Assemblymember Pichardo, one of the co-authors
New York City is, and always will be, one of the world’s economic powerhouses. Yet that doesn’t mean there isn’t room for improvement. In fact, although unemployment across the city has fallen faster than the rest of the country since the recent recession, areas like the Bronx still lag.
While the Bronx has seen some progress, there is still much work to be done for shared prosperity and economic opportunity for all. With the right tools and policies focused on entrepreneurial growth, the most impoverished borough can have the opportunity to complete the city’s economic boom and ensure that the entire city, not just the lower half of Manhattan and a few other areas, experiences long-lasting economic growth.
New York City’s resilience was again proven by an impressive return to economic prosperity after the recent worldwide recession. Although it’s near 5 percent overall unemployment rate may make much of the rest of the country envious, the Bronx continues to have a rate above 7.5 percent, more than 50 percent higher, while the 1.5 million Hispanics in the borough also make up a majority of its unemployed.
Hispanics in New York City total nearly 2.5 million people; alone they would be the fourth-largest and one of the fastest growing cities in the country. Even while Hispanics still constitute a disproportionate amount of the unemployed, also losing more of their wealth than any other demographic during the recession, Hispanic-owned businesses have proliferated across New York. In fact, new business growth in this demographic has increased at a rate of more than eight times the overall rate, simultaneously improving total payroll by 40 percent and revenue by almost 50 percent.
Local representatives and appointed officials shouldn’t take these statistics lightly. While we’ve always known that something has to be done to improve economic outcomes in more disadvantaged areas such as much of the Bronx, what hasn’t always been clear is what will drive results. It should now be clear: the best opportunities for long-term growth reside in improving entrepreneurial opportunities.
There is plenty of room for improvement. While the Governor Cuomo’s Unemployment StrikeForce is a great program to increase employment, New York City was recently ranked 145 of 150 U.S. cities for Hispanic entrepreneurs. More should be invested in creating entrepreneurial opportunities, while also ensuring that regulations don’t impede them.
When asked, one of the greatest impediments to creating and growing a business is the lack of access to capital. Hispanics in particular receive funding at rates far lower than the rest of the population. In one recent study, it was found that across the country less than one percent of venture capital funding went to Hispanics. Grants and other creative funding opportunities should be pursued through both the private and public sectors, especially here in the New York City.
While some ventures require significant capital to start, it should be noted that thousands of small business owners across the city continue to bootstrap their way to success. While few are lucky enough to get angel funding and share space with other like-minded entrepreneurs, many more start businesses selling products such as those offered by Herbalife, which focuses on expanding its line of nutrition products and is especially popular in the Hispanic community.
With little up front capital, these “micro-entrepreneurs” are creating additional income for their families that is otherwise hard to obtain. When considering easing the burden of the city’s bureaucracy, officials should realize that many of these smaller startups might not find it worthwhile to take the time – and pay the fees – to navigate the existing regulatory process. Although tempting to focus on the direct revenues gained from complying with existing regulations, if we have to choose between a profitable, tax-generating, employee-paying business in operation versus an entrepreneur sitting on the sidelines, the former should always win.
Incubators and accelerators are another alternative to promote economic development and are fast becoming the best way to improve the economy of a particular region, especially one that is currently plagued by poor economics. Thus far, few of these exist in areas outside of Manhattan.
It’s not unreasonable to ask a municipality to get involved in the creation and development of a local accelerator; after all, the entire region benefits. Just ask 1776, which has incubated hundreds of local startups in Washington D.C. with a relatively small grant from the city and has begun expanding across the country, recently opening a branch in Brooklyn. New York should have similar success stories in every borough.
Whether a future business mogul looking to get that tech startup on its feet or a local family just hoping to help make ends meet with income selling nutritional products within their neighborhood, one thing is certain: New York’s future resides in these entrepreneurs. Local appointed and elected officials should remember that New York City’s best chance to grow is through the expansion of new, and improvement of existing, entrepreneurial opportunities outside of lower Manhattan. Only then can we guarantee the successful future that New York has always promised.
Assemblymember Victor M. Pichardo represents the 86th District in the New York State Assembly.
Justin Vélez-Hagan is the executive director of the National Puerto Rican Chamber of Commerce and an economic policy researcher at the University of Maryland.