By: Marshall Kirby, Public Policy Analyst
After reading this article, I was reminded of an old saying– “numbers don’t lie, but statistics do.” A press release from the Census Bureau reads “Minority Business Ownership Increasing at More Than Twice the National Rate.” Sounds promising and gives a sense of economic progress, right? It does at first glance. However, some groups are giving the numbers and statistics a second look and coming to different conclusions.
Here are the raw numbers for business growth amongst racial and gender groupings for the calendar years 2002-2007:
- All business: 18.0% increase to 27.1 million
- Minority-owned: 45.6% increase to 5.8 million
- Black-owned: 60.5% increase to 1.9 million
- Women-owned: 20.1% increase to 7.8 million
- Hispanic-owned: 43.6% increase to 2.3 million
- White-owned: 13.6% increase to 22.6 million
- Asian-owned: 40.7% increase to 1.6 million
- Hawaiian/Pacific Islander-owned: 34.3% increase to 39,000
- Native American/Alaskan Native-owned: 17.9% increase to 237,000
- Veteran-owned: 2.4 million businesses*
* represents the first time the survey has tracked that categorization.
Looking at these statistics it would appear that business growth is doing well, especially for minorities. However, as mentioned earlier some groups have done a little more digging and have their own conclusions which are more in line with the numbers. In the Census Bureau’s recording data there is another subcategory into which a business is placed: employer and non-employer firms. An employer firm is considered a business which employs at least one other person besides the owner, and a non-employer firm is a business in which only the owner is employed. Experts in small business growth and economic development cite employer firms as the small businesses which generate the majority of economic growth in our communities because they hire people and generate greater revenues for their business.
Further investigation into how minorities and women are doing in growth of employer firms shows that they lag behind their counterparts (white-owned and male-owned). For example, while black-owned businesses had the greatest percentage of growth – most of this growth was a result of vast increases in non-employer firms. To illustrate this point further, one in five white owned firms was classified as an employer firm, where only one in eighteen black owned firms had the same classification. Overall, increases in the number of firms for minorities vastly outpaced their growth in revenue, leading to a decline in revenue per firm. White-owned firms however had the opposite effect – growth in revenues outpaced the growth in total firms. With respect to these findings, it is clear that minority owned businesses, while growing, have not closed the gap.
It is still good news that minorities have experienced such growth in entrepreneurial activity. This shows us several positive things, such as a renewed interest in entrepreneurship from minority groups, and that minority groups will have an increasing market share and voice in the small business community. It is true that businesses take time to grow and expand so it is possible for the next round of reports on entrepreneurial activity to show that they are beginning to close the gap. It is important that community leaders and elected officials at the local, state, and federal level take notice of the real story behind the statistics. They should seek out and identify problem areas and begin to work to equalize the entrepreneurial playing field for men and women of all races.
There are a number of grants, trainings, and resources that are made available to businesses and would-be entrepreneurs. It is our elected officials’ responsibility to make sure they remain available, and up to community leaders to make sure interested entrepreneurs can receive the assistance and expertise they need. This is one of the reasons why The National Puerto Rican Chamber of Commerce makes itself available to entrepreneurs and business owners so that key research and assistance can be passed to those who will generate growth and shape the future of our economy. For a limited time, membership is totally free.