This article is from Brookings.edu.

For the descendants of enslaved Africans in the United States, entrepreneurship represents more than just owning a business and pursuing the proverbial American Dream. Instead, the ability for Black people to participate in local, regional, and global markets represents a dream deferred by systemic racism and discrimination. Consequently, an analysis of Black business ownership can offer insight into the degree to which America is truly the land of opportunity.

Inspired by the work of the Path to 15|55 initiative, this research explores the state of Black-owned employer businesses (hereafter referred to as Black businesses). Using the Census Bureau’s 2018 Annual Business Survey (ABS), which replaced the Survey of Business Owners (SBO), we analyzed data at the national and metropolitan levels to compare Black and non-Black businesses.

The purpose of this research is to provide the empirical context that will make way toward a set of business development goals. Future goals will provide a shared vision among key players that can drive capital to Black entrepreneurs to start, maintain, and grow their businesses. This includes capital from corporations and philanthropies, support from political leaders, investment and products from financial institutions, and venture and startup capital investment from high-net-worth individuals. The potential economic and social returns that strategic investments in Black businesses can have for individual business owners, local communities, and the overall economy warrant an analysis.

According to the most recent Census Bureau data available, Black people comprise approximately 14.2% of the U.S. population, but Black businesses comprise only 2.2% of the nation’s 5.7 million employer businesses (firms with more than one employee).

Black-owned businesses are much more likely to be sole proprietorships. According to the 2012 SBO (the last year reported), 4.2%of Black-owned businesses had employees, compared to 20.6% of white-owned businesses. Black adults are much more likely to be unemployed, and Black businesses are much more likely to hire Black workers.

This shortage of Black businesses throttles employment and the development of Black communities. Furthermore, the underrepresentation of Black businesses is costing the U.S. economy millions of jobs and billions of dollars in unrealized revenues. Read more...

About the Authors

Andre M. Perry

Senior Fellow – Metropolitan Policy Program

Carl Romer

Research Assistant – Metropolitan Policy Program
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