Category Archives: Business and economics

Spreading wealth and breaking down barriers

Business, Business and economics

By Steve Brawner
© 2014 by Steve Brawner Communications, Inc.

For several years, I published a newsletter, “The Vanguard,” for Arkansas Baptist College, a historically black college in Little Rock. The newsletter dated back a century, and I assume I was its first editor who was white. It was an honor.

The school was in the midst of a resurgence under its visionary president, Dr. Fitz Hill. It’s now facing some challenges, but this column is not about that. I attended many events there, often as the only white person in the room, or one of the few. When it came time to publish, I would email a rough draft to my contact hoping she would like it, and when she called to sweetly make corrections, I would be disappointed in myself if I made many errors. She was the one writing the check, and I wanted to please her.

The nation needs more minority business owners. It spreads the wealth the way wealth is best spread. It breaks down barriers, creates respect, and makes everybody better. It made me better. When two people are doing business together – one performing a needed service, the other providing a needed paycheck – then it’s a lot easier to get past all the terrible things that have happened the past 400 years.

According to the U.S. Census Bureau’s 2007 Survey of Business Owners, of the nation’s 27 million businesses then, 1.9 million were owned by African Americans. That’s about 7 percent in a country where 13.2 percent of the population is “black or African-American alone,” according to the Census Bureau. The 1.9 million companies employed less than 910,000 people, so most had no paid employees. But those 910,000 people had jobs because of an African American business owner.

At one time, Little Rock was home to many minority-owned businesses – 102 on West Ninth Street in 1959, according to the Mosaic Templars Center, a neat museum in the capital city. But that would soon change. Integration put those businesses in competition with larger and more resourced businesses owned by white people. (The same dynamic occurred with colleges like ABC.) The construction of Interstate 630 cut through the business district, pretty much destroying it. Today, what’s left of West Ninth Street is in decay.

Traditionally, many small businesses owned by African Americans have served mostly African American people – funeral homes, hair stylists, etc. While that’s not necessarily a bad thing in itself, it is bad if it stops at that. According to the Pew Research Center, median incomes for African Americans in 2013 were 59.2 percent of whites, and the wealth gap between members of those two races was growing. One way to address that is to circulate dollars throughout the entire American community. The best way to make that happen is for more African Americans to own the means of production.

When I told my wife I was thinking about writing this column, she asked, “So what’s your solution?” Unfortunately, I don’t have a good one. I’m not sure if any more laws need to be passed. I think affirmative action in government contracts and scholarships is helpful, though it should be based on class and background, not race.

Undoubtedly, progress is being made in race relations, which should increase opportunities for African American business owners. Regardless of what you think about President Obama, his election was a ceiling-breaking event unimaginable not long ago. Young people are not color blind, but they are color blurry, which is good, because they’ll have to be. While the Census Bureau considered only 2.4 percent of us to be “two or more races” in 2013, that number will grow in the coming years. In 2010, 10 percent of opposite sex married couple households were interracial or interethnic – an increase from 7 percent in 2000. A 2013 Gallup poll found 87 percent of Americans approved of marriages between white and black people. In 1958, just 4 percent did.

Please keep all this in mind as we watch the unfolding events in Ferguson, Missouri. Certainly a scab has been ripped off an old wound there. I’m not sure what to think about all of it, except this: An officer shooting an unarmed man is bad, and rioting is also bad.

But honest commerce – that’s really good. Many things must still happen on this long march to justice. One is more diverse people doing business with each other. After all – and I usually hate this expression – but in business, the only color that matters is green.

Welcome to America, kids – eventually

Business and economics, Debt and deficits, Politics

By Steve Brawner
© 2014 by Steve Brawner Communications, Inc.

The question of what to do with these 50,000 Central American children sent to America alone by their parents to escape violence and poverty in their homelands – that’s a tough one. What do we do? Let some of them stay? Send them all home?

Eventually, we’ll be asking young immigrants to come.

We will do that because the decisions we have made, politically and personally, will leave us with no better choice. Let’s look at some statistics to see why.

In 1946, the World War II generation returned home from overseas and made a bunch of babies. From that year until 1964, 80 million baby boomers were born, and now they are beginning to retire in massive numbers and living longer than previous generations. Social Security’s framers did not plan for this influx of long-living beneficiaries when it was created. Life expectancy was 64 for a program that started paying benefits at age 65. There was one beneficiary for every 16 workers paying into the system.

Now there are three workers supporting each beneficiary. By 2025, the ratio will be 2.3 to one. The baby boomers themselves did not make enough babies, and then Congress messed it all up by raiding Social Security to pay for other programs.

This isn’t just a problem for the Social Security system. Entire sectors of the economy will be looking for workers. For example, the trucking industry, which pays pretty well, is expecting a deficit of 300,000 drivers over the next decade.

Could we just wait for people to make more babies who will grow up and fill the void? Not really. According to the Census Bureau, the median age for American females in 2013 was 39. That means a lot of us are too old to make babies. We’d have a real problem if it weren’t for the Hispanics already here (average age: 27).

Let’s review. We’ve promised benefits to an entire generation of retiring senior citizens, but we don’t have enough young people working to pay for those benefits, fill jobs in certain sectors, or make babies themselves.

We need an influx of young people – fast. Where could we find them? Obviously, south of the border and across the ocean.

At some point, regardless of all the political yelling, the United States will loosen its immigration laws. Those already here will be given a path to citizenship, or at least a path to something. The door into America will open wider. It might be attached to a wall, but the door will be open.

Is this the right thing to do? It won’t matter, because no one will have a better idea.

We ultimately will do this because we will have no better alternative as a result of the choices we have already made. Politically, we could have raised the retirement age enough to compensate for our increased lifespans. We have chosen not to do that. Our society could have fostered the expectation that the care of the elderly would be primarily the responsibility of their children. We decided, for many good reasons, to also rely quite a bit on Social Security, Medicare and Medicaid. We could have had a sensible immigration policy. We chose to squabble about it. As individuals, we could have had more kids. We, including my wife and I, decided that two were enough.

The choices we have made over the past 50 years, when we have had lots of alternatives, will dictate the choices we will make in the future, when we will have far fewer alternatives. So welcome to America, kids – if not now, then eventually.

Hobby Lobby: Is a corporation owned by people still people?

Business and economics, Politics

By Steve Brawner
© 2014 by Steve Brawner Communications, Inc.

You probably think this column is being written by a columnist. It’s not. Legally, it’s being written by a corporation, Steve Brawner Communications, Inc.

Steve Brawner Communications, Inc. – in the eyes of the IRS, an “S Corporation” – copyrighted the material, bills your news provider, and writes a paycheck to its only full-time employee, Steve Brawner.

Last week, the Supreme Court declared 5-4 that the federal government under Obamacare could not require another S Corporation, Hobby Lobby, to pay for insurance that covers four types of birth control for its employees – two interuterine devices and two types of the so-called “morning after pill” – because the family that owns the corporation considers those to cause abortions. The Court drew a distinction between public corporations with many stockholders and a closely held corporation owned by only a few people – in this case, founder and CEO David Green and his family.

Among the arguments opposing the decision, voiced by politicians and pundits, is that the Supreme Court has decreed that employers can force their religious beliefs on their employees.

That’s not even remotely what has happened. All the Supreme Court has said is that a closely held corporation should not be required to pay to insure forms of birth control that its owners consider to cause abortions. Hobby Lobby employees are free to purchase those services on their own or to go to work for a company whose insurance does cover them. Or they can take advantage of one of the 16 types of birth control that Hobby Lobby is willing to cover.

The federal government under Obamacare gave the Greens three choices: cover those services; don’t provide health insurance and pay an annual penalty of $26 million; or face annual fines up to $475 million, which would have put Hobby Lobby out of business. Hobby Lobby has 23,000 employees.

The Court specifically said the decision applies to “only the contraceptive mandate,” but in her dissent, Justice Ruth Bader Ginsburg wrote that the Court has waded into a legal minefield. Who could decide if one religious objection is legitimate while another can be ignored?

Ginsburg has a point. But that’s the thing about these hard cases – they’re hard. That’s why we have courts and legislatures, so we can tackle these issues one at a time, attempting to formulate general legal principles while also being flexible based on the facts of an individual case. Very few of us would argue that an employer could have a religious reason to practice racial discrimination, for example, but on abortion Americans are deeply divided. True, it was difficult for the government to accommodate the Greens’ religious beliefs, but does that mean it shouldn’t have even tried?

The mixed public reaction to this case is about more than Hobby Lobby, birth control, or even abortion. At its heart, it’s also about what people think about corporations, the people who own them, and the people who work for them. During the past few decades, Americans have watched corporations off-shore jobs and manipulate the political system to their advantage. It’s no wonder that many Americans identify more with the employee than the employer.

The Court does not see it that way. In its decision, it used some of the same “corporations are people” logic that it used in the Citizens United decision that removed limits on corporate political spending.

“A corporation is simply a form of organization used by human beings to achieve desired ends. … When rights, whether constitutional or statutory, are extended to corporations, the purpose is to protect the rights of these people,” Justice Samuel Alito wrote in the Hobby Lobby decision.

So if you start a company and then incorporate it, is it still an extension of you? Five Supreme Court justices say yes, and four say no.

I’m watching how this unfolds. Whatever the federal government can enforce regarding an S Corporation with 23,000 employees, it probably can do to an S Corporation with one.

Help wanted for 400 jobs, and more

Business and economics, Education, State government

What would happen if an out-of-state employer was prepared to build a factory in Arkansas and pay 500 people a starting salary of $50,000 a year – but was having trouble finding the employees?

The state of Arkansas and the local community would pull out all the stops for that $25 million annual payroll. After ensuring the industrial park had adequate water, wastewater and electrical connections, there might be an offer of state-financed employee training. Then there would be a big press announcement with the governor, the mayor and the plant manager.

What if I told you a similar opportunity already exists with one of Arkansas’ established employers, immediately, with no need for a factory?

Here’s what Steve Williams, CEO of North Little Rock-based Maverick Transportation, told me about his trucking company’s situation.

“I’d go out and buy, easily go out and buy 500 trucks … and have more than enough business for those people to haul. I just can’t find 500 people to train to put in the trucks to do that. It’s literally, they do not exist.”

Because he can’t find enough drivers, Williams is buying about 100 trucks, leaving unfilled 400 jobs with starting salaries of about $50,000 a year. Some truck drivers earn $80,000.

Maverick Transportation is not the only trucking company looking for drivers. The American Trucking Associations estimates that the industry will need to find about a million in the next 10 years. There are many trucking companies in Arkansas. Those trucks also have to be maintained and repaired.

A person can go from unemployed to a truck driving job offer in 20 weeks at a cost of $10,400. That’s what it takes to earn a commercial driver’s license at the Diesel Driving Academy in Little Rock. Barry Busada, senior vice president, said many motor carriers will reimburse drivers for the cost of that tuition after hiring them.

I’ve oversimplified this situation. Many long-distance truck drivers are away from home a couple of weeks at a time, which is why turnover at many carriers is 100 percent a year. New government enforcement mechanisms have reduced the labor pool by forcing carriers to hire only drivers with clean records, which is not a bad thing.

Still, truck driving is a solid, middle class job requiring a skill that can be gained in 20 weeks. Very few college graduates make that kind of money after four or five years of a taxpayer-financed university education.

Two thoughts. First, jobs out there, even in this economy, and not just in trucking.

Second, Arkansas’ education system and workforce policies should be about filling jobs as much as creating them. Yes, Arkansas should nurture high-tech companies and the so-called “jobs of the future.” But Maverick is ready to hire 400 people now, and those jobs don’t require constructing college classrooms or remaking the K-12 public education system. Plus, truck driving jobs can’t be outsourced to China. Diesel Driving Academy students are eligible for federal student aid. Could Arkansas also create or at least encourage truck driving scholarships or loans?

This is not just about driving trucks. It’s about the value Arkansas places on work that doesn’t require a desk or a college degree. In the recent fiscal session, Sen. Jane English, R-Little Rock, changed her vote on the private option from a no to a yes as part of a deal to revamp the state’s workforce training system. English, who has worked years in this field, says the current system is too duplicative, too inefficient, and doesn’t meet the needs of employers or workers. Young people are not encouraged to work in skilled, blue-collar jobs. People aren’t being trained for the jobs that actually are out there.

That would include truck driving, where 400 people could make $50,000 a year, if Maverick Transportation could only find them.