New York Times, October 5, 1999

Memphis Blacks Find Cycle of Poverty
Difficult to Break

By PETER T. KILBORN

MEMPHIS, Tenn. -- On the face of it,
the 1990s have been good to George
Jones, a 58-year-old black man in a city
with a history of chronic poverty and
acute racial tensions. Jones opened his
first McDonald's restaurant here in the
1980s with a loan from a Chicago bank
after Memphis banks had turned him down.
He now owns six McDonald's restaurants
and sits on the board of a Memphis bank.

"But not a single one of those openings
has been easy," Jones said over coffee at
his first store, on the corner of a
fading shopping center in the largely
black south Memphis neighborhood of
Southgate. "I can tell as far as black
businesses go, they have not done well. A
few like me have been able to slip
through the cracks, but very few."

By all accounts, the nation has been
enjoying an extraordinarily healthy
economy. With nearly nine years of
unimpeded growth, with jobs abundant,
poverty declining, interest rates down
and the federal budget back in the black,
almost everyone has been enriched.
Americans are earning more than ever, an
average of $460 a week or nearly $24,000
a year for all nonsupervisory workers.

But a look at any American community, in
this case the old cotton-trading port of
Memphis, shows how capricious prosperity
can be in blessing some people more than
others. Blacks have benefited much less
than other groups, according to the
latest census data, and even black
entrepreneurs like Jones say they still
must struggle.

The Center on Budget and Policy
Priorities, a liberal research
organization in Washington, has reported
that by the end of this year the
after-tax income of the richest 1 percent
of the population will have climbed 115
percent since 1977 -- more than doubling.
But it will have risen only 8 percent for
middle-income households and declined 9
percent for the poorest one-fifth of the
population.

The issue of income disparity is finding
its way into the national political
debate. But it is also playing out at the
local level, nowhere more so than
Memphis, a city of 600,000 people, 55
percent of whom are black and drawn
mostly from the destitute rural
communities of the Mississippi Delta west
and south of the city.

In nonpartisan elections on Oct. 7, with
15 men and women running for mayor,
poverty and race are the leitmotifs in
the conflicts between the two leading
candidates over how the city exploits its
prosperity. Challengers to Mayor Willie
Herenton question whether he has done
enough, as a black mayor, to help lift up
the people at the bottom of the income
ladder and open opportunities for those
like Jones, who strive for a chance to
build a business.

While defending his focus on rebuilding
the city's core, Herenton acknowledges "a
major weakness" in cultural and financial
institutions in the city, which remain
impervious to many black Memphians.

"We have a nagging problem of poverty,
especially in the African-American
population," Herenton said. "Memphis has
not experienced a major breakthrough for
African-Americans in terms of
accumulating wealth."

While prosperity has expanded the black
middle class, he said, "African-Americans
are absent from any influence at the top
tier" of leadership. "It's not an easy
city to break the barriers of the past,
getting capital, doing joint ventures,
developing strategic alliances with
successful majority companies," the mayor
said.

Compared with any earlier decade, these
have been good times for Memphis. It
bills itself as the capital of the
mid-South, the home of Elvis Presley,
Beale Street and the Blues and Federal
Express, which has made the city the
world's biggest air cargo hub.

The city is within commuting distance of
Tunica, Miss., a once-impoverished Delta
town that has become a phenomenon of the
decade of prosperity with the start of
casino gambling there seven years ago.
Cotton, though ailing from falling prices
and excess supply, has rebounded from the
assault of synthetic fibers. The National
Cotton Institute here says 61 percent of
Americans' clothes now contain cotton,
compared with 40 percent a decade ago.

In general, these industries' good
fortune has spilled across this city's
economy. It has given the newly employed
former welfare recipients time to build
skills that can help them hold their jobs
in harder times, and it discourages
discrimination in hiring because
employers have to bore deeper than ever
into the ranks of the unemployed to find
workers.

"These are really the best of times,"
said John E. Gnuschke, director of the
Bureau of Business and Economic Research
at the University of Memphis. "Everyone
has moved up a notch," he said, "even the
poorest." Income per person in Memphis,
$25,905 in 1997, began exceeding the
growth of the national average five years
ago.

Higher incomes, Gnuschke said, have
helped propel African-Americans out of
the city's decrepit public housing
projects. "The suburbanization of the
black population didn't happen in the
past," Gnuschke added, "and it's
happening now. Differences in income
levels kept people segregated, and that's
changing."

Willie Joe Alexander, an African-American
and the president of Local 1733 of the
American Federation of State, County and
Municipal Employees, whose 4,000 members
are mostly black, said: "I can see
members of this union who were walking
and are now driving cars. I can see
members who were renters who are now
buyers, who procrastinated about their
kids' education who are now educating
them."

Marc Jordan, president of the Memphis
Area Chamber of Commerce, who is white,
said leading businesses were doing a lot
of "partnering, mentoring and getting
people to participate in business
ventures." He added, "I know of minority
companies that are doing real well," like
a moving and storage company and a new
black bank.

"And if you look at starting wages,"
Jordan said, "they're moving up. People
in warehouses are making $10 and $12 an
hour. There are just ample opportunities
for people who want to move up."

But such measures of progress are
relative. Herman C. Ewing, president of
the Memphis Urban League, said that
incomes of African-Americans were about
62 percent of those of whites, compared
with 60 percent a decade ago, before the
start of the boom.

While Memphis' resurgent downtown throbs
with the jackhammers of affluence, its
aged, debris-invested public housing,
occupied mostly by blacks, has not been
touched. Businesses that followed
African-Americans into outlying suburbs
and sylvan subdivisions are heading for
the malls in more affluent communities.

Whitehaven, for example, the south
Memphis neighborhood that is home to both
Herenton and his top challenger in the
mayoral race, Joe Ford, an
African-American who is chairman of the
City Council, is a community of small
ranch houses. It was 80 percent white two
decades ago and is now 80 percent black.

With the shift in the population,
Whitehaven has recently lost some major
retailers, like Kinney Shoes, a
Chrysler-Plymouth dealer, a Target store
and a Red Lobster restaurant. Store
vacancies have surged.

According to analyses by the economic
research bureau at the University of
Memphis', the city suffers deeper poverty
and has less economic opportunity than
most of the cities the business leaders
consider their rivals: Atlanta; Dallas;
Indianapolis; Nashville, Tenn.;
Charlotte, N.C.; Birmingham, Ala., and
Louisville, Ky.

When last measured four years ago,
Memphis' poverty rate, 18.1 percent, far
exceeded those in cities like Atlanta and
Nashville, and Gnuschke sees little
reason to think the gap has narrowed
measurably since then. In the 1996-97
academic year, Memphis spent about 90
percent of the average of what was being
spent on education by its rival cities.

Its unemployment rate, though low at just
above 3 percent, still exceeds the rates
of its rivals. A reason might be the
challenges black businesses face here.
Employment in black-owned businesses grew
an average of 2.4 percent a year from
1982 to 1992, the latest years for which
comparable figures are available. The
average for the other cities was 8.4
percent.

To the extent that crime and economics
are linked, prosperity in Memphis has
been a mixed blessing. Two years ago,
Gnuschke's studies show, 107.4 of every
100,000 women in Memphis had been raped
here, more than double the rate for the
other cities. Memphis' murder rate then,
15.9 per 100,000 people, exceeded the
rates of all its rivals except
Birmingham.

The grim statistics weigh on the record
of Herenton, a 6-foot, 6-inch former
boxer and superintendent of schools. By a
mere 142 votes eight years ago, he became
the city's first black mayor in a race
against a white incumbent that broke
sharply along racial lines.

He promptly set about building rapport
with the white business establishment
while retaining his support among blacks.
Running against a conservative white
challenger four years ago, he won in a
landslide, with 74 percent of the vote.

This time, Ford, 45, a funeral home
director and scion of a political dynasty
here, has seized upon the economic
stagnation of the city's black
neighborhoods, chastising the mayor for
leading a renaissance of the long-ailing
downtown with tens of millions of dollars
in tax breaks for the city's biggest
developers, all white.

"Whitehaven, south Memphis, Raleigh,
Frayser," Ford said of predominantly
black communities. "We've got stores
moving and houses deteriorating. We just
left them out there dangling."

An African-American who does get a foot
in goes only so far. "We've become better
educated in the last 10 years," said
Audrey McGhee, editor of The Tri-State
Defender, the city's weekly black
newspaper. "The most important thing we
find out is that the ceiling isn't glass.
It's concrete."

Olivia Dobbins, president and chief
executive of the Black Business
Association, says her phone rings
constantly with blacks wanting to
participate in the flourishing economy by
starting businesses. "And they're crying,
'We can't get loans,"' she said.

Blacks stand on the sidelines of the
city's economic development, added Fred
L. Davis, a leading black insurance
broker, because they own few of the
businesses that can participate. The
city-owned power company needs utility
poles, pipes, cable and office furniture.
"But it's hard to find a black
distributor," Davis said.

Then, when blacks might spread their
spending among black businesses, they
head instead for the white suburban
malls. Davis has two business cards --
"my white card and my colored card." The
back of the white card is blank, but on
the back of those he hands to blacks, he
has printed:

"Did you know that 97 1/2 cents out of
every dollar blacks spend leaves the
community? Guess why we are poor and
powerless."

Jones, the McDonald's owner, was the
budget officer for the housing authority
in Chicago and the owner of five
apartment buildings there, all paid for,
when he came across a Time magazine
article about doctors and lawyers who
were leaving their practices to open
McDonald's restaurants.

"I decided to give it a shot," Jones
said, "and I was accepted into the
McDonald's program." Upon completing his
training, he said, "I was told I could go
anywhere, and Memphis was where I wanted
to go."

The company had just built the Southgate
store, at the corner of a shopping
center, and Jones agreed to take it on.
But he needed a loan to buy the
franchise.

"Banks here did not want to give me a
loan, even though I had solid financial
statements," he said. "Fortunately, I had
a cousin who was a bank president in
Chicago, so I went there to get it."
 

Copyright 1999 The New York Times Company