September 18, 2014
City News Service
A downtown Los Angeles-based business chamber said last week, its members want Mayor Eric Garcetti to tweak his proposal for raising the minimum wage to $13.25 an hour by 2017. The Central City Association issued a statement suggesting the mayor’s proposed $4.25 increase from $9 be spread out over four years — instead of three years — for companies with more than 500 employees. Smaller companies and nonprofits should be allowed to phase-in the increase over seven years, the group said.
The group also suggested a separate, lower wage be set for teenage workers. The association said it “appreciates Mayor Eric Garcetti’s focus on raising Los Angeles residents out of poverty, but we are concerned about possible negative consequences for existing jobs, job creation and business retention unless there are significant changes to his proposal for a citywide minimum wage.” The group added that “any minimum wage proposal must be coupled with initiatives to attract, retain and grow businesses that create good paying jobs for Los Angeles.”
The group said the mayor should do away with the city’s business tax, “without imposing unreasonable additional taxes on businesses.” The changes are necessary “so that businesses can cope with this unprecedented mandate and smaller businesses in particular can prevent widespread layoffs,” the statement said.
The group also called on the City Council to drop a proposal to raise hourly wages for some hotel workers to $15.37.
September 11, 2014
By Julianne Malveaux
The Dow Jones Industrial Average has been floating at or above the 17,000 mark in the past two months – an all time high. There has been a stumble here and a wrinkle there, but even with a weak unemployment report for August, the Dow has remained over 17,000. This compares with a Dow of 13,000 just a year ago (or a 30 percent gain), and is generally seen as a sign of economic progress and of increased wealth.
Who gets the wealth, though? Fifty-two percent of US adults own stock which includes mutual funds, Individual Retirement Accounts, and 401-k accounts down from 65 percent in 2007. The drop in the level of stock holdings can be at least partly attributed to the Great Recession, when high levels of unemployment forced people to go into their savings to survive. Maybe, too, dissolved stock holdings to help them with housing crises and underwater mortgages. For those reasons, and for many others, stock ownership is falling.
While half of the overall population owns stock, bonds or mutual funds, a 2011 Washington Post survey reported that one in four African Americans and one in six Hispanics had such holdings. These are the folks who were disproportionately hit by the housing crisis, and are now unlikely to gain from the surge in the stock market. Some folks just can’t catch a break.
Now, the latest unemployment report suggests that there are fewer gains in the labor market than expected. While the overall unemployment rate has ticked down from 6.2 percent to 6.1 percent, only 142,000 jobs were created, about one hundred thousand fewer jobs that economic forecasters had been expecting.
Tepid job growth bodes ill for the so-called recovery that is optimistically referenced. The Black unemployment in August was unchanged from July at 11.4 percent, with the rate for Black men falling, and that for Black women rising. Usually, Black men have a slightly higher unemployment rate than Black women.
While the racial unemployment rate still reflects inequality, and the general unemployment rate is too high to be optimistic about recovery (though the rate is down a full percentage point from a year ago), equally concerning is the level of wages that has not grown significantly in the past year. In the last year, the hourly wage has grown by just 50 cents, from $24.03 in August 2013, to $24.53 last month. With unemployment rates falling, it would seem that employers would have to work harder to compete for workers, but the extremely small increase in hourly pay suggests this is just not the case. While these data are not broken down by race, the fact that the average African American household earns just $32,000 a year, compared to $51,000 for a white household suggests that there is a similar difference in hourly wages.
The movement to increase the minimum wage has momentum, but Congress can’t seem to understand how challenging it is to earn the minimum wage in a stagnant labor market. The minimum wage hasn’t changed in five years. Meanwhile, Congressional pay has risen from $129,500 to $174,000 between 1992 through 2014. Congress also has its pay inflation-adjusted. President Obama has chided Congress that “America needs a raise, “ last addressing the point on this Labor Day. And fast food workers have taken it to the streets, demanding that their employers pay them $15 an hour. Dozens were arrested in cities around the country as they disrupted traffic in busy intersections to make their case known.
The juxtaposition between minimum wages that have not been adjusted in five years, Congressional pay that continues to rise, and a 30 percent stock market gain in just a year are simple indicators of our nation’s inequality. Those at the bottom aren’t seeing any trickle down from stock euphoria. There has been little increase in the amount of work available, and the amount of pay that it brings. America needs a raise, and congress needs to spend just one week living on the minimum wage. That might give them an insight or two about how some people are forced to live.
Julianne Malveaux is a Washington, D.C.-based economist and writer. She is President Emerita of Bennett College for Women in Greensboro, N.C.
August 28, 2014
By Cary P. Yates
Special to the NNPA from the Houston Forward-Times
Myths and misconceptions about the reason banks decline loans and the rate at which this happens are as common today as ever. As a banker, it’s my goal to bring clarity to the process, and explain what it takes for a business to get a loan and why a loan application may be declined.
Let me share a few credit basics small business owners should know before applying for a loan that may make the loan review process easier to understand.
For a banker, evaluating a credit application means reviewing the five C’s of credit: credit history, collateral, capital, conditions and capacity. You may have heard of these five general areas that help determine whether a business loan will be approved. Yet here are five things you may not know about the five C’s:
Did you know both business and personal credit history are important when pursuing business credit, particularly smaller loans? Looking at credit history helps us answer the question: How has the borrower handled credit obligations? Both business and personal credit are relevant. On the personal side, a lender will look at the business owner’s history of credit management including FICO score and details of their credit record. A lender also will want to know whether the business applying for credit has paid suppliers and other business obligations in a timely manner, including those to other financial institutions.
That’s why a deep tenured business and personal credit and deposit relationship with a bank can make a difference. When you pursue a loan at a bank that knows you, a banker can see your current balances relative to 12-month averages and annual sales – and can better determine whether your business has strong enough cash flow for new credit. And a banker can see if a business avoids overdrafts. It helps tell the lender whether the business is credit-ready.
Did you know that when it comes to “capital,” a banker wants to see that an owner has a significant investment of personal capital in a business? When a lender sees the owner invest money in the business, it shows that the business owner is committed to succeeding. What’s more, a business owner with assets that can be converted into cash in case of a sudden downturn in revenue will be better able to operate his or her business and repay debt.
A lender wants to see that the assets of the business sufficiently exceed its liabilities, and to understand how quickly and easily those assets can be turned into cash.
Did you know that “conditions” are both internal and external factors that affect the ability of a business to repay a loan, as well as the intended use of the loan? For example, on the external side, conditions can be economic factors, such as the strength of the housing market for businesses that are tied closely to this important sector. In today’s improving economy, conditions in many industry segments are getting better, giving banks confidence in lending to those segments.
On the internal side, conditions include the borrower’s business experience and knowledge. A lender will ask: Is the owner someone who has extensive experience in the industry or relatively new? In some cases, business references and education are personal factors that can affect conditions.Both internal and external conditions can be important indicators of a business’ ability to survive and thrive, and therefore its ability to repay its credit obligations.
Did you know that “collateral,” when it’s required, is a secondary source of repayment to a lender in case of default? Collateral can include personal assets – like investments and CDs – and business assets – such as real estate, inventory, equipment and accounts receivable.
Collateral doesn’t replace good payment history or showing your ability to handle the proposed debt level. Nobody wins when a bank turns to the final option for repayment of liquidating collateral. In fact, it often results in a loss to the financial institution – it’s absolutely the last thing a bank wants to do. A healthy business that’s using credit the right way is a win for the business, for the bank and for the community.
Did you know that a lender looks at cash flow and debt to determine whether a business has the “capacity” to handle new credit? Before extending a loan, a banker wants to make sure a business has the ability to repay a loan given its other pre-existing loan or payment obligations. Typically lenders look for a business seeking credit to have a debt-to-income ratio of no more than 40 to 50 percent, depending on its credit score.
Profitability and cash flow are essential components of capacity. A business must have enough positive cash flow to meet both short-term and long-term commitments. A lender will carefully consider the cash flow of a business to gauge the probability of repayment.
Again, a long-term relationship with a bank can help, since the banker knows the customer, and is able to see deposit inflows to have a good idea of business income and sales.
When you understand the five C’s of credit, you have pretty good idea what it takes to get a business loan. Small business approval rates are increasing, and the reason should come as no surprise. Healthier businesses, better balance sheets, and stronger revenues mean more businesses today qualify for credit.
Now, it’s up to all of us in banking to keep spreading the word about how more small businesses can get credit-ready before pursuing a loan.
To help more small businesses achieve financial success, Wells Fargo recently introduced Wells Fargo Works for Small BusinessSM – a broad initiative to deliver resources, guidance and services for business owners. For more information, visit: WellsFargoWorks.com.
September 04, 2014
By Roz Edward
Special to the NNPA from The Michigan Chronicle
When Oba (King) Adedotun Aremu Gbadebo visited Detroit recently to meet with local business leaders and promote development projects in Nigeria, all were eager to hear more about the array of investment opportunities in the African nation and what they might expect in terms of return on investment. What may not have been expected though was to become so absorbed in the possibilities of conducting business in Nigeria — enough to make travel plans — that they began visualizing what these bricks and mortar developments would look like in the continent’s largest economy.
As the charismatic and knowledgeable traditional ruler addressed potential investors at Detroit’s Music Hall on Tuesday, Aug. 26, he presented practical concepts for economic development in the “Giant of Africa.” Shouldering the responsibility for the lives of more than 5 million citizens, is a daunting charge, but one that Oba Gbadebo was born to — literally, and a charge he intends to implement with all of the resources that his position and prestige bring to bear. He is a reserved confident man who tells a compelling story of his mission to improve the quality of life for Nigerians.
“The King is everything to the people over whom he is king. Some see him as the person who should solve all of their problems for them. Just as with the Jews in the Bible, when they selected Saul, they said they wanted to have a King like other nations. And some said, ‘God is already your king, you don’t need another king.’ But some said, ‘We want someone who will fight our battles for us, who will lead us in battle, and who will promote our development.’ And that is what an Oba is … someone that people will come to in tears and leave with a smile.”
The 30th ruler of the Egba people, which includes 4.6 million people in Nigeria and countless more in the Nigerian diaspora, King Gbadebo is remarkably adept at negotiating with government entities on behalf of Egba and Nigerian citizens. Having been groomed by centuries of tradition and scores of learned leaders, he is a naturally astute and confident when it comes to affairs of the state.
“The King does not play partisan politics,” Gbadebo states emphatically. “But as for the politics of development, [I] relate to the government at the local level, at the state level and at the national level, to demand what truly belongs to the people. As father of all [I] can’t afford to be partisan … but it is from the government of the day that[ I] can get support and comfort for the people.”
The support and living comforts King Gbadebo works so arduously to secure, involves working with governments and economies around the world. “We have our doors open now for investments from all parts of the world. What I am doing is interfacing with what governments are doing at much higher levels, and that is to attract investors to our country. … [Like] the conference that took place in Washington only two weeks ago to get the United States to show more interest in bringing investments to Africa, now I am here to talk to Americans so they can invest in Nigeria in general and in Egbaland in particular.”
Larry Alebiosu, President and CEO of Fashion International Men’s Clothing says the king’s visit is significant for a number of reasons. “This is huge,” exclaims Albesiou, we need to accentuate the positives and eliminate the negative stigma of Africa, especially in the United States. When royalty visits it sheds light on the positive things that are happening in Africa and helps backward thinking people understand that Africa is a civilized society.”
Foremost on King Gbadebo’s list of priorities for economic development in the nation is education. He adamantly asserts that building state-of-the-art schools and preparing students to assume well-paying jobs in construction and service industries is essential for quality living in Nigeria.
“The economic climate in Nigeria is 1,000 times better than it was 14 or 15 years ago. At that time the government controlled the economy, but now the private sector has been allowed to move in. Government only creates the atmosphere for business to develop,” concluded King Gbadebo.
King Gbadebo and his advisors will visit Dallas and Houston, Texas before traveling to London and then home to Nigeria later this week. Gbadebo will discuss natural power initiatives as part of his economic development agenda for Nigeria and Egbaland.
August 21, 2014
A $30 million gift from the foundation started by the co-founder of Farmers Insurance will go toward building a residence hall for up to 600 freshman honor students, the university announced recently. “USC’s residential colleges provide supportive communities and contribute immensely to students’ academic and personal development,” said Ainsley Carry, vice provost for student affairs. The donation comes from the Thomas and Dorothy Leavey Foundation, chaired by USC Trustee Kathleen Leavey McCarthy, and the money will help build the Thomas and Dorothy Leavy Foundation Honors Hall at USC Village, which is set to open in 2017.
The village, which will include four other residential halls, will add about 2,700 beds to student housing. McCarthy and the Leavey Foundation, which has contributed to various scholarships over the years, also provided gifts that helped build the Leavey Library and McCarthy Quad.
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