Census Data: Blacks Trail Whites in Business Ownership

New data recently released by the U.S. Census Bureau indicates that blacks own disproportionately few businesses compared to whites or to other minorities. While that gap has narrowed in recent years, blacks still have a lot of catching up to do.

Though blacks account for 12% of the overall population, they make up just 2.1% of business owners, according to the Census’s new Annual Survey of Entrepreneurs. The survey gathered information from approximately 290,000 businesses across the country with paid employees, excluding self-employed workers.

Even in large metropolitan areas with a higher percentage of black demographics, black-owned businesses make up less than 10% of all firms. In Memphis, for example, where 46% of the population is black, only eight percent of businesses are black-owned.

About half of all of the black firms in the survey were less than five years old. While it’s not clear how many of those businesses will survive into the future, that information could represent an upward trend in minority ownership.

“Technology has in many ways been a great equalizer because small and minority business owners can access labor cheaper and information more readily,” said Richard Taylor, a real-estate investor and adviser, to the Wall Street Journal. It also provides built-in marketing, as 70% of social media users connect their profiles to at least one local business.

The rise in new businesses could also be part of a rebound effect after the Great Recession, said Georgia Tech professor Thomas Boston, where black business owners dealing in home equity were hit particularly hard.

Still, the current trends are not entirely enough to close the racial business gap. “Black businesses, even though they have been growing, have lagged behind the growth of other groups,” Boston said.

That reality might only change through a shift in cultural attitudes.

“Entrepreneurship is just not pushed in our community,” said Malcolm Crawford, founder of the Austin African American Business Networking Association in Chicago. “We teach our children to go to college so they can get a good job. We don’t have any place for them to come back and use what they learned at college inside the family business.”

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