CT minority businesses still underrepresented
Dr. Fred McKinney
The Greater New England Minority Supplier Development Council (GNEMSDC) is the largest minority business development organization in New England, whose more than 200 corporate members include Northeast Utilities, United Technologies, Xerox, Pitney Bowes, The Hartford, and Aetna. The mission of the organization is to help these large corporations source goods and services with certified minority business enterprises (MBEs). The GNEMSDC has over 500 MBEs in our direct network and as the regional affiliate of the National Minority Supplier Development Council is part of a network that includes over 3,500 corporate members and 12,000 certified MBEs who in 2012 had combined sales of over $120 billion.
In 2012, the GNEMSDC had 124 certified MBEs in Connecticut with combined sales of $322.9 million; average sales per firm were slightly over $2.6 million. Connecticut MBEs employed 2,587 workers. About 46 percent of the firms were in professional, scientific and technical service industries.
In a state with 3.6 million citizens, 88,000 business establishments, and 1.4 million workers, MBEs are barely a drop in the bucket. This is not to say that as an organization we are extremely proud of the MBEs that have overcome great odds and barriers to be significant organizations and leaders in their communities. But these numbers relative to the size of the state's economy suggests that we still have a very long way to go before MBEs play a role commensurate with the population of minorities in the state.
In 2010, Hispanics (14.2 percent), Blacks (11.2 percent), Asians (4.2 percent), multi-race (2.1 percent) and Native Americans (0.6 percent) represented 32.2 percent of the state's population. All minority businesses represented 12.4 percent of business establishments. Based on these numbers, minority businesses are underrepresented in the state.
There are several steps that can be taken to improve the performance of MBEs and other minority businesses. The first is that MBEs suffer from a lack of personal wealth, which impacts their ability to get loans from financial institutions. A study by Thomas Shapiro, Tatjana Meschede, and Sam Osoro of Brandeis University found that the black/white wealth gap tripled between 1984 and 2009, from $84,000 to over $239,000. The median wealth of black households nationally is less than $10,000. It is hard to finance a business if the owners and their families do not have the personal financial capital to grow the business.
There are other problems related to discrimination in housing markets, poor education systems, lack of social capital and generally being unconnected that make it difficult for minority businesses to thrive in the state. But the one factor that perhaps could have the biggest impact, but hasn't, is the role of state government.
The state of Connecticut is one of the largest buyers of goods and services in the state, yet purchased an anemic $4 million from certified MBEs in 2008, according to the latest data available from the Connecticut Commission on Human Rights and Opportunities. This represents less than 1 percent of purchases by the state. In contrast, the Commonwealth of Massachusetts with nearly twice the population of Connecticut, spends 70 times as much with certified MBEs and over 100 times as much from non-minority women owned enterprises. The only reason for this gaping difference between the two New England states is the culture of political leadership on matters of minority economic development. Two Massachusetts governors — William Weld and Deval Patrick — issued executive orders clearly stating that the Commonwealth understands the importance of minority business development, and Connecticut leadership either does not, or is and has been completely ineffective. The Massachusetts governors established goals for state agencies and a reporting mechanism for the leaders of those agencies to follow.
The political culture can be changed in Connecticut, and I would add it does not require a disparity study. Massachusetts has been able to achieve these impressive results without a disparity study. If Connecticut spending with MBEs was similar on a percentage basis as spending with MBEs in Massachusetts, Connecticut MBEs would have an additional $100 million in sales. Imagine the multiplier impact of that spending in communities like Hartford, Bridgeport, New Haven, and Waterbury.
In the meantime, minority businesses in Connecticut will continue operate on the fringes. It will take both political and business leadership to change this, but I believe it can be done. This is the mission of the GNEMSDC.
Fred McKinney is president and CEO of the Greater New England Minority Supplier Development Council in Hamden
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