If minority businesses were fully incorporated into the economic recovery, the country would benefit along with workers and households in the minority community. It is past time that this issue be moved to the forefront of the political debate. The policy focus must include not only small businesses, but it must also focus on minority-owned businesses.
The American population has become increasingly diverse. This development has been discussed at length especially in regards to the changing ethnic and racial composition of the labor market. The latest census of the population indicates between 2000 and 2010, the Latino and Asian American populations each increased by 43%, the African-American population increased by 12.3% and the white population grew by 5.7%.
While most people are aware of the growing diversity of the population, very few realize that diversity within the small business sector is growing even faster than it is among the population. For example, between 1982 and 2007, African American-owned businesses increased by 523%, Asian American-owned businesses increased by 545%; Hispanic American-owned businesses increased by 696%; and businesses owned by whites increased by 81%. Today, minority-owned businesses make up 21% of the nation’s 27 million small businesses.
Furthermore, a milestone was reached in 2007 because for the first time since the Census Bureau began recording data on minority-owned businesses, they grew faster than did non-minority-owned businesses not just in number, but also in revenue and employment.
Although minority-owned businesses have grown rapidly over the last two decades, there is still a significant disparity in the employment and revenue of minority establishments in comparison to comparable businesses owned by whites. One reflection of this disparity is that minority-owned businesses comprise 21% of all small businesses, but they employ only 5% of the US workforce.
In a Gazelle Index national random survey of 350 black CEOs who operated businesses with 10 to 100 employees, the results indicated that two-thirds of their workers were black. Because blacks and Latinos are experiencing extremely high rates of unemployment, job generation in minority-owned companies is an important economic outcome.
This makes it clear why fully incorporating minority businesses into the economic recovery would benefit the entire country.