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Empowering Human Capital

by Patrick Graham

Empowering Human Capital

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Picture by Chris Cureton

January 5, 2012

When I first arrived as a freshman on the campus of Johnson C. Smith University in August of 1988, I was excited about the new opportunities that awaited me in my new home.  Charlotte was a growing city with a new coliseum on the way, a large banking presence, growing airport, and a destination for new talent from around the country.  At first glance, it seemed a total change from the economically and racially segregated streets I experienced in my hometown of Long Beach, New York, where African-American, Hispanic Americans, and some poorer European Americans literally lived on the other side of the railroad tracks.

As I explored my new environment, it did not take me long to realize as I walked down streets such as Beatties Ford Road, or drove through other streets like Queens Road, that Charlotte struggled with the same issues created by social and economic segregation as other communities throughout our nation.  Today, as President and CEO of the Urban League of Central Carolinas, I witness the effects of that isolation in the people we serve each day. Our recent economic downturn and propensity to live in economically, and many times ethnically, segregated neighborhoods aids in the creation and sustaining of disparities that creates pockets of human and talent waste.  In other words, potential human capital that could aid our region in its growth goes untapped.    

We Need New Philanthropic and Leadership Perspectives

Charlotte has a strong history of economic, civic, and philanthropic leadership.  The development of its banking industry, civil and educational rights movements, and ranking as one of our nation’s top philanthropic cities is a testament to some our social and economic engineering.  Current examples of initiatives to address gaps are Project L.I.F.T. (Leadership and Investment for Transformation) in the West Charlotte High School corridor to lift graduation rates, and the Critical Needs Fund to address basic emergency needs.

Graduation rates and basic needs are important, but they are only useful if they are connected to a much larger project of economic and educational empowerment in the neighborhoods most in need of such initiatives.  These initiatives also rely too heavily on the thoughts and motivation of older and established leadership. 

While I believe our Charlotte Region’s philanthropic strength and established leadership give us sturdy shoulders to stand on, there is a need for new philanthropic and leadership perspectives. Leaders must view the educational and economic development of communities facing the gravest disparities as sources of human capital that will help our region and nation gain a competitive edge in a global economy. 

For example, Evergreen Cooperative in Cleveland, Ohio developed an innovative job model with the assistance of the Cleveland Foundation, Case Western Reserve University, City of Cleveland, Cleveland Hospitals, and several businesses.  Evergreen has become an employee-owned cooperative specializing in Green and Solar technologies. It produces millions in salaries for employee owners that come from low-income and disenfranchised neighborhoods. The collaboration between the philanthropic and business community has not only empowered low-income residents to own their own multi-million dollar business, but also has given the Cleveland area competitive edge in a growing global field.  

Locally, the Levine Foundation invested $300,000 into the Urban League of Central Carolina’s 21st Century Workforce Initiative this past year. The Levine Foundation’s investment was part of the first $700,000 invested by several corporations and private donors into the program for national certifications in broadband and fiber optics, heating, ventilation and air-conditioning, and solar power.  During the first year of their investment, local individuals from low-income neighborhoods earned $7,490,000 in salaries.  It is estimated that these individuals, accounting for displacement, will earn $18,275,600 over three years.  

Just as important, the energy created around the opportunity led the Urban League to become an owner of its own fiber optic school and allow participants to perform contract work in local solar power farms in Kings Mountain, North Carolina and develop other contracts as far as Hawaii in the spring of 2012.

Evergreen and the 21st Century Initiative are just a couple of examples of long-term philanthropic investments that empower struggling neighborhoods and also give the region a competitive edge with a local workforce resource.  Both examples were beneficial for local people struggling with self sufficiency and the local economy.  Imagine if more collaborations and dollars were invested in these types of initiatives.   

Disparities and our Competitive Edge

The recent revelation from the Pew Research Centerindicating that wealth gaps between “whites” and “minorities” in the United States have grown to their widest levels in 25 years is alarming.  The median wealth for a European American household is $113,149 compared to $6,325 and $5,677 for Hispanic American and African American households.  Regionally, the signs of this trend are statistically present as well.  From 2007-2009, the median household incomes for African American and Hispanic American households in the greater Charlotte region were approximately $33,799 and $35,596, compared to $55,674 and $70,774 for European American and Asian American households, respectively. 

The economic disparities are mirrored in education. According to the 2009 Programme for International Student Assessment, our nation’s 15-year-old students ranked 14th in reading, 17th in science, and 25th in math out of 34 countries.  Regionally, this is reinforced with lower cohort graduation rates and lower pass rates in key subject areas such as science and reading for Hispanic Americans and African Americans.  For example, Hispanic Americans had a four-year cohort graduation rate of 59% compared to European Americans at 82%.  Only 53% of African Americans passed the end-of-year science exam for eighth grade in 2010, compared to 86% of European Americans.  The percentages for the end-of-year eighth grade reading exam were 54% and 83% respectively.  This means many of our students are failing in areas that directly relate to 21st century skills development and needs in our global economy.

However, studies such as Programme also reveal some great opportunities for us.  It is interesting to note that our best and brightest rank well with other international students, but we do not numerically produce enough students that perform at high levels, especially in science, engineering, and other technical areas.  Our lack of interest, attention, and support for developing people in communities facing disparities creates intellectual, entrepreneurial, and workforce shortages that could be partially remedied by empowering the untapped talent of those individuals represented by the statistics above.  

The emphasis on entrepreneurial and workforce development cannot be overemphasized as part of the equation, especially for communities facing our gravest disparities. For example, this year we have seen the African American unemployment rate in Charlotte climb above 19%, approximately three percentage points higher than the national average for the same group.  As cited in the Johnson C. Smith University 2010 white paper, “Gaining Traction in Doing Business in Charlotte, North Carolina: Compelling Reasons for Community-Wide Support for Minority Owned Businesses,” many minorities had to start businesses with personal finance without much access to capital from traditional lending sources. Many minority business owners use home equity as a primary source of personal assets. Our current market has not proven friendly to home values, especially in minority neighborhoods that face disparities. 

Furthermore, home mortgage denial rates for the entire region are 23% and 26% for Hispanic Americans and African Americans, approximately 1.6 to 1.8 times higher than that of European Americans at 14%.  This means that lower median incomes, lack of access to capital for entrepreneurial ventures, higher denial rates to establish wealth, and inadequate education models negatively affect job creation, intelligent consumer bases, human services, and the economic bottom line of neighborhoods facing disparities and our regional economy as a whole.  Thus, the impact goes far beyond those communities directly affected.

A New Agenda for a Competitive Edge

Our future as a region is also dependent on the type of talent we develop.  The Charlotte region is well known for its strength in banking and is still the second largest banking center in our nation.  However, our greatest strength may also be a weakness if our workforce is totally dependent on the banking industry, as demonstrated by the problems with our recent housing bubble.  Organizations such as the Charlotte Chamber and Charlotte Regional Partnership have been actively recruiting alternative businesses and industries to the region in the areas of green or sustainable energy, film, defense, and other 21st century fields.  One of the most important factors to successful recruitment of these industries is the education and talent of a potential indigenous workforce and qualified entrepreneurial businesses.  Untapped human capital in struggling neighborhoods could help us address such needs.

Accessing untapped talent requires aligning our post and secondary education models with 21st century job trends and devoting greater attention to workforce and entrepreneurial development in communities with the highest rates of unemployment and under-employment.  New scenario and application-based curricula with the use of technology in classrooms require development.  Special attention must be given to schools with dropout rates of 20% or higher, with alternative learning practices and heavy emphasis on one-on-one mentoring.  Just as important, we must revisit school districting and mixed-income housing policies that will lead to more diverse and stronger educational communities.

From an economic perspective, we must increase entrepreneurial and bankability training for potential business owners that are responsible for most of our employment.  There is a need to revisit lending practices and risk factors associated with lending to minority and small businesses.

For example, Carolina Premier Bank and the Urban League of Central Carolinas launched an initiative for a new bank concept, Urban League of Central Carolinas Bank (ULCCB).  The ULCCB will operate as an affiliate of Carolina Premier to help low-income and non-banked customers become financially literate by teaching real-life banking skills through their own bank accounts. The venture will allow individuals to have paperless accounts to transact business with a very low fee structure along with a financial coach to help develop goals. This will include small business education on bank transactions and how to become more attractive to lenders. The ULCCB will consist of a Community Advisory Board that will include advisers from local neighborhoods. The program provides a way for struggling individuals to become banked and have an actual stake in the development of the financial institution and education.

In addition, we must make more training available in new 21st century industries to expose more individuals to alternative careers.  Just as important, we must be willing to set measurable metrics for the increasing of minority and small business contracts in the public and private sectors and home lending to communities most impacted by foreclosure.  Like many of the aforementioned examples in workforce development and financial literacy, these approaches demonstrate greater possibilities for our community’s financial stability and competitiveness when we invest time, talent, and treasure into such ventures.

If We Have the Political Will

There is no doubt that the aforementioned approaches will require us to change some of our philanthropic and leadership models and develop the political will to implement a new inclusive vision.  We will have to make more long-term investments in communities that go beyond what we interpret as immediate needs. The need to develop more social capital ventures as exemplified by organizations such as Evergreen Cooperative gives a blueprint for new leadership and philanthropic thought around communities that face disparities. It moves our leadership and philanthropic community away from paternalistic initiatives that simply address immediate needs, but also creates new leadership within neighborhoods and financial resources that are owned by residents and used in our local markets.     

As the Cooperative example suggests, this shift will require public and private sectors to establish partnerships that foster the development of talent in neighborhoods most impacted by disparities through long-term investments in 21st century education, workforce and entrepreneurial development, and social capital ventures.  These are investments that will lead to a weakening of our disparate gaps and a strengthening of our region's competitive edge for everyone.  

You and Your Expertise

I urge more citizens to get involved in local education, financial literacy, workforce and entrepreneurial development, and social capital initiatives.  Specifically, more mentors and tutors in schools and service agencies with expertise in science and technology are needed. More successful entrepreneurs and corporate leaders are needed to provide mentoring to underdeveloped communities and non-profits for entrepreneurial and social capital venture development.  We also need more individuals in our financial sector to get involved with financial literacy coaching over longer periods of time with individuals and families in disparate communities and those receiving services from social sector agencies.   Just as important, we need individuals to advocate in the public and private sectors for allocation of more financial resources toward these empowerment initiatives that yield a return for all.

Why I Advocate

Two weeks ago more than 300 people gathered in the First Ward Center in Charlotte to see 108 GED and 21st Century Initiative graduates of the Urban League walk across the stage.  I had just delivered the commencement address when a friend, who is an instructor, handed out certificates with pride.  We looked at each other and smiled at the excitement of the graduates.  We also smiled for another reason.  We came from the same struggling neighborhood in New York and could remember how unlikely it seemed long ago that we would find ourselves in this position.  We remembered the people and agencies that invested in us.  I advocate because I am a living testimony of an investment in human capital that pays back dividends every day.

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Tags: african american, hispanic, socio-economic, low-income, human capital, industry, charlotte

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