(MP) Each February, as we celebrate Black History Month, we would be remiss to not recognize the heritage and contributions of black-owned businesses to America and around the world. However, a newly released U.S. Dept. of Commerce report revealed that African-Americans still lag behind other groups when it comes to business ownership, Yet, the gap may be slowly but surely narrowing.
According to a recent analysis by the Commerce Dept., other minorities and non-minorities consistently make up a disproportionately high share of U.S. business owners. For instance, Black Americans account for roughly 12 percent of the population, yet own just 3.3 percent of businesses less than two years old.
The numbers were even more disturbing in 2014 when the annual census survey reported that Black-owned businesses made up just 2.1 percent of the nation’s companies with at least one employee. According to the Wall Street Journal, the majority of those Black-owned firms were founded after the 2008 recession.
The publication points out that the survey only considered businesses with paid employees, thus omitting those who are self-employed.
One 2014 Census study, which surveyed around 5.2 million business, also found that white-owned firms raked in twice the average number of sales as minority-owned and female-owned businesses. Now, white-owned firms account for 81 percent of U.S. businesses, with Asian and Hispanic-owned firms coming in at 9.7 and 5.8 percent, respectively.
The African American population had an estimated buying power of $910 billion in 2009, larger than 2009 estimated purchasing power of all but 16 countries worldwide, including Australia ($824 billion), Taiwan ($717 billion) and the Netherlands ($654 billion). Although we make up only 2.1 of the nation’s companies we still created nearly one million jobs for the economy.
New York accounts for 10.6% of the nation’s Black businesses, followed by Georgia at 9.6% and Florida with 9.4%. In Indiana, the number of Black businesses was 4.6% of the total in the state of Indiana or 22,210 of their 482,847 firms.
Black-owned businesses tend to be a lot smaller than others and accounted for just 1 percent of total sales. According to one report, sales at Black-owned firms averaged $911,594, which is way below the $2.89 million sales average of white-owned companies.
Still, the rate for African-Americans is 14.0%, while among whites, it is 7.3%. An astounding 40.5% of black teenagers is unemployed.
Consider this fact. Today GDP growth is 3%, and black unemployment is 14%. The best performance of the economy in the last decade occurred in the fourth quarter of 2003. During the period, GDP grew at 6.7%, which is more than twice the current rate.
Nevertheless, the unemployment rate for blacks still averaged 10.6%. Growth is not enough, according to BlackEconomicDevelopment.com. “One solution is that more African Americans might buy from black-owned businesses,” says Sadiq Taylor of blackbuying.com, an online directory that seeks to connect Black buyers with Black businesses.
“Black business is limited in our community. If we want to support a black owned business many times we don’t know who has which products or even where to find them,” Taylor added.
In spite of the news, businesses owned by African Americans are still growing. Ownership, revenue and hiring among black-owned businesses are climbing “significantly faster” than they are at all other businesses in the United States, a report by UC Riverside’s School of Business Administration Center for Economic Forecasting and Development found.
The report also revealed that, in certain areas, the percentage of black-owned businesses is moving closer to, and even outstripping, the share of blacks employed in those regions. Now that would be something – wouldn’t it.