Pandemic Led to More Black-owned Businesses but Exacerbated Their Challenges
Cheerful small business partners in restaurant. iStock.com/SouthWorks
Connecting state and local government leaders
A new report says that state and local governments must commit to creating more opportunities for Black-run firms, including through the infrastructure act.
While the pandemic led to an increase in Black-owned businesses, Black owners were affected the most by Covid-19, exacerbating the challenges they already faced, according to a report by Brookings.
Even prior to the start of the pandemic in March 2020, no metropolitan area in the U.S. had a share of Black-owned employer firms that corresponded to or surpassed the Black population in the area.
The metro areas with the highest representation of Black-employer businesses in 2019 were:
- Oxnard-Thousand Oaks-Ventura, California
- St. Louis
- Fayetteville, North Carolina
- Los Angeles-Long Beach-Anaheim, California
- Washington, D.C.-Arlington-Alexandria, Virginia-Maryland-West Virginia
- Worcester, Massachusetts-Connecticut
- Cape Coral-Fort Myers, Florida
- Columbus, Ohio
- San Francisco-Oakland-Hayward, California
- Rochester, New York
In 2019, about 4% of Black-owned businesses were employer firms, compared to 19% of white-owned businesses, the report shows. If Black businesses accounted for 14% of employer firms (equivalent to the total U.S. Black population), there would be nearly 800,000 more Black businesses, the Brookings report notes.
Covid-19 heightened the challenges that small businesses owned by people of color faced before the pandemic, according to findings from the Federal Reserve System’s 2021 Small Business Credit Survey.
While most small-business owners reported undergoing financial difficulty during the pandemic, the highest percentage was reported by Black business owners (92%), the survey says. Following Black businesses were Asian American-owned firms (89%), Latino- or Hispanic-owned firms (85%) and white-owned firms (79%).
Expanding Black-owned Businesses
Here are some federal and metropolitan policy solutions suggested by Brookings to expand Black businesses:
- Expanding the Minority Business Development Agency, a federal agency dedicated to the growth and global competitiveness of minority business enterprises and its partnerships.
- Committing to opportunities for Black-owned businesses in infrastructure spending. This will allow leaders to follow through on their promises to lift the Black community by formalizing and building relationships with the Black businesses that create wealth for these communities.
- To ensure public funds are managed by people who look like the public, officials should seek investments with diverse fund members. This also leads to diversity in investments. Brookings goes on to say that localities “should demand” that those who oversee their funds and assets should at least 30% women and people of color.
- Leveraging philanthropy to support structural change that can provide temporary relief. However, philanthropic giving must encourage the kind of structural change at the federal, state and local levels that will allow the economy to work for everyone.
For more information from the Brookings report click here.
Andre Claudio is an assistant editor at Route Fifty.
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