Black Firms Lag in Capacity Growth

Over the last quarter century, the number of Black-owned businesses has grown at a record pace – nearly four times the rate of white-owned businesses. During the last decade, the gap in revenue and employment capacity widened between black-owned businesses and businesses owned by other minorities and those owned by whites.

In 2015, minorities made up 38.4% of the U.S. population and owned 29.3% of the country’s 27 million non-public small businesses. The minority share of business ownership sounds rather impressive until it is broken down by job creating capacity (i.e. employer-based businesses).

In 2014, there were 5.2 million nonpublic employer-based small businesses in the country. Of that number, minorities owned 18.4%. However, the number of businesses owned by minorities greatly exceeded the national share of jobs created by those firms.

On September 1, 2016, the Census Bureau released a new survey entitled, Annual Survey of Entrepreneurs (ASE). The survey uses data collected from a sample of approximately 290,000 employer businesses that operated during 2014. The nes survey results will be released on an annual basis and serve as a supplement to the Census Bureau’s five-year Survey of Business Owners.

According to the ASE’s 2014 survey, whites owned 86% of the nation’s employer firms and received 92.5% of the total revenue of all employer firms. Second to Whites was Asians, who owned 9.8% of employer firms and received 5.4% of the revenue of employer firms. Latinos followed with 5.8% ownership of employer firms and 3.0% of the revenue of such firms. In contrast, Blacks were far behind, owning just 2.1% of employer firms and receiving just .9% of total revenue.

The employment pattern of firms was similar to the revenue pattern. Specifically, businesses owned by whites accounted for 92.5% of jobs while businesses owned by Asians employed 6.9% of the workforce. Latino firms employed 4.4% of the workforce while firms owned by Blacks employed just 1.8% of the workforce.

The lag in revenue and employment capacity of Black firms is extremely problematic. It must become the primary focus of our actions over the next decade.