JEFFREY BROWN: Now, why African-American-owned businesses are still a rarity in many neighborhoods, including minority communities.
NewsHour economics correspondent Paul Solman has been exploring that question. It’s part of his ongoing reporting Making Sense of financial news.
GIRL: Bye-bye, mommy.
PAUL SOLMAN: Maggie Anderson, her two daughters, her husband, John, nice suburban Chicago neighborhood, upscale house, upscale life. And yet these successful business professionals with brand-name MBAs felt guilty for years.
MAGGIE ANDERSON, “Our Black Year”: We thought we should be doing more, and we thought we should be doing stuff with the money that we made.
PAUL SOLMAN: Things like what?
MAGGIE ANDERSON: Make sure that whatever we do, it was with a black company, a black family company, buy a product made from a black company, use black professionals, shop in black communities.
PAUL SOLMAN: And thus the empowerment experiment, chronicled in the recent book “Our Black Year,” buying strictly from black-owned businesses for 12 whole months.
PAUL SOLMAN: Starting out, the Andersons expected some problems shopping only at black-owned stores.
MAGGIE ANDERSON: They would be smaller, selection not as great, prices a little higher. We’d Maybe have to drive a little bit. We assumed there would probably be about 20 Dry Cleaners that we could choose from, you know, just in black pockets, not in Oak Park, where we live.
PAUL SOLMAN: What they found? One black-owned dry cleaner in all of the Chicago area, about two-and-a-half miles from home, in a mostly African-American West Side neighborhood.
JAMES FORREST, business owner: Well, years ago, it used to be a lot of black-owned businesses around, and, you know, funding just went down and things just went kind of kaput after that. And it just — black-owned businesses just seemed to leave the area.
PAUL SOLMAN: So how did you survive?
JAMES FORREST: I have been in this location for about four years, and before then, my uncle owned this place for 20 years. And most of my survival came from contract business. You know, where we couldn’t, you know, get the money from the neighborhood or people come in and patronize the businesses in the neighborhood, you know, due to the lack of jobs, you know, we had to revert to contract businesses.
PAUL SOLMAN: So that explains all those Army camouflage shirts or whatever it was that I saw?
JAMES FORREST: That’s the ROTC uniforms for the City of Chicago Public Schools.
PAUL SOLMAN: Most money spent African-American consumers, even in their neighborhood shops, goes to non-black business owners, who seldom invest in or hire from the local community, something the Andersons link directly to the 14 percent black unemployment rate and other economic inequities and that they found the media failed ever to report.
MAGGIE ANDERSON: Don’t just say that black unemployment is four times that of whites. Say that black businesses only get 2 percent of the $1 trillion of black buying power, and then say that black businesses are the greatest private employer of black people.
Then you might be able to say, wow, if there were more support of black businesses, if maybe a little more of that $1 trillion got to those businesses, unemployment wouldn’t be so high.
PAUL SOLMAN: They wanted to do something extreme enough that everyone, including their fellow members of the black upper middle class, would notice.
MAGGIE ANDERSON: Most folks like us think that, that we are giving back to the community by living well. We’re stereotyped negators.
PAUL SOLMAN: Is that true, that middle-class black folk think that just being middle class or upper middle class is enough?
JOHN ANDERSON, “Our Black Year”: I do think that is a prevailing sentiment. There’s almost a pride, for lack of a better word, in being able to kind of disassociate yourself from the African-American community, from the, you know, lower economic echelons in the community.
MAGGIE ANDERSON: It’s not a lack of caring. It’s not that we don’t care about what’s going on in the communities that we have for the most part left. It’s that we don’t see a target anymore. There’s nothing to go after. So that was really the point of the experiment.
PAUL SOLMAN: By month three, the Andersons had found their dry cleaner, and a black-owned grocery store and a black-owned gas station 40 miles away, all located in largely black neighborhoods.
MAGGIE ANDERSON: We found a cool way to get gas. We would send that gas station our money, and the gas station owner would send us a gift card, and he was part of the BP franchise.
So we got gas, food, and a dry cleaner. Everything else, we were just desperate and hopeful that something would pop up. And in the third month, we got a general merchandise outlet. And in the fourth month, we finally found a place to buy clothes and shoes for our daughters.
PAUL SOLMAN: In the meantime, they found a shop that described itself as a grocer, but fell somewhat short.
MAGGIE ANDERSON: We thought it would be like kind of a small grocer, where we could buy fresh meats and produce. There was nothing fresh in there. It was just canned goods, some frozen burritos, frozen pizza.
So that was the first thing, like, wow, this place is terrible, and we — the people who live in this community have to put up with it.
PAUL SOLMAN: Eventually, the Andersons found an actual full-service black-owned grocery store.
And there used to be a lot of black grocers in America.
JOHN ANDERSON: Thousands nationally, yes.
PAUL SOLMAN: And now?
JOHN ANDERSON: In January of 2009, there was one black grocer in the entire state of Illinois, one. That was it.
PAUL SOLMAN: The Andersons enlisted John’s alma mater, the Kellogg Business School, to survey the whole country.
MAGGIE ANDERSON: We used to have 6,400 in the 1930s. We had 19 full-service grocery stores at the turn of the century. Now those researchers at Kellogg who helped us with our study, they could only find evidence of three — three black-owned full-service grocery stores in all of the United States of America.
PAUL SOLMAN: So what happened to all those black-owned businesses? Competition from mega-stores like Star Market or Wal-Mart is one answer.
But a fuller answer may be integration, says Cornell economist Vicki Bogan.
VICKI BOGAN, Cornell University: Priors to desegregation — actually, my parents are in that generation, in which they weren’t allowed to patronize certain kinds of restaurants. In that particular environment, if you were a black-owned restaurant, you were guaranteed a certain number of customers that didn’t have any other option of eating in other establishments if they wanted to eat out.
PAUL SOLMAN: John Anderson agrees, but adds one more troubling factor.
JOHN ANDERSON: The white man’s ice is colder.
MAGGIE ANDERSON: Yes.
PAUL SOLMAN: White man’s ice is colder? What is it?
JOHN ANDERSON: In the black community, there is a joke about how sometimes we feel like our goods and services are inferior, like a psychosis, which is disturbing, because I’m not aware that this exists in other ethnic communities.
MAGGIE ANDERSON: It was the one-two punch of integration. Of course integration was great, but economically it had a deleterious impact on our community.
The first punch was, we were so happy to have the opportunity to shop at Woolworths and Sears that we felt like we were sticking it to somebody by going there. Hey, I’m going to spend all my money with you and show you that my money is just as green.
JOHN ANDERSON: Right, just as green.
MAGGIE ANDERSON: Then, the second punch was that those retailers started recruiting my husband and me. So when I’m coming up in the ’70s, the big goal of any momma, any big momma is for her daughter or her son to get a good job at a big white company.
So our would-be entrepreneurs, our talented 10th, as we call them in our community, we flocked to corporate America, and they got all our money, and they got all our talent.
PAUL SOLMAN: If there isn’t much disagreement over why the black community lost its retail jobs, there’s plenty over what to do about it.
Cornell’s Bogan makes two points. First, the key need is for more capital to be generated by and invested in the black community.
VICKI BOGAN: Just on a day-to-day basis, black businesses generally don’t have the same access to capital, financial capital, even human capital, that other types of businesses do.
PAUL SOLMAN: But the second point is that buying black won’t make much of a difference, even if you do find black retailers, says Professor Bogan.
VICKI BOGAN: Even if you confine yourself to just purchasing from black merchants, where are those black merchants going to get their products? In today’s global economy, it’s likely that their suppliers are not going to be African-American; they might not even be American.
PAUL SOLMAN: But one business the Andersons found certainly is, black-owned Covenant Bank, which also reinvests in the community.
Board Member Kim Jackson.
KIM JACKSON, Covenant Bank: The percentage of dollars that go out of this community is far beyond most neighboring communities. And we definitely need to see that decreased. We can and have supported ourselves and sustained ourselves. We need to go back to that.
PAUL SOLMAN: And Maggie Anderson’s efforts do seem a step in that direction.
What percentage of your customers would you guess are like Maggie Anderson, coming here specifically to patronize a black business?
JAMES FORREST: I would say maybe 10 percent of my customers, you know, because of Maggie.
PAUL SOLMAN: So before Maggie came here and wrote about you, what percentage of your customer base was here to patronize a black business?
JAMES FORREST: I would say, before, maybe 1 percent.
PAUL SOLMAN: The Anderson effect, making a small dent in inner-city Chicago, which needs all the economic revitalization it can get.