The discussion started before Michael B. Kennedy was born. By last year, his patience had wore thin.
“I serve on a lot of committees, and I felt like I kept having the same conversation. It took hours and hours of repeating the same thing. And every time, I felt like I had to start all over again,” said the architect and president of KAI Design and Build.
Founded by his father, Michael E. Kennedy, 32 years ago, KAI is recognized as one of the leading minority-owned architectural firms in the country. The senior Kennedy serves as chairman and chief executive.
To the younger Kennedy, 34, the exchanges with contractors, government officials, trade unions, developers and fellow designers inevitably returned to the shortage of minority contractors and trade participation on local construction projects.
The problem has vexed St. Louis, publicly at least, since the afternoon of July 14, 1964, when Percy Green and another activist climbed a leg of the yet-to-be-completed Gateway Arch to protest the lack of African Americans working on the landmark.
Nor has the situation shown much sign of improvement. A March study by the Associated General Contractors of St. Louis that pegged the number of minority workers on local construction jobs at approximately seven percent.
African Americans account for 49 percent of St. Louis City residents and 23 percent of those in St. Louis County.
Kennedy didn’t need census data to drive the point home.
He found proof in the overwhelming number of white faces encountered on visits to area construction sites, particularly those outside the city.
The time had come, he concluded, to move the conversation from board rooms and business meetings to a broader audience.
“I thought if I could capture everything that is being said in these meetings on video, and then get that video in (the right) hands, then maybe we can finally move onto some viable solutions,” Kennedy said.
“Building a Better St. Louis” was initially envisioned as a “ten-minute clip.”
But once Kennedy and the production company, headed by Bobby Edwards Media Group, began the interviews, they learned just how much local business and community leaders, both black and white, had to say about minority hiring.
Thirty hours worth to be exact.
Edited to 41 minutes, the film takes unsparing shots at the insularity of white-dominated local trade unions, the shortcomings of public education in St. Louis and the chronic racial divide.
“Anyone who says St. Louis is not a segregated community is someone who has had his head stuck up his you-know-what for too many years,” volunteers Terry Nelson, the outspoken head of the Carpenters’ District Council of Greater St. Louis.
St. Louis City License Collector Mike McMillan offered a more measured analysis: “What we’ve found at every level of business or corporations or government is that if (change) is not pushed from top and implemented all the way down, then women and minorities, who have always been left out of the picture, will continue to be left out of the picture.”
In an interview this week, Kennedy cited additional factors he believes shift the odds against minority contractors and workers. High on the list are the social and economic forces separating the city and outlying suburbs.
He praises adherence to the ordinance stipulating that minorities perform 25 percent of the work on projects within the city. But frets at how the threshold is rarely met on construction sites in the surrounding counties free credit score online.
Kennedy says a fair share of the blame goes to minority contractors and laborers themselves.
Construction, like all businesses, is about relationships.
African American contractors and laborers, Kennedy charges, don’t forge the necessary connections while working side-by-side with non-minorities on city projects.
The upshot, he says, is that construction companies choose to do business with white subcontractors when jobs materialize in St. Louis, St. Charles, Jefferson and Lincoln counties.
“Building a Better St. Louis” points out that minorities compete for just one percent of the opportunities to participate on area construction jobs.
“It’s not a black and white issue, it’s a cultural issue,” Kennedy says, singling out the “where’d you go to high school?” question. “It’s about the St. Louis cliques. St. Louis is not friendly to outsiders, white or black.”
“Building a Better St. Louis” makes a stab at answering the overarching question of how, or if, minority contractors can ever achieve equity.
It’s a tall order.
Kennedy believes it will occur organically.
He points out that the white males that have dominated the construction trades are retiring. With many of their children exhibiting little interest in continuing the family tradition, the door will swing open for African Americans.
The key, Kennedy says, is getting young minorities interested and prepared to step into the breach.
He sees “Building a Better St. Louis” as prompting a dialogue to move the black community in that direction.
The video was screened this week for a group of contractors and Kennedy ultimately hopes to bring it to a wider audience of government officials, civic groups and – his big goal – an airing on a public broadcasting station.
“This industry lags farther behind any other industry that I’ve seen,” Kennedy says in the video. “The more I talked to people the more I decided other people needed to hear what I was hearing. And that was to listen to the voices of reason.”
QUOTE OF THE WEEK
“… workforce professionals we interviewed said that some employers are reluctant to hire older workers. Because of legal prohibitions against age discrimination, employers are unlikely to explicitly express a lack of interest in hiring older workers; however, one workforce professional told us that local employers had asked her to screen out all applicants over the age of 40.” - U.S. Government Accountability Office on plight of older Americans suffering bouts of long-term unemployment.
Source: U.S. Government Accountability Office
BY THE NUMBERS
7.3 percent - Missouri’s seasonally-adjusted unemployment rate in April, the lowest in 40 months.
Source: Missouri Department of Economic Development
FINAL WORD
“There has been a lack of progress on this issue, and too many families are struggling right at the time when they should be celebrating the birth of a new family member. Working parents should have the benefit of these programs.” Vicki Shabo, director of work and family programs at the National Partnership for Women & Families on study that found only 11 percent of privately-owned companies provide paid family leave for new parents.
Source: The Chicago Tribune
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Claims for unemployment benefits declined last week to the lowest level in a month, easing concern that the U.S. labor market is faltering.
First-time claims dropped by 1,000 to 367,000 in the period ended May 5, the Labor Department said today in Washington. Other reports showed that a gauge of consumer confidence declined to a three-month low, and the trade deficit widened on rising demand for imports from oil to autos.
Claims are returning to levels reached in February and March, indicating a surge last month probably reflected difficulty in adjusting the data for an Easter holiday that came earlier this year than last. Declines in dismissals point to a brighter labor market that would help sustain consumer spending after payroll growth slowed last month.
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With Facebook hurtling toward a spectacular initial public offering in the $100-billion range May 18, it
U.S. stock market futures are basically flat ahead of the government release of April employment data.
Dow Jones industrial average futures are up 4 points at 13,147. Standard & Poor’s 500 futures are up 1.17 to 1,387. Nasdaq 100 futures are gaining 2.75 points to 2,694.75.
In Europe, Britain’s FTSE 100 index, Germany’s DAX and France’s CAC-40 are all down, as traders waited for the U.S. jobs figures and fretted ahead of weekend elections in France and Greece that could impact Europe’s debt crisis instant payday loan. Earlier Asian markets were mixed, with the Nikkei in Tokyo gaining, while Hong Kong’s Hang Seng and South Korea’s Kospi both ended down.
U.S. stock to watch include Berkshire Hathaway Inc. Warren Buffett’s investment vehicle reports quarterly results after the market opens.
Dow Chemical’s first-quarter earnings fell 50 percent after it took a pre-tax charge of $357 million to close some of its plants.
The nation’s largest chemical maker reported income of $412 million, or 35 cents per share, from January to March. That compares with $625 million, or 54 cents per share, for the same part of 2011.
Excluding restructuring costs related to the plant closures and other special items, Dow said it earned 61 cents per share. Revenue was flat at $14.7 billion.
Analysts, who typically exclude special items, expected earnings of 59 cents per share and revenue of $14.96 billion, according to FactSet.
The Midland, Mich., company has benefited from growth in emerging economies in the Asia-Pacific region and Latin America. But sales have weakened in Europe, where a growing debt crisis is pushing parts of the eurozone back into recession. In March, Dow decided to restructure its international business to account for the slowdown in Europe.
Dow cut 900 jobs, closed plants in Charleston, Ill., Portugal, Hungary and Brazil, and it idled operations at a plant in the Netherlands. The changes are expected to cut costs by about $250 million each year.
Dow Chairman and CEO Andrew Liveris said that Western Europe will continue to deal with “recessionary conditions” this year. The economic picture is better in the U.S., thanks to cheap natural gas prices. Natural gas prices have a huge influence on company margins because it’s such a big input in the process.
China’s economy appears to be moderating and Germany is showing signs of improvement, he said.
Shares of The Dow Chemical Co. fell by 59 cent to $35.49 in premarket trading.
The Senate on Wednesday passed a plan to save the struggling U.S. Postal Service, an effort that could save thousands of jobs and 100 mail processing plants now slated to be closed or consolidated next month.
In an unusual showing of bipartisanship, the Senate voted 62-37 to throw a lifeline to the indebted Postal Service. Without help, the Postal Service would otherwise cut Saturday service, delay mail delivery and close hundreds of postal processing plants and post offices, triggering thousands of job cuts nationwide.
"My hope is that our friends over in the U.S. House, given our bipartisan steps we took this week, will feel a sense of urgency," said Sen. Tom Carper, a Delaware Democrat, one of the Senate bill’s co-sponsors. "The situation is not hopeless, the situation is dire."
The House has yet to take up a different bill to reform the Postal Service. However, Rep. Darrell Issa, a key Republican on postal service legislation, called the Senate bill "wholly unacceptable," in a statement released Wednesday.
Congress faces a deadline of May 15, when a moratorium on postal closures expires.
The recession, declining mail volume and a congressional mandate to prefund retirement health care benefits have put the service in a bind. It reported a $5.1 billion loss for the year ended Sept. 30.
The Senate bill, offered by members in both parties, forces the Postal Service to ease off part of its plan to slow down the delivery of first-class mail, the kind of mail that most consumers use.
Postal Service: We need more junk mail
The bill makes controversial changes, including cuts to workers’ compensation benefits, as well as a transition from door-to-door delivery to curbside delivery in some areas, such as suburban neighborhoods.
The Senate bill also prevents the Postal Service from cutting Saturday delivery for two years, until the agency can prove such a cut is needed as a "last resort."
During debate on the postal bill the past two days, the Senate agreed to order the Postal Service to postpone the May 15 expiration of a moratorium on closures until the House passes a postal service bill.
The Senate also agreed to cap executive pay of high-ranking postal officials to that of Cabinet officials, $199,000 cheap credit report. (Postmaster General Patrick Donahoe made $384,000 last year.)
The cost of the Senate bill could prove a major sticking point with the House. The Congressional Budget Office says the bill would cost $33.6 billion over 10 years.
The tab comes from increased borrowing authority for the Postal Service, allowing it to borrow $11 billion more from Treasury. The Postal Service can currently borrow up to $15 billion, and has tapped $12 billion of that loan.
The other cost comes from elimination of regular billion-dollar payments, now required by law, to Treasury to pre-fund health care benefits for retirees. That $23 billion would ease financial pain for the Postal Service, but it also means less revenue to ease federal deficits.
Several Senate Republicans, including Sen. Bob Corker of Tennessee, said they voted against the bill, because it wasn’t paid for in an appropriate way.
Earlier this year, the Postal Service said it was doing away with overnight delivery of many kinds of first-class mail, opening the door for closing 223 mail processing plants at a cost of 35,000 jobs.
The Senate bill would force the Postal Service to maintain some one-day delivery of first-class mail, mostly for items mailed within the same processing area — saving 100 mail processing plants.
The Senate bill would also tap most of an estimated $10.9 billion overpayment in the Federal Employees Retirement System to pay down postal service debt and use up to $2 billion on buyout packages to entice long-time employees to retire.
Unions oppose the Senate bill, saying it doesn’t provide a good long-term business model.
"We are very disappointed that the Senate approved such a flawed bill, but we are determined to continue the fight for legislation that will provide a path to long-term viability for the Postal Service," said Fredric V. Rolando, president of the National Association of Letter Carriers.
The U.S. Postal Service is, by law, an "independent establishment" of the executive branch. The agency doesn’t normally use tax dollars for operations, except for its $12 billion loan from Treasury.
Here are two words to guide you financially through the rest of 2012
Iranian and European officials expressed confidence in the results of Saturday’s negotiations on Tehran’s disputed nuclear program as it was announced that the two sides will meet again in Baghdad on May 23.
The very fact that there will be another round adds to a growing sense among diplomats that the two sides were making notable progress in talks that have grown increasingly tense as the West has tightened sanctions on Iran and Israel has threatened a pre-emptive military strike on the Islamic republic.
But the challenges in the next round could be far more significant. That’s when the six powers will likely seek further commitments from Tehran to reduce concerns that it could use its uranium enrichment program to make the fissile core of nuclear missiles.
EU foreign policy chief Catherine Ashton called Saturday’s talks in Istanbul constructive and said future talks will be guided by the “principle of a step-by-step approach and reciprocity.”
That indicates the international community is ready to reward Iran if it moves to alleviate fears that it intends to weaponize its nuclear program _ rewards that could include delaying or easing some sanctions.
Iran’s chief negotiator, Saeed Jalili said his team “saw a positive approach (from the other side) and we consider it a step forward.”
Iran insists its nuclear program is peaceful, and Ashton said Saturday that Tehran has a right to such a peaceful program. At the same time, she added, the Nuclear Nonproliferation Treaty must be the “key basis” for future talks.
Iran asserts that it has not violated the treaty, and that it has a right under that agreement to enrich uranium for peaceful purposes. Asked about the making the treat the basis of the talks, Jalili said, “We expect that we should enjoy our rights in parallel with our obligations.”
Iran is under four sets of U.N. sanctions for refusing to stop uranium enrichment _ which can be used both to make reactor fuel and the fissile core of nuclear warheads _ and the international community continues to demand that Tehran stop the activity.
But the last set of nuclear talks broke up without result more than 14 months ago after the Iranian team had refused to even discuss enrichment.
The six countries negotiating with Iran _ the U.S., Russia, China, Britain, France and Germany _ came to Saturday’s meeting with modest expectations.
Diplomats said before the meeting began that even general Iranian readiness to accept the need to discuss its enrichment program would be considered enough of a success to warrant a follow-up round.
Earlier Saturday, one of the diplomats, who like the others demanded anonymity because he was sharing confidential information, said the Iranians appeared to be moving toward that readiness, engaging in discussion about the peaceful use of nuclear energy and the nonproliferation treaty.
He said the Iran’s team had mentioned Iranian Supreme Leader Ayatollah Ali Khamenei’s “fatwa,” or edict, prohibiting nuclear weapons for Iran, in the course of the plenary discussions.
Here’s an unsettling fact for anyone thinking of ever buying shares in a newly public company: Even if its executives know their internal accounting systems are a wreck, they aren’t required to disclose this until after the company goes public.
It is a lesson that Groupon Inc. shareholders have learned the hard way. Groupon shares fell 17 percent on Monday, after the online coupon company said late last week that it had identified a “material weakness” in its internal controls over financial reporting, as of Dec. 31. The Chicago-based company also revised its fourth-quarter results to show lower revenue and a larger loss, after finding errors in its accounting for customer refunds. At $14.54, the stock now sells for 44 percent less than it did after the first day of trading.
Given that Groupon went public only last November, the latest news raises the question: Didn’t Groupon know before its initial public offering that its controls were weak? A company spokesman, Paul Taaffe, declined to comment. Let’s assume for the moment, though, that its executives did know. Even then, they wouldn’t have had to tell investors beforehand.
That’s because there is no requirement to disclose a control weakness in a company’s IPO prospectus. Groupon would have had no obligation to disclose the problem until it filed its first quarterly or annual report as a public company — which is what it did. Sandbagging IPO investors in this manner is perfectly legal, it turns out.
Sox Hole
The reason lies with a gaping hole in the Sarbanes-Oxley Act, which Congress passed in 2002 in response to the accounting scandals at Enron Corp. and WorldCom Inc. That statute had two main sections related to companies’ internal controls, which are the systems and processes that companies are supposed to have in place to ensure the information they report is accurate. Those provisions apply only to companies that are public already, not ones that have registered for IPOs.
One section, called 302, requires public companies’ top executives to evaluate each quarter whether their disclosure controls and procedures are effective. The other section, known as 404, is better known. It requires public companies in their annual reports to include assessments by management and outside auditors about the effectiveness of their internal controls over financial reporting. Congress left it to the Securities and Exchange Commission to write the rules implementing those provisions.
Here’s where it gets tricky. Groupon reported the weakness in its financial-reporting controls through a Section 302 disclosure, not a Section 404 report. In other words, the problem was serious enough that it amounted to a shortcoming in the company’s overall disclosure controls.
Groupon won’t have to comply with Section 404’s requirements until its second annual report, due next year, under an exemption the SEC passed in 2006 for newly public companies. Likewise, Groupon’s auditor, Ernst & Young LLP, to date has expressed no opinion on the company’s internal controls in its audit reports instant payday loan.
Groupon’s IPO prospectus cautioned that future disclosures about control weaknesses were possible. It also said the company had only “recently filled a number of positions in our senior management and finance and accounting staff.” However, the prospectus made no representation about whether Groupon’s controls were effective at the time. None was required.
An SEC spokeswoman, Judith Burns, confirmed: “There is no requirement to disclose a material weakness in the prospectus.”
She was speaking broadly, not about any specific company.
Perfect Call
Give credit where it’s due: Two writers who made the perfect call on Groupon are Anthony Catanach, an accounting professor at Villanova University, and Edward Ketz, an accounting professor at Pennsylvania State University.
“It is absolutely ludicrous to think that Groupon is anywhere close to having an effective set of internal controls over financial reporting, having done 17 acquisitions in a little over a year,” the pair wrote in an Aug. 24 article on their blog, Grumpy Old Accountants. “When a company expands to 45 countries, grows merchants from 212 to 78,466, and expands its employee base from 37 to 9,625 in only two years, there is little doubt that internal controls are not working somewhere.”
Even before going public, Groupon restated its financial reports in September to correct errors in the way it reported revenue, which slashed 2010 sales to $312.9 million from $713.4 million. That alone should have flagged to investors that Groupon’s controls were lacking. Nonetheless, the stock market this week acted like it was surprised.
The debacle at Groupon understandably has drawn comparisons with the new securities legislation that President Barack Obama is scheduled to sign into law. The act lets newly public companies go five years without providing internal-control reports by outside auditors, as long as annual revenue is less than $1 billion. (Groupon reported 2011 revenue of $1.6 billion.)
The change comes after the Dodd-Frank Act in 2010 permanently exempted companies with less than $75 million of freely tradable shares from meeting this requirement — which means most U.S. public companies.
The new law will reduce disclosure obligations in many other ways. Pre-IPO correspondence between companies and the SEC’s staff initially would be stamped secret, for example. The act is a lurch in the opposite direction of what is needed.
Let’s not fool ourselves, though. The existing protections for IPO investors were feeble before the new law. That Groupon could stay mum for so long about any control weaknesses it had, legally, is merely the latest evidence.
There is only one solution for investors who aren’t insiders: Don’t ever buy stock in a company that just went public.
Wendy’s gave its new CEO a pay package worth $4.6 million for the last four months of 2011.
Emil Brolick was hired last September after Wendy’s split from fellow fast-food chain Arby’s. The 63-year-old Brolick has been on a mission to reinvent Wendy’s as a higher-end burger chain by improving ingredients and remodeling restaurants.
An Associated Press analysis of a regulatory filing finds Brolick’s compensation included salary of $338,462, a bonus of $500,000, stock and option awards worth $3.2 million and an incentive-based bonus of $533,026.
Other compensation covered legal expenses related to the negotiation of his contract.
Wendy’s previous CEO, Roland Smith, received $16.5 million for the first part of 2011, including $11.3 million in severance pay.
The AP’s calculation includes salary, bonuses, perks and stock and option awards.
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