THE BLOG

Solving Chronic Unemployment by Creating Minority Entrepreneurs

02/24/2014 05:02 pm ET | Updated Apr 26, 2014

In some disadvantaged U.S. communities, male chronic unemployment has topped 60 percent. This is crippling many black and Hispanic communities, desperate for a lifeline to the American dream. But in today's economy, with more emphasis placed on technology, these groups often times face greater challenges then ever before.

The U.S. government is looking for solutions. It requires that a certain percentage of its contracts be awarded to minority firms, but this can create its own set of problems and often times doesn't live up to its intention. Large public works projects, for example, require that 9 percent of the budget be awarded to minority firms, but more often than not, large developers would rather anticipate fines then assume the risk of hiring an unknown, unbonded, minority firm that may not perform the work on time or within budget.

The New York Times reported in October of 2013 on "the misuse of funds designated for minority- or women-owned businesses, according to people with knowledge of the matter." As per a federal and state investigation, Larry Davis, owner of DCM Erectors Inc., allegedly "defrauded government programs by evading requirements that he hire a certain percentage of minority- or women-owned subcontractors."

Some firms find an individual from a minority community to front a shell company then merely "flush" payroll through it, but paying the non-minority workers. This is illegal and, sadly, prevalent in the industry.

Michael Angeliades, of MA Angeliades which has provided construction management and design/build services to the industry in the New York City area, says, "The government mandates these minority hiring requirements, but in many cases doesn't provide the minority firms. This leaves developers in a precarious situation and many choose to pay the fines instead of deal with the uncertainty and headaches associated with finding and hiring minority firms that have no track record."

Don Edwards, CEO of minority-owned Walsingham Construction located in the Bronx has endured the frustration first hand. "We get invited to bid on projects by big firms like Tishman, but it soon becomes clear they have no intention of hiring minority contractors. They always hire the same non-minority firms. They just go through the motions to make it look like they made an effort." Edwards' company has experience on large projects such as the Atlantic Center in Brooklyn and still public works projects allude him.

Former Insurance executive, lawyer and engineer, James Kernan, is well aware of these challenges and became frustrated by the fact that minorities still were not benefiting. "The spirit of the law not being met," Kernan commented, while touring his non-profit training center at the Maritime College in the Bronx. Today Kernan uses his experience to mentor and market minority entrepreneurs in the construction industry and to train their workers.

Minority firms appear to be at a disadvantage from the start. As Kernan explains, "They lack experience so they have difficulty securing the bonding necessary. If a minority firm is not bonded, most developers won't hire them so they never get the experience to be bonded. It is a catch 22."

But once a minority entrepreneur is hired, he will employ people from within his community and this is a key to reducing chronic unemployment in underserved communities, according to Kernan's experience. He runs two not-for-profits focused on increasing employment opportunities that provide prevailing union wages, not minimum wages. He created Economic Cornerstone which mentors minority firms, helps them secure bonding and skilled employees, then helps market them to large developers. To train a minority workforce, he established the Oriska Jobs and Careers Center which has been placing disadvantaged workers in apprenticeship programs (which come with prevailing wage pay) for over two decades.

This is how Kernan believes unemployment should be approached and he is in good company. Reverend Reginald Benjamin, the executive director of the Able Bodied Believers Association, a group that works within the minority community, has just partnered with Kernan. Together they are expanding the program throughout the New York City area.

"I've seen minority contractors get close to landing a large public works project, only to be disappointed," Reverend Benjamin said. "I've heard all the excuses from developers. But I believe working with Economic Cornerstone will improve the chances for these firms and finally allow the people in these disadvantaged communities to get real work."

Kernan started his program while working as an attorney in the late 1980s for a group of contractors that were trying to win public works projects. The developers had difficulty locating bonded and qualified contractors, and minority firms didn't have the experience to qualify and win the developers trust. The situation seemed deadlocked. Kernan then began merging his legal, insurance and engineering expertise in what has become two not-for-profits.

With one not-for-profit dedicated to helping the worker and the other to mentor the entrepreneur, Kernan has been showing success. On his Oriska Jobs and Careers website, one can find the story of Al Cohen. Cohen began the program as a Bricklayer and Mason. He was placed with Atlas Roll Off, Inc., to help refurbish the Holland Tunnel. He helped complete a job which was originally scheduled to take two years in only nine months. Today he still works at Atlas Roll Off, Inc., and is moving up within the company.

Economic Cornerstone, which focuses on mentoring entrepreneurs and promoting minority firms, has been working with larger firms like MA Angeliades to make sure that minority firms get access to the work. The Economic Cornerstone helps them in the bidding, project management and securing their bonding.

"I believe that we have found a private solution to a public problem," Kernan points out. "The government makes certain requirements, but does not always provide the tools to meet those requirements. Minority communities often don't benefit. Through mentoring and training, we are trying to help achieve what the law intended."