|By Dohrea Bardell
Since the inception of the U.S., privately owned local businesses have been the traditional “American way” route for creating jobs and sustaining local communities (Gilbert, 2008, pp. 39-41). But along the way, economical changes affected work and commerce; first with the industrialized age and through the years into the technological era, “Each year, millions of small business enterprises collapsed, only to be replaced by millions of new enterprises, most of them doomed to the same fate. As corporate dominance of the economy expanded, small business was relegated to the highly competitive retail sector of the economy” (Gilbert, 2008, p.46). As large corporations take over small businesses, monopolize the economy and garner more political power, inequality grows between the working class and upper class, with poverty levels increasing, taking under more people (pp.69-79). The issue of finding work has become an enigmatic phenomenon that seems to elude modern society.
I started my research on the business class with an essay on the “American Dream” (2009) and asked if the American Dream is a myth or reality. Although sources like Gilbert (2008) and Domhoff (2006) show negative statistics on social mobility to higher paying working positions (Gilbert, p. 124), and speak of the American dream as “a fabricated reality to keep the general populace believing in something that will keep them trying hard to achieve success” (Domhoff, pp. 111-114), my hypothesis is that the privately owned small to medium local businesses are indeed still the heart and soul of America: “it is in this arena that the sprit of self-expression operates freely and creatively”, and further more “we can have the American Dream but it will take a systemic approach, an open society that is willing to get angry and act to bring changes” (Bardell, 2009, p.7). Investing in the structure to help people build small local businesses can change the face of the US economy, put power back into the hands of local communities and still maintain the global relationship and progress of the 21st century. How does a small business operate today? What are the challenges and joys? And most of all, would it bring the American Dream back if we invest in such a structure?
For this research paper, I have interviewed five locally owned private businesses that have been a part of the Seattle-Bellevue community for over thirty years. I have asked the owners what do they think of the small business today, and how do they maintain and survive in these hard economical times. This research project brought to light the incredibly hard work and diligence of local community people who illustrate how alive and well the American dream still is. These owners squarely face the hardship and instability of the times, the fact that at any moment, even with thirty years of ownership, they too can lose their businesses and livelihood. What stood out in the interviews was the willingness to share and impart knowledge and information about the nature of business, its value in our economical system and its solid tradition. The commitment and strong sense of purpose and responsibility for the community was notable and on par with the findings of the Lynds’ Middletown from 1890 “…there emerged a society…that stressed individual initiative and progress, family solidarity, simplicity of manner and style of life, and equality among neighbors” (Gilbert, 2008, p.39). Times have changed; economies, politics, modern lifestyles; and yet, the spirit of the people has remained creative and community oriented.
For the last several decades the American people may have forgotten the beauty of owning businesses, but an awakening is taking place. David C. Korten’s new book, Agenda for A New Economy (2009), demonstrates the emerging new thinking of economists: the American Dream does not want to die and disappear into mega conglomerates that diffuse the intent of society to be independent, healthy and vibrant, but rather, a turn back to community owned businesses, or what Korten terms “Main Street economy” is at hand (p. 29). Korten explains that “Main Street is the world of local businesses and working people engaged in producing real goods and services to provide a livelihood to themselves, their families, their communities” (p. 26). What is the function of a business? Korten’s family owned retail music and appliance business and he therefore “understood that business was a service to the community and that that was what businesspeople provided. Many main street business owners continue to this day to embrace a similar commitment to community service…” (Korten, 2009, P.27). Businesses are the foundation of a thriving community; liken to a “healthy ecosystem” of many diverse forms, “function[ing] within a framework of community values and interests that moderate the drive for profit” (p.26).
Masins is a fourth generation family owned quality furniture store with the mission to offer the finest home furnishings and interior design. Mr. Eman Masin founded the store in 1927, and today three generations Masins are working at the store. Dave Masin who is the fourth generation great-great son o Eman Masin manages the store in Bellevue Washington describes the family’s early beginnings as a thrift store. His great grandfather used to go to the train yard and take things that fell off the train and fix them at the store. With time he realized “he liked to restore and work with furniture” (Masin, 2009). 83 years later, the family business is employing many local people and is a foundational part of the community. Dave joined his father Bob and grandfather Ben in 2001 after a phone call from his father requesting his help. The economical recession of 2008-2009 is hitting everyone hard, but the Masins have a strong positive attitude about hanging in there; “We have been here for a long time and we all will survive but we will have to hold on pretty tight. We have to cut back in a few areas but have tried not to lay anybody off-yet… We are friends with everyone that works here but we have to realize excess and cut down and let go when we have to…”. It is easy for big corporations to fire people at will; the publically owned large businesses don’t belong to the city they do commerce in, they do not know the people and their families, or are attached to the survival and general success of the community. To them it is simply about profit and the happiness of the shareholders (Korten, 2009, pp.27-28).
Dave Masin hopes that things will not get any worse than they are now since the businesses are already experiencing a 30 to 40 percent reduction in sales and still are burdened by too many taxes “I cannot imagine anyone having more taxes than the business people…there are 15 different taxes and the list goes on and on…we don’t have the connection as the large businesses do, and that is why they are getting bailed out… it is not what you know but who…”. Dave was not the only owner that talked about “15 different taxes”, other owners talked about the burden of additional taxes added on to a long list of taxes that already are eating up profits, which could have been invested back into small businesses and the community. Dave formed a network of friendships with many of the owners and managers of other furniture stores (privately and publically owned), and “everyone’s business is suffering”.
Unlike the big furniture stores, the Masins primarily stock their store with U.S. made furniture, supporting local and national workers, “not that there is anything wrong with things made in China—because there are some nice things coming out of the region, but to be able to buy a piece of furniture that is made by an American craftsman is rare now days. Ten years ago everything was made domestically, but now 75-80% is made in China” (Masin, 2009). Masin brings up the point of profitability; the large corporations have taken businesses and therefore work out of the U.S., bringing back cheap merchandise that makes it hard for Americans to compete “with the big guys… the ‘big box’ stores”. How can a local business compete with Costco Home or Crate and Barrel when their advertising and marketing abilities surpass the smaller budget of a small business? When you add up the facts that the merchandise in these large owned corporate stores are bought cheaply from elsewhere therefore not benefiting American workers, and that the money people spend on these goods goes back into the pockets of stockholders therefore not benefiting communities; it leaves very few people and businesses that benefit from such commerce. A faulty system in need of correction.
In Who Rules America? (2006), William Domhoff reports that there are “approximately 23 million small businesses in the United States, defined as businesses with less than 500 employees…there are only 14,000 companies with 500 or more employees. Because small businesses make 52 percent of all sales and employ 54 percent of the private labor force, they are sometimes claimed to be a counterweight to the power of the corporate community” (p.41). If that is the case, why does the government not support and give tax breaks and programs to enhance the abilities of the small business to grow and prosper? According to Domhoff it is because the corporations can move out of cities if “regulations [become] too stringent or taxes and wages too high” (p.45) and the ability to move around causes competition between cities “for new capital investments, creating tension… The net result is often a “race to the bottom” as cities offer tax breaks, less environmental regulation, and other benefits to corporations in order to temp them to relocate” (p.45). Domhoff compares this special treatment against the plight of the small business, which does not have the power to negotiate, move or dictate terms to its own city government. It is this corporate power system that Korten (2009) wants to re-organize and even eliminate (p.77). His intent is to rebuild the community by re-vamping the system and bringing back to health the status of the small local business. Since they produce more than half the jobs of Americans; it is time to pay attention to their place in reviving and shaping a healthier future economy.
The Sunlight Café is an important institution in the Seattle cultural and community scene. Joe and Margaret Noone have owned the café for over thirty years and have been committed to serve fresh vegetarian food that is affordable and healthy. The reviews are positive not only because of the good food but also because the owners care about the community: it is the healthy “ecosystem” of Korten that you find at the Sunlight Café. But in these tough times, every penny counts “Our business has always been cost wise, at a level where we have to work really hard to stay in business” (Noone, 2009). Joe Noone views the Café as a place for the community to eat fresh food: “we are at the nice price range that people can afford”, but even when he has to raise prices he calculates it to the point of “surviving” and “staying afloat”. The idea is to be affordable, support local people, add to the community and “help the neighborhood grow”. The exact concept that Korten describe as the ideal “Main Street” business (p.30).
Noone also talks about taxes keeping the small businesses struggling with new taxes that seem to spring up, such as the Stadium tax that supposed to “benefit business people in the greater Seattle area”, but in fact “only benefits the big restaurants downtown” (Noone, 2009). Even though Joe feels that they will survive this difficult period “taxes are killing businesses” and the capitalistic system “is not meant to run well or [with] honesty—it meant to steal money, as much as possible— legally”. Exactly the sentiment of Korten (2009), who thinks that Wall Street cannot be fixed and should be replaced (p.45), and Domhoff, who thinks that the “capitalist mentality” keeps the corporations and upper class focused on the “investment climate and the rate of profit…[and therefore] involve themselves also with policy planning process…and then conveys them to the two major political parties, the White House, and congress” (pp.75-77). If the focus in on profit only, where does that leaves the small-owned business like the Noones? For Joe and Margaret Noone, owning their own business means having “ a roof over our heads and enough food to eat” and a savings account that is not reliant on Wall Street “make believe money”, since you “don’t really have money when stocks go up” (Noone, 2009). The reality of owing a small business may be difficult but it is honest, pays the bills, put a roof over the family’s head and food on the table.
Butch Blum is a family owned business and was the first store to bring original European designer fashion to the Northwest. Butch Blum is now managed by Kay Blum and has both men and women lines of U.S. and European designers. Blum who says, “2009 will not be a fun year”, has experienced many ups and down in their 35 years of business. According to Blum, the apparel business has a hard time to remain in business beyond 3 to 6 years in good times, let alone now days, with banks not loaning money, and businesses stuck with inventory they cannot sell, forcing them to lower prices (sales), effecting their ability to pay bills. The business of apparel has to have three key points to survive: a good location; “open the store in the beginning of a decade, rather than the end — it’s a downturn”, or especially at the end of the decade, during national election time since “times are too insecure because laws and taxes can be changed, and people and therefore business pull back”. The third key point is to have enough capital to invest (Blum, 2009). The lessons Kay Blum teaches are felt by several stores that have already closed in the Seattle downtown area because one of the three key points was missing, and at hard times; location, timing and enough money is not only needed but is essential to survival.
But even large publically owned companies are suffering in the downtown Seattle area. Barneys New York is being offered for sell for half the price its owner, Dubai’s Istithmar World, paid only two years ago (Business Week). Times are tough for large stores and their sales cycles are being stepped up and “completely destroy[ing] the cycle of retail” (Blum, 2009). Blum describes how Saks started before Thanksgiving with 60% off everything, Nieman followed suite, then Barneys and Nordstrom “with a cascading effect” that brought down the small owned stores: “any resemblance to a bottom line is out of the question- and it is very difficult to navigate that kind of a retail environment when you are competing to a certain extent with the large stores, particularly if you are in the designer business”. To this effect, the Blums made very different choices from everyone else in town and Kay thinks it may be the reason they are still in business: they decided “not to follow suit” and did their “typical things”, what they have done for 35 years; remain steady in their approach to hard times.
Kay and Butch Blum believed their customers would support healthy business practices and the community of patrons indeed backed their plan. Although everyone’s business is down, Blum’s no exception, there is a spirit of solidarity and shared values to keep locally owned businesses live and well. Butch Blum has also “always has a base in the store, an opening price points” to please many different clienteles with contemporary outfits that are well priced. Although the store has “hung our hat on certain designer collections we thought were great”, they “evaluate them each year” and buy accordingly. Or as Blum says it honestly “if it is bad [the collection]- we only buy a few good pieces, to keep continuity”. It is not the name or brand that is important but the practicality and price of the outfit itself; the value has to be real. The Blums sentiment about their merchandise is what Korten calls “community values and interests” (p.26). When the community is served with honesty and value; both business and community benefit.
The reality of the situation is that many stores and malls across America are closing their doors. Blum thinks that may be a “good thing even though painful” since “how many ways do you split the pie?” and points to the statistics of population growth not being high enough for the amount of stores that have been opened in the last two decades. The result: The New York Times announces big corporations like Saks, with over 400 stores, is considering closing down some of its stores to survive, just as Starbuck will be closing 600 stores, with many other chains following suite. The philosophy that the Blums embrace is not about endless expansion but how to serve the costumer: “we are only as good as how did we solve our worst costumer’s problem—yesterday”. Solving problems and serving the community is the mission of the Blums; and that is good business. Kay Blum wants to make sure that “what they do in the community is really contributing on a positive level”. They remodeled the store with green materials, publish periodical magazine that highlight the people in the community, support many charities, and enjoy long standing relationships with their costumers: “we feel encouraged that people are solving issues in our community”.
How can the government support a small business? Kay Blum believes it is the Small Business Administration needing to be funded again. It is how they started their own business and how many can benefit in times of economical need—as banks freeze credit lending. Investing in infrastructures such as the SBA will ensure the care for our environment, help the small business owner, and cut taxes to give more breathing room to reinvest in business and community (Blum, 2009). Sounds simple enough, and yet it is the lack of focus and healthy investment in our privately owned local business community that is destroying the ability for the American Dream to materialize for many people (Korten, pp. 141-143).
Steven Goldfarb, second-generation owner of Alvin Goldfarb Jeweler brings an historical perspective to the place of the small to medium sized businesses in America. Goldfarb remembers the 60’s when he watched the TV’s show Gilligan’s Island and laughed as the millionaire, Mr. Howell, checked on the radio the “performance of his stocks”. Back in the 60’s this was the joke of the show, but “fast forward to the 80’s — all we did was talk about stocks. The movie Wall Street came out – and there was a sudden shift in finances, in the general population towards Wall Street; and everybody talked about stocks”. Goldfarb outlined the 80’s as being all about stocks, buying homes, selling homes, and buying more than one home to fix and sell, in short—making money. In the 90’s the dot.com companies came and left with a bang, and “here we are today, you hear politicians talk about the middle class creating 50% of jobs and yet Wall Street is getting all the headlines since the stock market is imploding”. Even though the local businesses are not getting recognition or help from the government, as banks and big corporations do, they uphold half of the American economy and indeed produce 54% of the jobs in the U.S. (Domhoff, 2006, p.41). Goldfarb adds that what is surprising about the jobs the business class generates is that “ most of the businesses that create all these jobs are companies that you have never heard of—and probably never will hear of”. So who are these companies? They are the commercial painting companies that paint warehouses and giant building, like “the space needle that gets a new paint job every ten years”, they pick up dirt from the first phase of building construction areas, and they deliver groceries. They do many jobs that are simply not seen since they do not have the typical storefront nor advertise, none-the-less; these companies create millions of dollars worth of business each year and employ many local workers. “When you think of local business—you think of the store fronts, retail people who serve the public, but there are many more jobs that the public never sees” (Goldfarb, 2009).
Steven Goldfarb contends that even though politicians say “the middle class is responsible for creating many jobs, they don’t have a great understanding, (nor does the general public), what these jobs are, since so many of them are literally behind the scenes”. This corresponds to research revealing how big corporations influence government policies to their favor, while taking American jobs outside the U.S. (Domhoff, p.77), compounded by the “economy of powerful corporations governed by a culture of greed [Wall Street] and a belief that it is their legal duty to maximize returns to shareholders” (Korten, p. 30).
Steven Goldfarb observes that serious economical changes will be painful. It took time “to get here”: credit cards are a recent occurrence that did not exist before the 60’s; mortgage loans are being used to get other loans, as in a second mortgages, and “now days people don’t think of paying off their houses, it used to be the goal, when they get close, they refinance” (Goldfarb, 2009). The consumerism of today has a spending motto, and it will take time to “re-set”. Goldfarb believes, as the other business owners do, that “it will be a dramatic and painful change”. Although we need to support the local businesses, Goldfarb also sees the global business world as a connected community with many opportunities to enjoy the kind of life we never had before and that the “mix of local and global will make you healthier, help your community out, and be better for the environment”. Goldfarb sees the advances that can be made in technology and energy as the wave of the future; the way we can dig out of the mess, and where the small business can shine: “ the big corporations are doing the electrical, nuclear and coal; but no one is doing solar, wind and hydro-electric (perfect in Seattle), it is an opportunity – companies can be born”. But can we overcome the politicians and the big corporations? Goldfarb thinks that will take a slew of new politicians in DC to see more reasonable solutions. Americans need to think differently; to “creatively self organize”, create new infrastructures, strengthen others, (as Kay Blum advices), and possibly even overhaul the government (Korten, 2009, p.117).
Nathaniel A. Jackson, owner of the Café Allegro figures that it will take a “social community” to bring about healthy changes. At Allegro, it is all about the mix of many creative people, good conversations and an excellent cup of coffee. Café Allegro has been a part of the UW life for over thirty-five years. To understand community life, Jackson looks back at the different decades and lesson learned in each decade. The hurdle to overcome is to “walk the talk”, or as Nathaniel puts it “despite the fact we talk about values of home and community, it is the opposite in our culture. The way we evolved— [has] destroyed community and family”. Jackson started to work at the Allegro because he realized the Café had a special inviting atmosphere that could be developed into a community center. In 1991 he bought the Café with another partner. Work ethics and good manners, respect and honor of the people around you are the foundations Nathaniel Jackson teaches his employees; it is his dedication to health of the community that holds the café’s society together. Jackson’s motto: “joy and community, an extended family that works together”. And “in that spirit” he worked hard “help[ing] his coworkers learn how to behave as family and benefit” (Jackson, 2009).
As a child, Nathaniel Jackson rebelled against “helping around the house”, but when his uncle came back from the Korean War, a broken and drunken man, Jackson’s mother gave him a roof over his head and “plenty work around the house to help him settle down”. During that summer, Jackson worked hard with his uncle “fixing and building, cleaning”, and seeing his uncle’s life changing and healing. That was a pivotal point in Jackson’s life and the possible reason for his success in working down the street from the Café with the Teen Shelter young adults. “I could have bought two more houses with the time and money I invested there, but its what Allegro does”. The joys of this kind of work is that over the years “kids have come back to let me know they are all right, that they are on a good foot” (Jackson, 2009).
Nathaniel Jackson believes that it is the positive intent of each business that “is the key to society’s success”. For him “it is never about money, it is about creating a safe space for people to congregate, share and grow”. Café Allegro is about “affirming people” and its goal is to be “a rich reservoir for people to draw from”. Allegro’s art and work comes from its local costumers. Café Allegro “is about a network of local people, connecting resources and talent”. If the door needs fixing, one of the customers will take the job, if the café needs plants or art, pluming or IT work; the customer base “will provide the talent”. But as all businesses struggle with the harsh economical times, so does Jackson who is now facing a large building being built, across from the café where a parking lot used to be. The large building already shields the wide windows of the cafe from sunshine, creating dust and noise as the structure gets bigger and more imposing. This change can put the Allegro out of business, yet Jackson views it as an opportunity to change and evolve “welcoming to re-define the space itself”, maybe as an “alley Café”.
Jackson understands the role history had played in changing the face of government towards the small business. He views the 70’s as a joyous, experimental period of time. The 80’s and Regan’s presidency is described by Jackson as a “period of greed… people were into power suites, “stock groups” populated the Café, and the society became more divided”. But that time also brought “diversity” to Allegro, turning the café into “a small globe”. By the 90’s Jackson owned the business and noticed during the tough economical times “people came back to Allegro to get their bearing again… to discuss the bad times…reconnect and hang”. With Bush’s presidency, and as the year 2008 shut down many businesses, Jackson observed how many people “lost the dream”. In the 70’s it was “a choice to be poor…we “mourned” getting a job by drinking beer at the pub…now, it is external [circumstances]”.
The tough economical times are creating what Nathaniel Jackson terms “an awakening”. The reality that government and big corporations “don’t care, don’t see us as fellow travelers”, if they did they “would have already provided us with health care, education… but they are isolated from our reality”. Jackson, together with the other business owners of this research project understand the difficult realities of the times; they are experienced and wise business people who have been through several decades of various business cycles. The interviews demonstrate the strength of the American spirit and the reality that the American Dream is alive and well; but hidden and unknown by the American people, and surprisingly the government. Small to medium privately owned businesses have performed well for the American economy even though they have not received due respect and consideration. Creating governmental (federal and local) systems that support and enhance the local community businesses will bring stability back into the economy, health and vitality to the communities.
David C. Korten (2009) summarizes well the new economical paradigm by saying “Adaptive change of this magnitude requires unleashing the creative potential of the community, which can be done only through responsible self-organization in service to the well-being of the whole” (p.118). The awakening of a society to what in fact has worked for many years, hidden from the media who focused on Wall Street and “paper money”. As each owner interviewed shared about the ups and downs of business management, the philosophy they hold, historical lesson learned, teaching the new generation how to hold on, nurture and sustain the business; a new sense of community hope developed within me. I realized, as a 30 years business owner myself that the American Dream is not a fabricated reality as Domhoff thinks, or a lost cause as Gilbert describes, but a bona fide opportunity that exists, and can continually be re-invented and re-designed to bring about better and healthier social change.
Korten’s (2009) book is about re-imagining a society that is based on local community businesses creating real wealth. The New Rules Project (www.newrules.org) is a group of people who believe that “the old ones don’t work any longer”, and worse “They undermine local economies, subvert democracy, weaken sense of community, and ignore the costs of our decisions on the next generation”. Their work is about creating a “legislative platform to strengthen America’s independent business”, and in doing that “keep [ing] the American Dream alive”. In the beginning of this project my hypothesis was that the privately owned small to medium local businesses are indeed still the heart and soul of America. I also wondered if investing into new economical structures would bring back the American Dream to the millions of people who have lost it. I learned that the American Dream is alive, even though diminished, but with hard work, good ethics, and creative inventive minds—we can build a new economy. But it will be a painful change. Is America ready?
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