The Root Cities: Chicago Takes Care of Business

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The legacy of prominent black businesses in Chicago goes all the way back to Jean Baptiste Point DuSable. A fur trader of Haitian and French descent, he ran a trading post at the mouth of the Chicago River in the late 1770s. The Potawatomi tribe called him Black Chief.


Thus began a tradition of black enterprise in the Windy City. Chicago is the home of the Johnson Publishing Co., the titan of black-owned publishing firms that was established in 1942 by John H. Johnson. It's also home to Edward Gardner, who in 1964 founded hair-care company Soft Sheen Products Inc. In 1965 a group of local black businessman formed Seaway Bank and Trust Co., the biggest black-owned bank in the Midwest.

Today's African-American business leaders have built on the foundation set by their predecessors to elevate the city's profile. They include John Rogers, whose Ariel Investments is a leading black-run money management and mutual fund company. And don't forget Oprah Winfrey, who has long housed her media empire in the city's Near West Side neighborhood.

Becoming the Center of Black Business Success

Chicago "has an unusually strong history and growth of black businesses," says David Thigpen, vice president of policy and research at the Chicago Urban League. That history, Thigpen adds, arises from a communal spirit that is rooted in a mix between family-oriented Midwestern values and the old black American tradition of having the other person's back.

Some of today's business leaders have known one another for decades, even growing up in the same South Side neighborhoods. That cohesive mind-set has helped mobilize not only the black business machine but, over time, has also bolstered the city's economy and political scene. Chicago's business leaders played a key role in Barack Obama's rise from state senator to the Oval Office through their own financial contributions as well as fundraising.

The black community is still fraught with its share of troubles stemming from segregation, including high levels of poverty and unemployment. The jobless rate among blacks in the metro area reached 15.5 percent in 2009, compared with an 8.5 percent rate for whites, according to the Washington, D.C.-based Economic Policy Institute.


Strength in Segregated Numbers

But "segregation, as perverse as it was, produced a very tight-knit community," says Thigpen. "One of the byproducts of segregation is that black institutions grew, and they were self-contained, and some of them thrived. Political and business power work together in Chicago. It's probably no accident that Illinois — basically, Chicago — has produced two black U.S. senators and a president, because there was a strong black business community that was able to come together."


African Americans began pouring into the city in the early 1900s as part of the Great Migration. Hundreds of thousands from Mississippi, Alabama, Arkansas and Tennessee traveled north on the Illinois Central Railroad. By 1960, Chicago's black population had grown to 813,000. (The black population of Greater Chicago now stands close to 2 million — ranking third behind the New York and Atlanta metropolitan areas, according to a report from the Brookings Institution.)

Escaping the evils of Jim Crow, black men and women had hoped to grab opportunities in the burgeoning steel mills and other manufacturing plants. They learned about these job possibilities from several black newspapers, including the nation's most notable and widely read black publication at the time, The Chicago Defender, founded in 1905.


Yet they found themselves restricted by discriminatory laws that confined them to the city's so-called Black Belt or Black Metropolis — which housed a narrow corridor of overcrowded apartment buildings on the South Side. Local black churches and community organizations helped newcomers adjust. Most African Americans worked as laborers and domestics, but over the years, a small middle class blossomed as some blacks were able to attain slightly higher-paying jobs in areas like city government.

The community also started to generate its own organizations and businesses, housed within existing residential and storefront buildings. The late John H. Johnson, who moved from Arkansas in 1933, once said that "Chicago was to Southern blacks of my generation what Mecca was to the [Muslims] and what Jerusalem was to the Jews: a place of magic and mirrors and dreams."


In November 1942, Johnson began publishing The Negro Digest, a news magazine that addressed black issues. In 1945 it was transformed into Ebony, whose first issue sold 25,000 copies. He followed that up in 1951 with the weekly magazine Jet. In 1982 Johnson became the first African American to appear on the Forbes 400 List, and he was also the first black man to build an office in downtown Chicago.

Black Business Leaders Today

The early era set the stage for today's circle of black business leaders, many of whom sit on major company boards. Some made their mark by establishing their own businesses, while others rose to the top executive suites of Chicago's major corporations.


Ariel Investments, founded by John Rogers in 1983, manages almost $5 billion in assets, while Quintin E. Primo III, who runs the real estate development company Capri Capital Partners, has $3.6 billion in real estate assets under management. There's also James Reynolds Jr., who heads up the investment bank Loop Capital Markets. Since 2005, Frank M. Clark has been chairman and CEO of Commonwealth Edison, a unit of Chicago-based electric company Exelon Corp. There are a host of other top black executives — including Desiree Rogers, who this year replaced Linda Johnson Rice as Johnson Publishing's CEO.

Winfrey, of course, is another big name who has long been a part of any discussion about Chicago's black business scene (although there has been speculation that she may eventually leave for Los Angeles, where her latest venture, the Oprah Winfrey Network, or OWN, is based). In 1986 she launched Harpo, which produces her current TV show as well as The Dr. Oz Show, Dr. Phil and Rachael Ray. The company has also developed a host of films and publishes her magazine O.


With such progress comes pressure to nurture the next generation of black Chicago business leaders. Most of the newest entrepreneurs have been small mom-and-pop operations, and they have struggled greatly amid the current recession. According to the Chicago Urban League, the number of black businesses grew just over 65 percent between 1997 and 2002, but their revenue also slipped about 24 percent during that period.

Looking to the Future

Professional and financial services make up the key business areas that are expanding in the Chicago metro area, and black Chicagoans own only a sliver of that pie. In 2008 black-owned professional-services companies made up just 5 percent of all firms within that industry in the region, and they accounted for 11 percent of the work force, compared with 68 percent of whites employed within the field.


"The real wealth that's being produced now is in the professional-services industry, and black businesses are not participating in a meaningful way," says Jason Tyler, senior vice president and director of research operations at Ariel. "I don't think we are pushing hard enough in the [company] boardrooms."

In 2008 the Chicago Urban League and Northwestern University's Kellogg School of Management launched a nine-month boot camp to help minority entrepreneurs reach the next level. As part of the program, Ariel's Rogers — along with Capri's Primo and other black businessmen — have offered their insights on reaching success. (Rogers is also a vice chair on the league's board of directors.) Those entrepreneurs who have gone through the camp have improved their profit margins by an average of 10 percent, according to the league.


Chicago United, a local organization that promotes racial diversity in all levels of business, since 2008 has enlisted about 20 midsize-to-large metro-area corporations to commit to expanding their business with an existing or new local minority-owned firm. In the second quarter of this year, minority-owned enterprises in the program saw a 16 percent jump in revenue over the same period a year ago.

"We know that if we can get the overall business community to focus on the need to spend with our local minority businesses, we can actually have an impact on our business growth even during an economic downturn," says CU President Gloria Castillo.


Monee Fields-White is a Chicago-based writer who covers a wide array of topics, including business and economic news.