An interview with Talitha Batts, Director of Advocacy at the The Research, Policy and Impact Center of the National Institute of Minority Economic Development conducted by WNCU during the Executive Networking Conference 2022.
Presentation from the National Institute of Minority Economic Development Executive Networking Conference 2022
Once a state with a clear racial binary (white/black), North Carolina continues to become more diverse as a result of natural increase (births) in minority populations, in-migration from other parts of the United States, and International migration of refugees and immigrants settling in NC. These demographic changes have great implications for housing equity, access to healthcare, educational opportunity, and economic development for North Carolina’s diverse minority communities.
- Treasury Announces New Steps to Increase Affordable Housing Supply and Lower Long-Term Housing Costs for American Families: The U.S. Department of the Treasury announced new guidance to increase the ability of state, local, and tribal governments to use American Rescue Plan (ARP) funds to boost the supply of affordable housing in their communities.
- Raleigh first time home buyers priced out despite financial assistance programs: Raleigh’s Homebuyers Assistance Program would typically assist about 50 to 60 people a year before the pandemic and housing boom. So far in 2022, only five people were able to close on their homes with assistance through the program.
- Evictions begin to creep back up in parts of central North Carolina: As federal pandemic relief money runs out, evictions across North Carolina are again beginning to increase. While eviction rates are currently lower across a majority of the counties, some counties historically report almost double the rates elsewhere in the state.
- Greensboro voters approve $135 million in bond measures: $30 million in housing bonds will go toward affordable housing, making homeownership easier, and making some neighborhoods more attractive to buyers.
- Houses were once plentiful across the U.S. Now half of cities don’t have enough homes: More than half of the nation’s metropolitan regions had an undersupply of homes in 2019, a sharp increase from one-third of cities in the 2012. The nation is short 3.8 million homes to meet its housing needs.
- NC Legislature Idles for Now on Medicaid Expansion Agreement: General Assembly leaders acknowledged on Tuesday that a compromise for North Carolina to finally embrace Medicaid expansion likely won’t come quickly and pinned success for a near-future agreement in part on buy-in from a key health care interest group.
- NC overdose deaths increased more than the national average in 2020: Drug overdose deaths surged by 30% nationally and 40% in North Carolina during the first year of the pandemic. Across the country, Black and Native American communities saw higher rates of overdose deaths and those disparities are worsening.
- Uterine cancer cases rising, outcomes worsening especially for Black women: Researchers at UNC Lineberger Comprehensive Cancer Center are investigating the why Black women die of uterine cancer at twice the rate of white women and are looking at factors of tumor biology, access to care, lifestyle, and behavior to improve outcomes and close the racial disparity gap.
- Vanderbilt, UNC and Duke Nurse-Midwives Join Forces to Reduce Black Maternal Health Risks: Nurse-midwives and educators from three prominent research universities form the Alliance of Black Doulas for Black Mamas to improve pregnancy outcomes in Black communities by providing specialized training for doulas.
- NC Health Center Aims to Reduce Mental-Health Stigma Among Latinos: Camino Health Center is spreading the word about Spanish-speaking therapists and counselors available to residents in the Charlotte area, addressing the stigma and lack of Spanish language resources in the community.
- Biden-Harris Administration Advances Equity And Economic Opportunity Through Federal Procurement And State And Local Infrastructure Contracting: Administration Announces Record Contract Spending on Small Disadvantaged Businesses and New Steps to Create Contracting Opportunities for Disadvantaged Businesses through the Bipartisan Infrastructure Law
- U.S. Senate passes bipartisan bill to boost Cybersecurity Job Training at HBCUs: The Cybersecurity Opportunity Act requires that 50% of grant funds must go to HBCU’s, tribal, and minority serving institutions in order to support greater diversity and equality of opportunity in the cybersecurity field.
- Lenovo and Panthers partner to support NC small businesses: Lenovo and the Carolina Panthers have announced the return of the Empowering the Carolinas contest to celebrate and uplift small businesses – especially those that are women and minority-owned – across North America through grant and product donations, mentorship, and community engagement activities.
- US sees union boom despite big companies’ aggressive opposition: Wins for Amazon and Starbucks workers shows labor movement surging after years of decline – but pushback has been fierce, and has come amid allegations of union-busting.
- UNC Charlotte alum paving the way for diverse developers: Jane Wu, founder of Panorama Holdings LLC, has donated $50,000 to UNC Charlotte to fund a scholarship for students from under represented backgrounds studying commercial real estate.
- NC legislative proposal would dramatically overhaul how North Carolina governs its public schools: GOP sponsors push for an elected state school board, but Democrats warn against further politicizing public education.
- 144 organizations sign onto brief asking Supreme Court to order compliance with school funding plan: Attorneys filed an amicus with the North Carolina Supreme Court this week in the long-running Leandro school funding lawsuit contending the state has consistently failed to provide every child in North Carolina with access to the educational opportunities to which they are constitutionally entitled under the previous ruling.
- New report delves into state of early childhood education in Western NC: Early childhood education opportunities and challenges across the state’s 18 westernmost counties have decreased since 2019 and put a cost burden on families, leaving many to enroll in lower-quality programs.
- Half of NC’s community colleges not within walkable transit: In North Carolina, more than 500,000 people attend community colleges annually. Without consistent and easily accessible transit options students that lack access to a car could be discouraged from seeking higher education — a significant driver of economic mobility in the state.
- NCAE opposes plan to pay NC teachers based on performance instead of their experience: A state commission is working on a new licensure and compensation model that would pay teachers based on their ratings on student test scores.
- New Policy Protects People with Vouchers Seeking City-Supported Housing: The Charlotte City Council on Monday voted to adopt a new city policy that protects prospective tenants in City of Charlotte-supported housing developments from being disqualified from renting a unit because they participate in a rental subsidy program.
- Residents urge High Point city council members to rethink vote against fair housing: Residents in the city of High Point are urging city council members to rethink their vote against becoming a fair housing assistance program in May which would provide freedom from housing discrimination based on race, color, national origin, religion, sex, familial status, or ability.
- Congress Finds Private Equity Kept Buying Homes, Hiking Fees Over Pandemic: A survey by the house financial services committee found private equity homeownership has been growing in low-income neighborhoods where companies have increased tenants fees 40% between 2018 and 2022.
- HUD Announces 24 Programs to Join Biden-Harris Administration Justice40 Initiative: The programs included in today’s announcement create affordable and sustainable housing and meet a range of different housing needs for individuals and communities, including single- and multi-family housing and housing for seniors, persons with disabilities, and tribal communities.
- New NC funding will help expand affordable housing for those with specific needs: The North Carolina State Housing Finance Agency has approved $4.3 million in funding for properties geared toward those with special housing needs, including military veterans, children aging out of foster care, and people with disabilities who fall below 50 percent of the area median income.
- Housing Connections Initiative working to combat affordable home crisis: The North Carolina Coalition to End Homelessness has helped house more than 2,300 people by providing financial incentives and assistance to landlords willing to work with households coming out of homelessness.
- How healthy are NC’s women, and are their needs ready to be met?: The women’s health report card from the UNC-Chapel Hill Center for Women’s Health Research spotlights promising trends in preventative health and adverse trends in perinatal and chronic health. Notable racial disparities in the data suggest differences in access to health care services and screenings.
- UNC, N.C. A&T Team to Lead Project to Address Social Determinants of Health in Women of Color: As part of the American Heart Association’s pledge to address social determinants of health in women of color, Alison Stuebe, MD, and her team of researchers received a $2.4-million grant to develop a curriculum that cultivates trust among patients and health team members.
- Biden Signs Executive Order on Access to Abortion Services: Executive order directs federal agencies to take steps within their power to safeguard abortions and reproductive health services, including ensuring the availability of emergency contraceptive medications and providing legal protection for out-of-state patients and abortion providers.
- Blue Cross NC taps Headway to expand mental health access for underserved members and children: In its latest effort to address critical mental health needs in the state, Blue Cross and Blue Shield of North Carolina is tapping a fast-growing mental health startup to help expand its network of behavioral health providers to underserved communities including children from diverse racial and ethnic backgrounds.
- Medicaid expansion would help people incarcerated in jails and prisons: Thousands of people currently cycling in and out of jails and prisons are among the roughly 600,000 who would get health coverage under Medicaid expansion, potentially transforming North Carolina’s justice system.
- NCDHHS Announces New National 9-8-8 Number for People in Mental Health Crisis: Starting Saturday, people in mental health crisis can dial 9-8-8 to reach the National Suicide Prevention Lifeline and get immediately connected to trained crisis counselors 24/7.
- Can people live on minimum wage in NC? Here’s how it compares to cost of living: With inflation affecting the cost of everything from food to gas, it’s getting harder for minimum wage employees to afford necessities. While the minimum wage in North Carolina is $7.25, the living wage for a single adult with no children in the state is $17.14. For single adult with one child, the living wage is nearly double.
- Climate Change, Extreme Temps Affect NC Black-Owned Small Businesses: In North Carolina, small Black-owned businesses say they’re struggling to cope with losses and damages from extreme weather events including floods, extreme heat, blackouts or severe storms.
- Equal Pay Gains Dampened as Wage Gaps Widen for Women of Color: Some incremental progress has been made in the effort to bring equal pay to women in the workplace, but data indicate women of color still face certain inequities exacerbated by the Covid-19 pandemic, widening their respective wage gaps from last year.
- Interest rates, price increases stand to have outsized effect on Black consumers, businesses: Black Americans — who already make less money, have a harder time securing loans for their businesses and have less financial security — stand to be hurt more than other demographic groups in this uncertain economy.
- CNBC Names North Carolina as America’s Top State for Business in 2022: North Carolina ranked highly in developing and training a strong workforce due to the Longleaf Commitment Community College Grants Program and the North Carolina Child Care Stabilization Grants and supported businesses through the pandemic with the Business Recovery Grant Program and ReTool NC Program for women- and minority-owned businesses.
- Truist announces $120 million commitment to strengthening small businesses: The commitment includes $30 million in philanthropic grants to support nonprofits who assist small businesses and diverse entrepreneurs and $5 million in philanthropic grants, which will support technical assistance, small businesses and volunteerism.
- Budget bill sent to Cooper puts NC’s controversial school voucher program on path to dramatic expansion: If the bill becomes law, funding for the underutilized voucher program would grow from $120.54 million to $176.54 million for the 2023-2024 school year, while traditional public schools are grappling with funding challenges and staffing shortfalls.
- U.S. Department of Education Awards Final $198 Million of American Rescue Plan Higher Education Funds to Support Students at Community Colleges, Rural, and Minority-Serving Institutions: Of the funds awarded, almost 90 percent will go toward Historically Black Colleges and Universities (HBCUs), Minority Serving Institutions (MSIs), community colleges, rural institutions, and institutions serving large populations of low-income students. The majority of institutions are also required to distribute roughly half of all grant funds directly to students with the greatest need.
- Education advocate joins task force to increase teacher diversity: Monique Perry-Graves, the executive director for Teach for America North Carolina, recently joined the State’s DRIVE Task Force to recruit teachers of racially, ethnically and linguistically diverse backgrounds to prioritize equity and inclusion in the educational system in North Carolina.
- N.C. A&T Works with Guilford County Schools to Build Community Education Center: The facility will be used to address the negative impact of COVID-19 on the district’s students, families, staff and community by providing flex spaces with tutoring, adult education and community meeting rooms for students and adults.
- U.S. Department of Education Announces Engage Every Student Initiative to Ensure Every Student Has Access to High-Quality Learning: The Initiative will help communities utilize American Rescue Plan funds alongside other state and local funds to allow more students to access more programs year-round to support their academic and mental health needs.
- NCDHHS Launches Raise NC to Highlight the Value of the State’s Early Care and Learning Network: The public education campaign highlights the value of the state’s early care and learning network to support children’s healthy development as well as families’ participation in the workforce.
The Research, Policy, & Impact Center polled constituents to better understand how inflation is impacting them. Disparities are clear as 72% of minority respondents indicated that their families are experiencing moderate to severe economic hardship as compared with only 52% of white respondents. Respondents are looking to the federal government to forgive student loan debt, raise minimum wage, institute price controls on fuel and other goods, and expand economic assistance programs.
See results to the poll in the infographic below.
Minority and Women Owned Enterprises indicated that inflation has impacted their ability to make a profit:
- Imported products and shipping costs have increased. NC HUB Certified Business Expansion plans have been slow.
- The cost of fuel and raw materials has certainly impacted project costs and internal operational expenses.
- We’re experiencing delays and loss of customers because they can no longer afford the extra expense.
- We have cash flow issues as staffing costs are much higher than before.
- We are making less profit to accommodate costs.
- We are basically paying to work. With the increase of all mentioned above & the past mentioned. Due to the issues at hand, I fear that there is definitely going to be a domino effect. The worst is yet to come.
- Very little. I am consultant and sole proprietor working from home.
- Unable to operate at a full profit.
- The surge in fuel pricing for diesel is high in NC alone it’s at almost $6 per gallon,. driving trucks places us back into a pandemic, because over the road is the only way you can make money to survive, and other states are higher. While everyone else is slowly recovering from the pandemic, the transportation Industry and the restaurant industry is about to experience another pandemic, due to the inflation of fuel to deliver the goods and the influx in food prices that restaurants and grocery stores have to raise because they are being charged more and need to be able to pay their bills to keep a business
- The costs of supplies, fuel, and employees has increased, decreasing my profit significantly.
- The cost in fuel has directly impacted my services because I have to travel back and forth to client sites. I am not able to take in as many clients without having to pass some of the travel cost to a client to off-set it. I also have to go up on the price of my services due to rise in goods and materials that I use to complete the services provided to the client.
- Supplies are more expensive and transport to and from events is higher
- Significantly. Which has caused a price increase in my products and offering less options, due to increase in product supplies
- Significantly. I own a Trucking Business and the Fuel prices have caused me to take lesser paying loads for shorter distances.
- Shipping cost is higher.
- Seriously contemplating whether or not this will be the last year of business and if its time to close our doors. Still recovering from the effects of COVID on a small business with inflation and cost on the rise is what will cripple us.
- Purchasing materials is more expensive. I have switched to consulting more.
- Not directly because we work from home and do data analytics – no inventory and very low overhead costs except for travel.
- My photography business been wiped out by COVID protocols.
- my business is home-based, and I also work a full-time job. My business supports small business owners and non-profit organizations so I have seen a reduction in business because they cannot afford my services, and many have reduced their businesses.
- Most of what I do is remote. My business cost has remained the same. The financial hit is more on a personal level. I know I have to generate more business to plan for any potential losses in the future and take as much work as possible. I have expanded my workday and work weekends in order to try to adapt to the economic changes and the potential of losing clients.
- More meetings are held via Zoom or Facetime
- Man-made electromagnetic fields (as mentioned in my previous statement in this survey) is what is destroying my business and life. I am about to join a two-hour support group for folks suffering from this right now, that is hosted by the Electrosensitive Society of Canada. But yes…lower income with these higher costs in general – along with the EMF take over – have become a disaster for me.
- Lower profit
- Losing customers, expenses are high so making less money
- Less traveling for business development and networking opportunities. Fewer company-sponsored meals for the team. Searching for opportunities for efficiencies in services.
- Less money for business
- I’ve stopped the delivery service
- It’s hard to see a profit and when we increase prices to keep up with inflation we loose customers
- It’s caused us to maintain our business with our personal income. It’s draining us but we are prayerful
- It would be extremely detrimental if we did not have a healthy cash reserve. Some increases we’re able to pass on to clients. most of our biz expenses have remained stable, and others we’ve absorbed since there haven’t been too many to where it’s unbearable
- It slowed down my business because people can’t afford my services and I’m mobile
- It has impacted my business negatively. I have to pass any increases on to my customers which isn’t sitting well with them. I have to increase my pricing on bid projects to cover gas/travel and increased per diem for out of town overnight stays, not to mention the increase in costs of equipment from manufacturers. Lastly, supply chain issues have me waiting months to get equipment and in some cases up to a year. I can’t close out jobs or increase revenue if I can’t get equipment!
- It has impacted it tremendously especially the gas prices
- It has effect my business tremendously because we travel to clean medical facilities. The gas is extremely high. So I try to give the staff a little extra for gas. Which in terms it is costing me more to run the business. Money that I don’t have. I had to apply for a line of credit to really make ends meet.
- Increased operational expenses all the way around
- Income is not rising to meet the rising cost of expenses this is lowering my disposable income tremendously
- I’m definitely being impacted the gas to meet clients, the food expense if I’m meeting at a restaurant. The amount for supplies increased.
- I’m a personal trainer so for most people my services are not a necessity. People are spending more on just surviving, and they don’t seek out my services.
- I spend over 2500 a week in fuel to run my business which is extremely costly
- I provide professional services (consulting), so I haven’t noticed much of an impact. I cannot say if less businesses are soliciting professional services though.
- I buy less inventory and supplies, and at a slower rate.
- I am at a stand still..
- I am a mobile dog groomer so higher gas prices have really set me back.
- Huge impact and funding has been disappointing
- Higher shipping cost
- Harder for employees
- Greatly! I have nearly doubled prices due to the costs of food, gas, materials and employee costs.
- Goods and services have increased drastically not just due to inflation but the increase was seen due to COVID. The cost of dental supplies sky-rocketed and the wages of employees increase drastically as well.
- Gas has taken away all of the profits for my hauling company. Making it difficult to operate and pay adequate wages.
- Gas has been a big impact, since we have to drive our child to school. Supply chain delays have impacted car and house repairs.
- Fuel cost often are half if not more than the days earnings which doesn’t leave much for saving or pay incentives for employees. Maintenance cost have went up and the quality has gone down.
- Fuel and supplies have gone up dramatically.
- Everything costs much more
- Despite the COVID numbers dropping, we still network via online meeting apps. This is not optimal but gas is too expensive to drive around for onsite networking. I am also more reluctant to outsource functions that can be done in-house (though with a lot of effort) because the cost of services has increased along with everything else.
- COVID had my business shut down for a year. The rent for the commercial space has increased twice and not it is at the point I can not afford to keep my doors open after 30 years being in business. It is so overwhelming just to keep the lights on and now higher rent – it is too much. Lay offs and now closings
- As mentioned, before I feel that I am all over the place trying to stay above water living check to check. We started a transportation business to help us get ahead, but it is taxing us we are spending almost 3K to 4K a month depending on the situation with just 1 vehicle this is unheard of. This does not include maintenance fees for the vehicle wear and tear and upkeep required just this past month we spent $3500. We thought starting this during COVID will allow us to save towards purchasing a home, but at the same time our rent has increase $200 more than what we initially signed up for not including the other maintenance fees. We feel trapped paying almost $1800 a month in a 2-bedroom apartment. Always having to make payment arrangements it’s nuts. We have no healthy live, work, play, learn, eat balance at all.
- As a trucking company sky rocketing fuel prices has impacted the companies overall profitability
- About 10k more a month
- Increased prices for inventory.
According to the Federal Reserve, in 2020 white families in the US had a median wealth of $188,200, compared to $24,100 for Black families.[i] Family wealth is an important tool for providing an economic safety net and for assisting the next generation in getting started. [ii] Wealth accumulation was systematically denied, and, in many cases, capital was even taken from Black communities and commuted to white institutions, resulting in the huge disparity seen today[iii]. The legacy of exclusionary practices in the twentieth century is the 800% difference in the median wealth of white versus Black families. Shapiro (2006) exclaims that “closing the racial wealth gap must be at the forefront of the civil rights agenda in the twenty-first century.”[iv]
The wage gap between white and Black workers is an important contributor to disparities in access to homeownership as well as just good quality housing, medical care, food access, and educational opportunities.[v] This wage differential narrowed between 1880, when “Blacks in the United States earned only about 34 percent of the income of whites,”[vi] to 51% by the 1950s.[vii] The gap narrowed further with improving labor rights for workers in the 1960s:“The black-white wage gap shrunk substantially from 1950 to 1980, and especially during the 1960s. Civil-rights laws and a decline in legally sanctioned racism most likely played some role. But the main reasons, Mr. Charles said, appear to have been trends that benefited all blue-collar workers, like strong unions and a rising minimum wage. Because black workers were disproportionately in blue-collar jobs, the general rise of incomes for the poor and middle class shrank the racial wage gap.”[viii]
Little has changed in the last 40 years. There remains a 38.8% gap in earnings today. According to the U.S. Census, the median income in 2020 was $45,870 for black households and $74,912 U.S. dollars for white, non-Hispanic families.[ix],[x] Across the South, these wage differentials are even more pronounced. For example, in Montgomery, Baton Rouge, Charlotte, and Memphis, Black households earn half the median income of white households. In some Southern cities the differential is even greater. For instance, in Atlanta, Georgia the Black median household income is $31,900 compared to the non-Hispanic white income of $96,065.[xi] As noted in national and state-level analysis by PayScale, Inc, “equal pay for equal work is not a reality for many people of color. When controlling for education, years of experience, occupation and other compensable factors, most men and women of color still earn less than white men…. these differences in annual earnings can amount to hundreds of thousands or even millions of dollars less for people of color over the course of their careers.”[xii]
Solution #1: Ensure equal pay protection for minorities & women
- Reinstate the federal government’s collection of pay data from employers
- Ban the solicitation of applicant salary data in NC County and Municipal Governments
- Strengthen equal pay protections via federal Paycheck Fairness Act and the Raise the Wage Act
Solution #2: Increase access to credit & capital
- Provide universal free basic checking accounts for unbanked individuals
- Addressing student loan debt and lower credit scores in minority communities
- Promote microlending (under $50k) for minority and women owned startups
- Expand resources for the Community Development Financial Institution (CDFI) Fund
- Promote “Baby Bonds” through the American Opportunity Accounts
- Hold commercial lenders accountable for making loans available to minorities and women at the same rates as others.
Solution #3: Stimulate growth entrepreneurship among minority owned businesses.
- Increase the share of federal, state, and local contracts allocated to small, minority-owned businesses
- Provide wider training and technical assistance to HUB businesses to help them access HUB-related benefits
- Provide funding to technical assistance providers with experience supporting minorities and women (like NIMED).
- Promote minority business incubator and technical assistance programs by expanding Small Business Administration funding
Download the printable Research, Policy, and Impact Agenda Part 1 Advancing Economic Opportunities
[i] Bhutta, Neil, Andrew C. Chang, Lisa J. Dettling, and Joanne W. Hsu (2020). “Disparities in Wealth by Race and Ethnicity in the 2019 Survey of Consumer Finances,” FEDS Notes. Board of Governors of the Federal Reserve System, DOI: 10.17016/2380-7172.2797.
[ii] Kriston McIntosh, Emily Moss, Ryan Nunn, and Jay Shambaugh. (2020). Examining the Black-white wealth gap. Up Front. The Brookings Institution. https://www.brookings.edu/blog/up-front/2020/02/27/examining-the-black-white-wealth-gap/
[iii] Baradaran, Mehrsa. (2017). The Color of Money: Black Banks and the Racial Wealth Gap. Cambridge, Mass. Belknap Press, Harvard University Press.
[iv] Shapiro, Thomas. (2006). “Race, Homeownership and Wealth.” Journal of Law and Policy 20:53-74. https://openscholarship.wustl.edu/law_journal_law_policy/vol20/iss1/4.
[v] National Academies of Sciences, Engineering, and Medicine; Health and Medicine Division; Board on Population Health and Public Health Practice; Committee on Community-Based Solutions to Promote Health Equity in the United States; Baciu A, Negussie Y, Geller A, et al. , editors. (2017). Communities in Action: Pathways to Health Equity. Washington (DC): National Academies Press (US); 11. 3, “The Root Causes of Health Inequity.” National Center for Biotechnology Information, U.S. National Library of Medicine https://www.ncbi.nlm.nih.gov/books/NBK425845/
[vi] Ng, K., & Virts, N. (1993). “The Black-White Income Gap in 1880.” Agricultural History, 67(1), 1–15. http://www.jstor.org/stable/3744636
[vii] Leonhardt, David. (2020). “The Black-White Wage Gap Is as Big as It Was in 1950: Recent research indicates little progress since the Truman administration.” The New York Times. https://www.nytimes.com/2020/06/25/opinion/sunday/race-wage-gap.html
[viii] Leonhardt, 2020.
[ix] Statista Research Department. (2021). “Median income of white, non-Hispanic private households in the United States from 1990 to 2020.” Statista. https://www.statista.com/statistics/203277/median-income-of-white-households-in-the-us/
[x] Statista Research Department. (2021). “Median income of black private households in the United States from 1990 to 2020.” Statista. https://www.statista.com/statistics/203295/median-income-of-black-households-in-the-us/
[xi] SimplyAnalytics (2021). “U.S. Census American Community Survey 2020 Current Estimates Data from SimplyAnalytics database.”
[xii] PayScale. (2021). “The Racial Wage Gap Persists in 2020.” https://www.payscale.com/data/racial-wage-gap
The North Carolina Small Business Impact Grant Program, RETOOLNC, is an initiative created by Governor Roy Cooper which addresses measures and supports efforts to aid communities of color disproportionately impacted by the pandemic through targeted lending programs such as Institute Capital.
In a poll conducted by the Research, Policy, & Impact Center, RETOOLNC grant recipients were asked how they used funds they received during the pandemic. A total of 565 emails were sent to 2020/2021 RETOOLNC recipients, 143 surveys were completed for a final response rate of 25.9% (omitting incorrect email addresses). The majority of respondents to this survey represented small businesses with only 1-5 employees (67.6%) or sole proprietor businesses (14.1%). Most (81.4%) were minority owned and half (53.1%) were woman-owned.
Three-fifths (60.6%) of RetoolNC grant recipients who responded to our survey indicated that they used the funds to pay salaries and retain existing employees during the pandemic. 80.7% indicated that they used funds to grow their business. This included: adding employees (23.6%), buying new equipment (39.3%), improving web presence (35.0%), and ‘other’ upgrades (7.9%). Another fifth (20.4%) of respondents said that funds were used for training purposes to pivot business services. Finally, just 2.1% said they used the funding to provide incentives to employees. Other uses included:
- Used funds to hire office 365 Cybersecurity professional.
- Print marketing, online marketing targeted towards brides, an email marketing course, social media ads and boosted social posts
- Invested in promotion of my company to attract new business for the business lost during the pandemic through promotional products, mailings, other contacts and introductions and rewards. Also used these methods to try and retain the current client base.
- I used to repair trucks
- I used funds to maintain operations during the pandemic to provide working capital and pay recurring expenses like rent, utilities and telephone.
- I used funds to enroll in new courses and classes as well as pay down some debt.
- I invested in training and education to expand our business.
- I franchised my company.
- Contractors were added to help further business growth and systems were put in place to attain process efficiency.
The infographic below summarizes some of the other results of this survey:
Last Wednesday (5/3/22), the Federal Reserve raised interest rates by a half percentage point, the largest rate increase since 2000. The Fed previously raised its rate a quarter percentage point in March. The Fed rate increases are meant to lower inflation while not slow down the economy so much that it tips into recession.
However, rising interest rates mean the cost of capital goes up. Increased interest rates mean higher payments for credit cardholders and new mortgages. The average interest rate for a 30-year fixed-rate mortgage rose to 5.55%, the highest it has been in more than a decade.
Small businesses will be impacted by the higher cost of capital. Short-term rates in particular will jump higher. Interest rates for business lines of credit and other variable-rate loans will increase making payments more expensive. This increased cost may cause businesses to halt recovery and growth.
Women-owned or Minority-owned Business Enterprises (WMBE) were polled by the Research, Policy, and Impact Center at the National Institute of Minority Economic Development about the potential impact of this rate increase.
Respondents indicated that there would be a ‘cooling off’ of business activities as a result of the increased cost of capital. More than half (58.1%) said they would delay planned business expansion and 54.8% said they would put off purchasing new equipment.
One small business owner said, “This rate increase will negatively affect our business throughout our production/supply chain ladder. As we are already battling supply shortages and paying higher prices for materials, this rate increase will only add to the struggle.”
Two-fifths (41.9%) of respondents would cut other business services causing ripples in the Business-to-Business (B2B) marketplace.
An WMBE explained, “As a small business, our line of credit is tied to the prime lending rate. The results of the increase will add to our operating costs which have already increased substantially due to inflation, the labor shortage therefore affecting our bottom line. There has been a heavy pattern of slow pay from general contractors to small business contractors over the last few years which will result in many small business subcontractors going out of business.”
This rate hike comes just as many WMBEs were beginning to recover from the economic fallout of the pandemic. During the pandemic, Governor Cooper established the Small Business Impact Grant Program (RETOOLNC) program to help certified Historically Underutilized Businesses (HUB) and Disadvantaged Business Enterprise (DBE) recover from unexpected adjustments to their business. Grants of up to $25,000 were awarded to certified small, underutilized businesses to help them with pivotal industry business changes needed during the pandemic.
One RETOOLNC recipient explains, “A rate increase will definitely be disastrous for minority and women owned small businesses. Especially when we are just beginning to see our business come back to normalcy. We did not have enough income last year to feed our families. It was thanks to loans and grants that we received that we could survive.”
Small businesses have been feeling the uptick in inflation. According to the Federal Reserve, inflation reached 6.6% last month, the highest point in four decades.
WMBEs, already struggling to remain profitable as fuel prices, supplies, and services costs increase, feel the coming rate hike will cause further uncertainty: “The surge in cost has affected me with travel due to rising fuel cost necessary to reach my customer, then the rise in cost for meals while on the road and meals necessary for PR with customers. Pricing jobs are very concerning because as a reseller, I cannot control rising cost for raw materials and shipping; these cost are controlled by my large business suppliers. A job that may take six months to a year to complete, will now most likely consist of an unforeseen price increase in materials. When this happens, it is usually a loss from the profit for the small business.”
The rate hike will also impact employees of WMBEs. More than a third (38.7%) of respondents to our poll indicated that they will be forced to reduce employee hours and 35.5% said they would not add new employees that were planned. Others said that they may have to postpone staff training (12.9%) and a few may even lay-off or furlough workers (9.7%).
Customers and clients of small businesses will also be impacted as they pass on the higher costs. Says one WMBE, “Any increases will have to be passed on to my customers and I’m not quite sure how receptive they will be to that news. It just makes everything increase. Costs of equipment, payroll increases, and we are still in the middle of supply chain issues that have a lot of my business in a holding pattern for equipment to complete jobs. So, profitability does not exist right now. The worst part of it all is I can’t predict when this will turn around.”
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The Paycheck Protection Program (PPP) was widely criticized, for favoring white-owned businesses over Minority Business Enterprises. (MBE) In the study PPP loans were consolidated using the program Stata using data only for North Carolina and included data sets for loans under and over $150K. In the first round of loans the racial demographics matched the business demographics of the Census for North Carolina, except that Asians were overrepresented and Whites were slightly underrepresented. However, there were extreme disparities in the amounts given to white owned business and some of the MBEs even after considerable controls where introduced. Along with race the study also controlled for the number of jobs a business had, whether they were female-owned, or if they were in a rural area, a non-profit or a specially designated HUBZone set by the SBA (Small Business Administration). The model also tested whether the business owner was Hispanic, as there is some evidence to show that Hispanics were discriminated against in the PPP loan process. However, our model shows that in North Carolina any differences are not statistically significant.
However, the model from Table 1 shows that in 2020 despite having the same number of employees, living in same area, being the same gender, and not living in a designated HUBZone a white owned business would have received an average of $15,000 more than a black-owned business and almost $21,000 more than an Asian-owned business, which are statistically significant at the less than 1% level. The chart and table from 2021 show considerable improvement over loan amount disparities. In the 2021 data white-owned businesses are underrepresented and the other races are overrepresented, which compensates for the disparities in the previous year. According to Table 2, Black-Owned businesses do not receive an average loan that is statistically significantly lower than white-owned businesses and Asian owned business received an average of $7,389 less than white owned business that is still an improvement over the near average $21,000 lower amount they received last year even when taking into consideration loan amounts were about half of what they were last year in N.C. Still much needs to be done to address. racial disparities on all fronts.
In order to determine whether Paycheck Protection loans in the North Carolina, suffered the same disparities between gender and race, as we found in our previous articles for 2020 PPP data. PPP loans were aggregated to include only North Carolina and included loan over and under 150K. In months that PPP were available in 2020, the disparities were much greater for loans given to male-owned businesses and women-owned businesses and were equivalent to amount of loans given between male and female owned business, however male owned businesses were awarded significantly higher loan amounts than female owned businesses. The demographic count almost doubled for gender between the two years, with the loans given in 2020 had close to 39% of loan applicants responding to the gender question, while 2021 had around to 78% responded as female owned businesses rate. Surprisingly, there were very few disparities between the loans given out in 2020 between male and female owned businesses and female businesses were overrepresented in the 2021 when compared to the overall business demographics of the North Carolina.
According to the most recent Census data that includes both Employer and Employer data statistics. The 2017 Census showed that female owned businesses made up 38.94% and male owned businesses made up 54.70% of Employer and Non-Employer businesses (percents do not add up to 100% because the Census includes equally/male and female owned as a separate category).
Male-owned businesses still received significantly more loans than female owned businesses. According to Model 1 in Table 1 below, male-owned businesses received and average of $6,759.96 more than female owned businesses, which is statistically significant at the five percent level. The model accounts for numerous factors that would affect loan amounts. The first and most important is jobs, the more jobs a business employee the more they will need to protect their employees’ paychecks and borrow more money. As the model shows for each employee a business reports they receive on average of $6,940.99, which is significant at less than the one percent level. Controls for race where also added which have been shown in many studies have shown that race has been shown to affect loan amount. Non-Profits, businesses in rural areas, and areas specifically designated as Historically Underutilized Zone (HUBZone). These controls were added to show that even when we disregarded the number of jobs a business employs, the race of the business owner, whether they are in an urban or rural area, or whether they are in a designated HUBZone female owned businesses still receive significantly less loan amounts than male-owned businesses.
Moreover, while the charts and the tables may show significant improvement in the amount of loans given when we did deeper the picture tells a different story. According to Model 1, in 2020 data male-owned businesses are given and average of $6756.96 more than female-owned businesses, while in the 2021 data male-owned businesses are given an average of $3301.50 more than female-owned businesses. So, male-owned businesses received around 2.05 times more than female-owned businesses when adjusting for controls. However, when looking at the mean amounts of total loans given, we see that in 2020 the average loan was $95,770 and in 2021 the average loan given was $40,266. Therefore, the average loans that were given in 2021 were 42% less than the average loan given in 2021. This means that the disparities between PPP loans given to male owned businesses and female owned businesses were about the same between the two years and may have been worse in 2021.