Newark: Economic Assets and Prospects For Growth, Along With Problems

Joe Tyrrell | June 13, 2016 | Politics
Lack of financial resources and connections among residents could hold city back

Du Kelly, speaking at "Power, Politics, and Community Reinvestment," a conclave called by Newark Mayor Ras Baraka.
Newark has more economic resources than generally acknowledged, but the city’s business and political leaders should do more to exploit and expand them, according to participants in a weekend policy conclave called by Mayor Ras Baraka.

Many of the discussions at “Power, Politics, and Community Reinvestment” pivoted around 2042, when non-whites are projected to become a majority in the United States, with this year’s presidential election providing a short-term impetus.

The goal is to “initiate a larger conversation” about how Newark and other cities and communities of color can sustain themselves over the long haul, Baraka said.

“With five-six decades of double-digit poverty, unemployment and a wealth gap that seems to be growing in our communities, it is time for us to make a serious statement and do it in a very deliberate way with solutions and not just say that we’re going to elect somebody,” Baraka said.

That attracted some prominent locals, but also participants from around New Jersey, elsewhere in the country, and Africa. The resulting conversations ranged wider than those at most policy forums, with entertainers, athletes and start-up businesses represented alongside political heavyweights.

“Now you have educators, you have owners and entrepreneurs, you have artists of the city talking about reinvesting in the community,” said one of the latter group, “DoItAll” Du Kelly, a media maven, producer and actor perhaps best known from the 1990s hip-hop group Lords of the Underground.

Running through the list of panelists for the session, Du Kelly marveled “(We) would not be at the same table at the same time” as powerful officials. The combination produced the sort of dialogue left unsaid at public policy meetings elsewhere in New Jersey.

“American exceptionalism has been the dominant narrative” in our national mythology, said Khalil Muhammad, director of the Schomburg Center for Research in Black Culture in Harlem. But that forces some strained explanations in places beset by a lack of jobs and poor educational outcomes, he said.

“When five out of 30 kids succeed” in going on to college, “we’re told that’s the norm,” Muhammad said. Yet the “per-capita increase in correctional spending over the last 30 years has far outpaced the increase in education spending.”

At another session, music producer and rapper Deric “D-Dot” Angelettie asked, “What is life?” Since his panel was asked to consider whether life imitates art or vice versa, he was right on point.

A recurring concern running though the sessions was whether communities of color are building sufficient connections, political bases, and wealth to capitalize on the country’s changing demographics.

A South African participant, Ron Kunene of Montlekar Holdings International, punctuated the misgivings with an observation on his own country. Since ending the apartheid system of white domination in 1994, non-white South Africans “might say we have political freedom,” Kunene said. “The economic freedom, 98 percent of it is still in the hands of the white folks.”

There was some limited good news on that subject from Kevin Lyons, a professor of supply chain management at Rutgers University Business School. Lyons said political policies have eroded the national manufacturing base in the United States and exported jobs but pointed out that the city still has a functioning core of industries.

Most of the city’s 400-plus manufacturers may be small businesses employing a total of roughly 10,000 workers, but Lyons said they are diversified across a multitude of sectors, with ready access to transport and markets.

“It is safe to say that Newark is one of those rare cities that touches every part of the global economy,” he said.

But he singled out Newark Beth Israel — he and colleagues work with the hospital and its parent, Barnabas Health — as an example of how decisions by the city’s core businesses and institutions often ignore local small and medium-sized businesses.

The hospital annually buys $150,000 worth of textiles from two city companies, which sounds substantial, but not when compared to “$5 million worth of textile purchases from outside the region,” Lyon said. That is not from lack of local suppliers, as “there are nine companies in Newark that have the capacity to deliver more than $15 million worth of textiles,” he said.

Of Newark’s roughly 45 anchor business, non-profit and government institutions, “only 3 percent of their purchasing power is actually directed at Newark,” Lyons said.

That applies to the city as well, said Randall Pinkett, CEO of BCP Partners, who pointed out that “87 percent of Newark contracts go outside the city.” Deputy Mayor Baye Adofo-Wilson pointed to measures passed by the city council to raise the total.

Small businesses owners, especially minorities, often lack contacts and are unaware of government programs or other potential funding, said Taneshia Nash Laird of Legacy Business Advisors.

“The funding for all these things we’ve talked about already exists, we just haven’t been talking about it,” said Laird, a former economic developer for Trenton. When she was involved with “gentrification” development in New York, “I had one black client.”

Brian Gerrard, one of the developers of the highly successful black dating app, BAE (Before Anyone Else), pointed to the relative low number of wealthy African-Americans as a problem for those trying to follow in their footsteps.

After college, “I have white friends who said, ‘Oh, I called my dad, some of his friends raised $800,000” for new businesses. “We didn’t have that,” Gerrard said.

When finance author Tiffany Aliche of the Budgetnista blog was growing up in Newark, her parents were careful to invest and spend wisely, she said. Both had been professionals in Nigeria, where her father was an economist.

“I didn’t realize that other people didn’t understand how money works” until she got older and began talking to adults in the community, she said. Aspiring entrepreneurs, or just consumers, need more education about what to do with their money, she said.

“It’s about really changing mindsets,” said Pinkett, a one-time winner of prospective Republican presidential candidate Donald Trump’s “The Apprentice” television show. The leading indicator of whether someone will own a business is “your parents owned a business,” Pinkett said. “We have to create more entrepreneurs, and that has to be done while they’re young.”

Baraka pointed to Newark’s incubator for technology start-up companies, but Pinkett suggested the city do more to help existing small- and medium-sized businesses. “They are already in the game” and can make immediate impacts, he said.

Anti-Trump sentiment was an undercurrent at the conference, where 20-year-old Chicago activist JayMal Green earned chuckles and murmurs of approval for listing “we shut down a Trump rally” among his accomplishments.

But while shunning the candidate, speakers also pointed out that many of his supporters are working-class and middle-class whites who are experiencing the same sort of economic pressures and health problems — including rising suicide rates and declining life expectancies — that have long afflicted communities of color.

The politics also presented some thorns for the Democratic elected officials who joined Baraka at the event.

Green is better known for leading protests against Chicago Mayor Rahm Emmanuel, the former chief of staff for President Barack Obama. Without attacking the Democrats’ prospective nominee, former Secretary of State Hillary Clinton, by name, a number of speakers criticized the party’s neoliberal policies as unhelpful to minorities and working people.

In 2010, the median net worth of black families was $4,900, compared to $97,000 for white families, according to an analysis of Census and labor data by the Economic Policy Institute, a Washington, D.C., think tank. Black family income dropped 10.1 percent during 2007-10, the Great Recession, almost twice the decline for whites, the study found.

Baraka acknowledged that Newark is continuing to cope with housing issues, which have been low priorities for the administration of President Barack Obama. The city continues to face “a huge foreclosure crisis” as banks, hedge funds, and other note holders evict residents, often with “underwater” mortgages for more than their homes are worth.

“There was a huge amount of wealth that was lost in the foreclosure crisis, particularly in the African-American community, in cities like Newark that have never fully recovered in terms of jobs and the economy,” Baraka said.

Newark officials have joined their counterparts in some other cities, notably East Orange, in pushing the country’s major mortgage guarantors, the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), to change their foreclosure policies for such buyers.

Operating under federal control, the agencies recently sold several hundred
mortgages to Newark Community Capital, a non-profit that tries to modify them so that borrowers can afford to stay in their homes. But thousands more mortgages continue to go to hedge funds and other investors.

“We’re trying to get Fannie and Freddie Mac to sell the mortgages to non-profits so people can stay in their homes,” Baraka said.

Conference committees were working on recommendations on these and other issues for potential action by the city, the mayor said.