As we end the first quarter of 2012, we see a global economy trying to correct itself and many U.S. citizens still out of work. A disproportionate number of these citizens are minorities, with unemployment rates for Hispanics and blacks at nearly 11 and 15 percent, respectively.
The congressional Hispanic and black caucuses are aware of these problems and are presenting their own policy and program recommendations that demand direct government investments. The “For the People” Jobs Initiative, an extension of unemployment benefits and an extension of payroll tax cuts are but a few proposals. These recommendations make sense and will have a positive short-term effect. However, to foster significant, long-term economic growth, we have to depend on the private sector and the vitality of the free-enterprise system.
Many say this recent recession was unlike any other and exposed the United States and European countries to major economic structural problems. That is why there should be a new business agenda, and minority leaders must play a more significant and meaningful role.
Contrary to many economists’ opinions, I predict the economy in the U.S. will grow stronger in 2012. I make this prediction for many reasons; most significantly, there is $3 trillion to be invested the U.S. economy:
• $1 trillion overseas awaiting the passage of tax break legislation.
• $1 trillion in the hands of U.S. venture capitalists.
• $1 trillion in the treasury of Fortune 500 companies.
My question is: Will minority businesses be ready to take advantage of the shift in marketability and infusion of $3 trillion of capital? My answer is no. Further, if we do not get ready to be part of this economic resurgence, we will not have anyone to blame but ourselves. To prevent this from occurring I make the following recommendations:
1. We need to form a cohesive front; the black and Hispanic caucuses should create a first-of-its-kind task force and pool their resources to analyze, in-depth, all existing and potential legislation to pinpoint long-term economic benefits for their communities and minority business owners. The same task force could request from the executive branch and key agencies information on which existing minority business entrepreneurs (MBEs) are doing major business with the federal government. The same elected officials could provide the names of local businesses capable of doing major projects, although they are not currently on the federal radar.
To ensure long-term impact, the elected officials should demand that the executive branches not only monitor progress to increase federal procurement, but also provide ongoing research into the major barriers to entry.
2.The federal government, under the leadership of Valerie Jarrett, has been aggressive in trying to increase procurement for small businesses, veterans, women and Native Americans. It should be commended for its efforts. However, only one department met its goals. The government will never meet its mandated goals until it conducts a study to pinpoint the many barriers to entry.
Once the major barriers are identified, the government should commission another study to analyze the strengths and effectiveness of desirable programs to foster the growth of minority businesses within the federal government.
3.Most MBEs cannot grow organically fast enough to take advantage of the pending economic reversal. To take advantage of new and potential opportunities, growth-oriented businesses must seek acquisitions in industries such as energy, health, telecommunications and business services. These acquisitions should not be only within minority communities, but also with non-minority companies both domestically and abroad. They should seek firms that help achieve economies of scale, allowing for greater revenue, more profitable production and stronger businesses.
Many of you are preparing for positive economic change. If not, you will have no one to blame but yourself, and this will be yet another missed opportunity.
James H. Lowry is a senior adviser for Boston Consulting Group and inaugural member of the Minority Business Hall of Fame. He can be reached at email@example.com.