Can Clinton's urban policies really work? B.E.'s economists weigh the value of empowerment zones and community banks in revitalizing America's cities - includes related article on prospects on jobs and increased incomes for African Americans - Black Enterprise Board of Economists - Cover Story

Black Enterprise, June, 1994 by Frank McCoy

Comptroller of the Currency Eugene A. Ludwig says this reinvention of the CRA will "channel billions of dollars in new credit into America's distressed communities, while at the same time reducing unnecessary burdens on banks."

Brimmer, a former Federal Reserve governor, is quick to point out the paradox. Nearly every black-owned bank will be excluded from closer CRA scrutiny because most have less than $250 million in assets. Yet, at the same time, he notes, these banks will still be required to meet such basic CRA standards as reasonable extensions of loans and reasonable loans to small businesses and individuals.

Swinton, for one, believes that the CRA reforms may, ironically, have a more beneficial and lasting impact on minority communities than EZs. His premise is based on CRA enforcement of basic fair lending policies, which would put more capital in the hands of previously under-served clients. "It [CRA reform] would really make a major difference to both the consumers buying houses and businesses seeking loans," he says. Regulators, he adds, are "even saying the banks should make investments in organizations that make loans to small and disadvantaged businesses."

As a result of the powerful impact of CRA reform, combined with dissatisfaction over the EZs, Yale University's Gerald Jaynes suggests that black energy be focused elsewhere. Community groups, which mastered the CRA's complexities and won battles with major financial institutions across the United States, should redirect their energies. As he points, out there are many other antidiscrimination laws already on the books that, like the CRA, could be used by African-Americans to reap "huge pay-offs" for the black community.

NO REAL RECOVERY FOR BLACK JOBS OR INCOMES

The economy is picking up steam. However economist Andrew F. Brimmer, president of Brimmer & Co. Inc., says that while "the progress of black Americans will improve slightly," the black population and labor force will grow faster than their share of employment and income. As a result, he predicts, "the jobs and income deficits which blacks suffer will widen further."

This year, the black civilian labor force should grow to 14.4 million, or to 11.1% of the total U.S. workforce, vs. 14.1 million, or 11% of the total in 1993. African-American employment, meanwhile, is likely to hit 12.6 million, or 10.32% of total employment, vs. 12.2 million, or 10.2%, last year.

This means that there will be nearly 1 million more black workers in 1994 than there are jobs for them. As the nation's gross domestic prodcut (GDP) picks up, black unemployment will be slightly lower than last year, but it will still stand at 2.27 times that of whites. Black joblessness is projected to average 1.83 million in 1994, or 23.3% of all those unemployed vs. 1.89 million or 21.7% last year. That translates into a black unemployment rate of 12.7% this year vs. 13.4% in 1993.

By contrast, total unemployment in the U.S. may dip to 6.1% for all workers vs. 6.7% last year, and to 5.2% for whites vs. 5.9% in 1993.