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ASU research shows how deregulation could help minority businesses

ASU research finds that easing startup costs could boost minority businesses.
October 21, 2021

New 'Doing Business' report ranks 134 cities on commerce regulations

If cities tweaked their regulations to make it easier to start a business, it might lead to more minority business ownership, according to an economist who analyzed a new Arizona State University dataset.

“I wanted to see, ‘Is there something we can put our finger on when it comes to the ease of doing business, and if we relax this barrier, will we see more minority business ownership?’ ” said Alicia Plemmons, an assistant professor at Southern Illinois University Edwardsville.

Plemmons examined ASU's newly released Doing Business North America 2021 report and compared it with data on minority business ownership. She found that even a small increase in the ease of doing business, measured as a one-point increase in a city’s score, correlated with a nearly 4% increase in minority-owned businesses relative to the minority population in a city.

Plemmons, who studies occupational regulation and taxation, spoke at a webinar held Tuesday by the Center for the Study of Economic Liberty at ASU, which produced the Doing Business North America 2021 report. The report, in its third year, compares a wide range of business regulations among 134 cities in Canada, Mexico and the United States. The center is a joint endeavor of the W. P. Carey School of Business and the School of Civic and Economic Thought and Leadership.

Doing Business North America 2021 was compiled by center researchers, including undergraduates at ASU, who analyzed publicly available datasets and websites, collecting information on regulations that affect small and medium-size businesses, such as required maternity leave, how many steps it takes to get the power turned on and how high the tax rate is.

The more regulations a city has, such as mandated paid time off or multiple steps for rezoning, the lower the score and the rank.

The analysis showed a wide range of experiences in starting a business. For example, it takes an average of one day to start a business in Colorado Springs, Colorado, compared with 12 days in Phoenix.

Among the 134 cities evaluated for the 2021 edition, Colorado Springs ranked first in overall ease of doing business, with a score of 78.04 out of 100.

The full top 10 are: Colorado Springs; Durham, North Carolina; Henderson, Nevada; Sioux Falls, South Dakota; Salt Lake City; Raleigh, North Carolina; Charleston, South Carolina; Cincinnati; Tulsa, Oklahoma; and Las Vegas.

Chandler, Arizona, a new addition this year, ranked 13th, with a score of 74.53.

Phoenix, which came in 59th last year, ranks 36th this year, scoring 71.58. The other two Arizona cities ranked were Mesa, 34th, and Tucson, 45th.

The cities at the bottom of the list were all in Mexico. The lowest-ranked U.S. city is Charleston, West Virginia, at No. 95.

Plemmons found that the subcategory of “ease of starting a business” had the biggest correlation to increased minority business ownership.

“Minimum wage is loosely related to a decrease. The higher the minimum wage, we start to see slightly less minority business ownership,” she said. 

“Severance or paid maternity leave or sick days didn’t have much of an effect, and neither did getting electricity,” she said.

The results can translate directly into policy decisions for cities that want to encourage minority business ownership, she said. So decreasing startup fees or streamlining licensing and permiting might prove beneficial, whereas decreasing the corporate tax rate might not.

Plemmons’ analysis found that, when considering the proportion of minorities in the population, the four Arizona cities rank fairly high among U.S. cities in the report for minority businesses: Mesa is eighth; Chandler is ninth; Tucson, 23rd; and Phoenix, 25th.

The Doing Business in North America project was led by Stephen Slivinski, who was a senior research fellow and project director at the Center for the Study of Economic Liberty until recently leaving ASU.

The primary motivation of the research is to find business migration patterns, he said.

“So we looked at the world as it existed before COVID, and now we’re looking at how it’s coping with COVID,” he said.

“People can leave and work remotely, independent of where their workplace is. There’s been a large exodus of businesses from California to several places. Phoenix is one of those places, as well as cities in Texas, Nevada and as far away as North Carolina.”

The 2021 report includes four new cities: Chandler; Durham; Fort Worth, Texas; and St. Petersburg, Florida.

“We realized that if we were only looking at the largest cities in the U.S., we were not looking at growing cities, and that’s important if you want to capture what the migration of people and businesses look like long term,” he said.

“So we added four cities that had the highest population growth.”

The new analysis found one surprising factor, Slivinski said.

The most significant reason why some cities moved up the rankings, or dropped, was the score in the category of getting electricity. That category measures the price of electricity per kilowatt hour and reliability

“When you scale it up, you realize that even a one-cent change for a small manufacturer can have a several-thousand-dollar change in the cost of doing business,” Slivinski said.

Reliability, the number of blackouts or brownouts, is based on annual data from the U.S. Department of Energy.

“Salt Lake City bumped into the top 10 this year, and it was almost exclusively because the state of Utah saw a one-cent-per-kilowatt decline in electricity prices and saw a halving of the number of days that a business would be offline because of electricity blackouts,” he said.

“So we’re getting a glimpse of how states are dealing with infrastructure needs and challenges they had when lots more people were working at home and residential energy consumption went up.”

“Texas saw a migration of businesses during the pandemic but suffered severe problems with its electricity grid earlier this year. Next year’s report might show the effects of that.”

Top image of the Phoenix skyline by Deanna Dent/ASU News

Mary Beth Faller

Reporter , ASU News


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Clint Smith says slavery sites are in a unique position to teach history

Author Clint Smith describes how slavery sites must explore complicated stories.
October 21, 2021

Author tells ASU audience how names, statues feed into society's narrative

When Clint Smith was growing up in New Orleans, it was impossible to escape the adulation of the Confederacy. Every step he took brought him to a monument or street that idolized white men who fought to uphold the enslavement of Black people. 

“I was thinking about what it meant that I grew up in a majority Black city in which there were more homages to slavers than there were to enslaved people,” Smith said during a talk at Arizona State University on Tuesday.

“What does it mean that to get to school I had to go down Robert E. Lee Boulevard? What does it mean that to get to the grocery store I had to go down Jefferson Davis Parkway? My middle school was named after a leader of the Confederacy and my parents, to this day, live on a street named after someone who owned more than 150 enslaved people,” he said.

Smith said that the names and iconography are more than symbols.

“They are reflective of the stories that people tell. And those stories shape the narratives that communities carry, and those narratives shape public policy and public policy shapes the material condition of people’s lives,” he said.

RELATED: Controversial statues: Should they stay or should they go?

In 2017, the city was removing some of the statues when Smith began thinking about how New Orleans, and then other places, tell the stories of their history.

That led to a cross-country trip to visit nine places with a link to slavery. That trip led to Smith’s book, “How the Word Is Passed: A Reckoning With the History of Slavery Across America,” which was released in June.

Smith, who also is a poet, teacher and staff writer for The Atlantic, was this year’s speaker for the Jonathan and Maxine Marshall Distinguished Lecture Series sponsored by The College of Liberal Arts and Sciences at ASU. After his talk and a reading from his book, Smith sat down for a Q&A session with Ruben Espinosa, associate professor of English and associate director of the Arizona Center for Medieval and Renaissance Studies.

Smith told the audience how one of the sites he visited was Monticello, the Virginia home of Thomas Jefferson, who Smith said personifies the cognitive dissonance of the story that Americans tell themselves.

“America is a place that has provided unparalleled, unimaginable opportunities for millions of people across generations in ways their ancestors could have never imagined, but it’s done so at the direct expense of millions and millions of other people who have been intergenerationally subjugated and oppressed,” he said.

“Both of those things are the story of this country.”

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Author and poet Clint Smith (left) participated in a Q&A session with Ruben Espinosa, an associate professor of English at ASU. Photo by Maximillian Conacher/College of Liberal Arts and Sciences

Jefferson wrote one of the most important documents in the Western world and also enslaved more than 600 people over the course of his lifetime, including four of his own children.

“He wrote in one document that ‘All men are created equal’ and wrote in another document that ‘Black people are inferior to whites both in endowments of body and mind.’ He said the slave was ‘incapable of love,’ ” Smith said.

So how does Monticello tell that story? The docent conducting the tour gave a “master class of the contradictions embodied in Jefferson,” Smith said.

Afterward, Smith talked to tourists who attended the tour who were shocked to hear that Jefferson was an enslaver.

“These places are in a unique position to have people who might not encounter this information in another context to serve as an entry point for them to think differently about the history of this country and to think more holistically about how they are situated within it.”

Smith also visited Angola in Louisiana, the largest maximum-security prison in the country. It’s on the site of a former plantation, and 75% of the prisoners are Black men who are controlled by armed prison guards on horseback.

“If you were to go to Germany and have the largest maximum-security prison in Germany built on top of a former concentration camp in which the people held there were disproportionately Jewish, that place would rightfully be a global emblem of anti-Semitism,” he said.

“It would be abhorrent and disgusting, and we would never allow a place like that to exist.”

Smith said the visit to Angola made him think about how the story of white supremacy numbs American society to its violence.

While Monticello is beginning to show the complexity of its story, Angola is not. The gift shop sells coffee mugs and shot glasses with the silhouette of a watchtower and the slogan, “Angola, a gated community.”

Smith said that he sensed a change among Americans after the murder of George Floyd, with a more sophisticated understanding of how racism is not just interpersonal, but systemic and historical.

“I joke that if you asked somebody in 2012, ‘What’s redlining?’ — they would say, ‘Is that a kind of makeup?’

“And now more people understand it as the state-sponsored mechanism through which housing segregation was perpetuated by the federal government throughout the 20th century.”

But that understanding has created a more sophisticated backlash from people who see the full story of American history as a threat to their identity. That has led to state-level legislation targeting what kind of history can be taught, he said — because for those aggrieved people, history is not about truth.

“It’s about being able to tell yourself a certain story that allows you to situate yourself in the American narrative in a way that feels empowering,” he said.

Smith said that “How the Word Is Passed” is essentially a letter to his 15-year-old self, who grew up surrounded by Confederate iconography.

“I didn’t have the language to understand why this Black city had a leader of the Confederacy on a 60-foot statue in the middle of a traffic circle, and not even fully understanding truly what the Confederacy was,” he said.

Smith said that as an adult, when he began researching and learning more about the Confederacy, it gave him context and a sense of understanding about New Orleans, which was often denigrated as “the murder capital of the nation” or criticized for promoting cultural decay.

“Implicit within so much of that was all of the things that people were saying was wrong with Black people. I knew it was wrong, but I didn’t know how to say it was wrong,” he said of his younger self.

“I think the most insidious version of that is that you begin to internalize some of things the world tells you about yourself.

“The power for me of learning about American history is that this country can’t lie to you anymore about why it looks the way it does.”

Top image: Poet and author Clint Smith was the featured speaker of the Jonathan and Maxine Marshall Distinguished Lecture Series on Oct. 19 at ASU. Photo by Maximillian Conacher/College of Liberal Arts and Sciences

Mary Beth Faller

Reporter , ASU News