to healthcare, higher education, food services and financial services, is an important ingredient to a having a more inclusive economy.

THE LESSONS OF BOSTON 2024

We have seen Boston galvanize around a common goal and around a crisis.  With active support and participation by the Greater Boston Chamber of Commerce (“GBCOC”) and other business organizations, Boston’s corporate community came together and raised millions of dollars to support the 2024 Olympic Games and its promise to be a transformative event for Boston.  We need that same level of interest and participation by the GBCOC to achieve the transformation possible for Boston’s communities of color – a benefit to the entire City.

The recent Indicators Report issued by The Boston Foundation in the Fall of 2015 lamented that despite hundreds of millions of dollars in investment in RDM, the economic indicators across the board, suggest that the economic status of Blacks in Boston had substantially deteriorated since TBF had conducted its last Indicators Report. Given the present state of the economy for Boston’s Black and Latino residents, including double digit unemployment, abysmal assets accumulation, escalating poverty, rising crime rates and the rapidly widening gaps in income inequality, we would argue that Boston's Black community is in an economic crisis.  Those same individuals who came together to submit a bid for the 2024 Olympic Games must now come to the table to create a bid for economic vitality for a majority of the City’s residents who’ve been shut out from sharing in the economic prosperity for far too long. 

It is critically important that the analysis of what went wrong with the 2024 Olympic movement not be crystallized into the conclusion that it was merely the “Boston 2024” versus the “No Boston” forces that waged the seminal battle – what a huge mistake in understanding the dynamics of the situation that would be! While “No Boston” did represent a relatively small, but powerful and resourceful group of individuals, it did not represent the skepticism and opposition emanating from a majority of the City’s people of color.  Had Boston 2024 been able to adequately respond to the concerns around business and employment opportunities, housing displacement, and the stubborn entrenched lack of any willingness to include Black people in the decision-making role, they would likely have been able to cultivate the necessary boost in support to allay the USOC’s concerns.  Case in point: While the Boston 2024 Chairman embarked on an aggressive public relations campaign, thereby fulfilling his publicly-stated intentions to meet with “key leaders” all over the City and State, he adamantly refused to even respond to repeated written requests to meet with a group of Boston’s key Black business leaders to hear their concerns.

CONCLUSION AND CALL TO ACTION

People of color represent almost 55% of Boston’s population, of which the majority are Black and Latino.  Boston’s corporate, political, philanthropic, and social leaders ignore this reality at their own peril.  Creating and expanding wealth-building opportunities among Boston’s Black and Latino business community, and being more  practical and deliberative about distributing taxpayers’ dollars, make the entire City stronger and more competitive. We must absolutely think outside-the-box in terms of how we bring living wage employment to the large number of working-age men and women from these communities. We must involve larger numbers from this group in the City’s booming economy to have any realistic hope of sustained economic vitality for the City as a whole.  Doing so would clearly put Boston in a more advantageous position for the next great opportunity requiring galvanized and unified City-wide support.

Our ability to compete nationally, and globally, is exponentially enhanced when the City’s MBE community is stronger because a stronger MBE community makes for a stronger overall community!  The minority community, including most certainly Black residents, businesses, clergy and community organizations, as well as the broader public- and private-sector communities – including elected officials – is committed to work with all those willing to position our City to successfully compete for whatever opportunities may come our way in the future. Together Boston Strong will become Boston Stronger!