Dearth of Black-owned firms may hurt country’s economy
About 6 in 10 Black adults say supporting Black businesses is an extremely or very effective strategy for gaining movement toward equality in the U.S., according to a survey from the Pew Research Center.
As previously reported by USA TODAY, the number of Black-owned businesses compared to the number of Black Americans in the U.S. is disproportionate. Black Americans make up about 12.4% of the country’s population, but Black business owners represented only 2.4% of all employer-firm owners. This disproportionate representation of business owners goes the opposite way for white Americans, who made up a majority (86%) of employee-firm owners while representing about 59% of all people living in the U.S.
The number of Black-owned businesses is up 14% from 2020, according to the Census Bureau. There were 161,031 Black or African Americanowned businesses in operation in 2021, with $183.3 billion in annual receipts, according to the most recent data available.
These sectors have the most Black-owned firms
Black-owned firms employed about 1.4 million people, according to the 2022 Annual Business Survey. These businesses collectively paid $53.6 billion in annual payroll. More than a quarter (45,015) of these businesses were in the Health Care and Social Assistance
sector.
The second-largest sector for Blackowned businesses was the professional, scientific and technical services sector. The Census Bureau tracks businesses by 20 categories, including “other services.” The smallest sector for Blackowned firms was mining, quarrying, and oil and gas extraction, with a total of 31 businesses.
Black women-owned businesses continue to grow
In 2020, 55% of majority Blackowned businesses had male owners, while 37% were owned by women and 8% had equal male-female ownership. The number of Black woman-owned firms grew to 42% in 2021 or a total of 62,953 firms, according to the most recent data available from the Census Bureau.
Investing in Black-owned businesses
Research from the Brookings Institution found that Black-owned businesses are much more likely to hire Black workers and at the same time Black adults are much more likely to be unemployed. The report says that a shortage of Black businesses weakens employment opportunities and the development of Black communities.
Not only does the underrepresentation of Black businesses hurt Black communities and further racial inequality, but it is also costing the U.S. economy millions of jobs and billions of dollars in unrealized revenues, according to the report.