The New York Times - December 13, 1995

Harlem's Economic Paradox

The killing of seven employees at a Harlem clothing store on Friday highlighted many social and political problems: complicated racial tensions, the easy availability of guns, the inflammatory oratory of community leaders. These issues will occupy us in the immediate future, as they should. But New Yorkers should also consider the economic factors that helped to set the stage for the tragedy.

The commercial strip of 125th Street has long been a regional business center, and not just for residents of Harlem. Until the mid-1950's, families living in the South Bronx walked across the Madison Avenue Bridge to bank there; today it is a regular stop for tour buses. The retail strip has more than 300 businesses, but it hasn't really expanded in decades. There are almost no second-story retail stores on 125th Street and few shops have opened on nearby streets or vacant lots.

Upper Manhattan has more residents than Seattle, but only one major shopping strip. Because of the, restricted space on 125th Street, rents have skyrocketed and many shoppers have taken their money to areas with more variety, especially midtown Manhattan and Northern New Jersey.

If the city and state had taken steps to strengthen Harlem's retail base, the tensions over space on 125th Street might not be so high. It is conceivable that there would have been ample room for both Freddy's, the white-owned clothing store that was attacked, and the Record Shop, the black-owned subtenant that was facing eviction.

Most government and private development plans, including the federally supported Harlem Empowerment Zone, have ignored retail expansion in favor of subsidized housing, social services and office buildings. These projects, although worthy, don't do enough to create wealth in the community.

Unlike Atlanta and Chicago, African-Americans are not big players in New York City's private sector. The public sector has tapped much of the brainpower; more than half of all native-born blacks with college degrees in the city work for government or nonprofit organizations. In part this stems from the historic racism in the mainstream business community. But it also reflects government's failure to help blacks start their own companies.

New York needs a private-sector black middle class, and retailing is a good way to build one. Opening a shop is a relatively inexpensive venture compared with high-tech manufacturing or business services. Stores also create jobs suited for low-income areas; retailing accounts for 40 percent of Americans' first jobs.

Yet most Federal and state programs that provide tax incentives and subsidized loans for commercial and industrial developments will not help retailers. The Federal Community Reinvestment Act, which insures that a bank lends to the people in its community, is geared toward housing loans.

Why does government need to step in? Commercial banks are understandably reluctant to make retail loans; applicants typically have little or no collateral or experience. The government, however, could help, either in the form of interest rate subsidies or loan guarantees.

This is not to say that everyone has ignored the potential of retail. Harlem's Abyssinian Baptist Church and the 125th Street Business Improvement District have recently stressed the importance of expanding the retail base. The New York Housing Partnership, a non-profit business group, plans a retail complex at 116th Street and Lenox Avenue.

But private initiatives alone are not enough. Government's priorities will shape the future of Harlem.