Obstacles still there for Black businesses
Many Americans like to think our society and economy offer a level playing field for all, no matter your gender, religion or race. On the other hand, there is reality.
Conservative politicians across the country are pushing to end every program intended to counteract centuries of white supremacist policies. They have vilified and misrepresented diversity, equity and inclusion programs, alleging reverse racism. But the facts remain, and they are ugly.
The Alliance for Entrepreneurial Equity’s “The State of Black Business” uses data from the Federal Reserve, the Census Bureau and other publicly available sources to gauge progress and problems.
“Black-owned businesses are seeing year-over-year growth, but there are still wide divides across numerous metrics, from revenue and debt to business size and market access,” said Imani Augustus, AEE’s director.
Black people make up 14% of the U.S. population yet own only 2.5% of American businesses, Census Bureau data shows. While that’s an increase from 2% in 2018, it’s still remarkably low. Asians are the only minority with a business ownership rate proportional to their population.
Black-owned businesses also tend to be small in comparison, with 97% employing fewer than 20 people. Three in four have fewer than five workers, the data shows. More than two-thirds are less than 5 years old and provide health care or social assistance; nearly 60% have revenues less than $100,000.
There are two explanations for the disparity: One is racist by suggesting Blacks are not as good at business, while the other suggests U.S. society is not as colorblind as it would like to believe. The telltales are in the credit and financing data.
Three-quarters of whiteowned businesses are considered a low credit risk, compared with 30% of Blackowned businesses.
“Black-owned businesses are denied financing far more than anyone else. Four in ten Black-owned businesses are completely denied loans, lines of credit, and cash advances,” the report concluded, citing Federal Reserve banking data. “Only 32% are fully approved. Compare that to white-owned businesses: only 18% are denied while 56% are fully approved.”
Startups often rely on venture capital for financing until they have sufficient cash flow to qualify for bank loans. However, out of $138 billion that VC firms invested in 2023, only 0.5% went to Blackfounded companies.
History provides some vital context. Whites enslaved most Blacks in the United States until the Civil War ended in 1865. The federal government and U.S. Supreme Court allowed state and local authorities to deny Blacks fundamental civil and economic rights until the 1960s.
Until the early 1970s, public schools and universities remained segregated, with Black children relegated to substandard facilities and fourthhand textbooks. Housing policy forced Blacks into impoverished neighborhoods where even if a family could own its home, it held very low value due to poor public services and environmental hazards.
Government affirmative action programs boosted minority enrollment in universities and encouraged employers to hire qualified people of color in numbers proportional to the population. But when whites were forced to compete on a level playing field, they complained of reverse discrimination.
Today, Texas cities remain among the most racially and economically segregated in the nation, the nonprofit Urban Institute found. Living apart produces inequities in access to well-funded schools and quality health care.
Some conservatives concede that past racist policies are responsible for today’s disparities, but they object to race-based methods of addressing them. In rejecting affirmative action programs at universities, Supreme Court Chief Justice John Roberts last year declared that offering a helping hand is discriminatory.
“Racial classifications are simply too pernicious,” Roberts said. He believes taking away the head start enjoyed by white people is as evil as holding Black people back.
Texas Republicans are dismantling every government effort to level the playing field by passing laws banning DEI programs. Laws also prohibit state agencies and public schools from discussing the state’s white supremacist history or how officials blocked Black communities from economic success.
Texas Attorney General Ken Paxton has announced investigations into private corporations trying to hire more minorities or correct past injustices. The most absurd suggestion is that DEI programs caused Boeing’s recent safety problems.
Conservatives will continue denying our society has a race problem, not realizing that placing the blame for inequity on the victims of discrimination is, in fact, racist. We all know where you start is the biggest factor in deciding where you end up, but too few people are willing to acknowledge their head start.
Award-winning opinion writer Chris Tomlinson writes commentary about money, politics and life in Texas. Sign up for his “Tomlinson’s Take” newsletter at houstonhchronicle.com/tomlinsonnewsletter or expressnews.com/tomlinsonnewsletter.