Black businesses create an average of four jobs per company, compared to 23 for all companies. If the average number of employees per black company reached parity, it would create approximately 12,900 new jobs. To achieve this, it is essential that leaders from financial institutions, philanthropy, government, corporations and investors come together and collaborate to address systemic barriers. Supporting black-owned businesses is more than just providing capital.
It will also require policy changes and representative leadership to build an economy that reflects the promise of America. When these companies are in high demand, businesses become more profitable and create more opportunities. Entrepreneurship promotes economic prosperity and serves as a bridge for low-income families to achieve middle-class status. This will give them greater purchasing power and influence, allowing them to support more local and international black-owned businesses and contribute to job creation. We can trace the origins of today's racial wealth gap to Jim Crow-era practices such as redlining and employment discrimination, which segregated African Americans from higher-paying jobs and homeowner ownership opportunities that ultimately prevented creation.
The Social Security Act of 1935 did not provide coverage for domestic and agricultural workers, many of whom were African-American, and its requirements for residency and payroll information also excluded the large number of African-Americans working in low-grade, “unofficial” jobs and migrating north in that area. If consumer spending represents 70 percent of the entire U. S. economy, imagine what directing some of that purchasing power to black-owned businesses across the country can do. Supporting these companies helps create business opportunities, strengthens communities, increases job opportunities, attracts community investors who provide banking services, loans, and promote financial literacy - all things that strengthen the economy. Small businesses and entrepreneurs have always been wealth builders in our society.
By supporting black-owned businesses, green Americans can create more opportunities for significant savings, property ownership, credit creation, and generational wealth. The growth of black-owned companies is helping to close the wealth gap between other ethnic groups. A study suggests that a 10% increase in businesses owned by people of color could create one million new jobs for people of color. In mostly black communities, this will also strengthen the local economy as around 48% of the money spent on a local business is recirculated locally. Participate in Facebook groups and websites that offer additional support specifically to black-owned businesses. The size of the metropolitan area point is the number of black businesses and the color of the dot on the map below is the percentage of the metropolitan area's population that is black divided by the percentage of businesses that are black owned. Even more worrying is that by 2053, the average wealth of black families is projected to fall to zero.
Small businesses in the United States were hit hard by the coronavirus but black-owned businesses felt it more. As racial tensions swirled this summer, so did calls on social media for those who support the social justice movement for African-American civil rights to amplify black voices and support black businesses. Many African American business owners self-finance their businesses as a result of lack of lending opportunities and to avoid racist and abusive credit practices. This neglect may have prevented the participation of black-owned businesses, especially if they were already skeptical of the program. For example, a recent study by a team of researchers from the National Coalition on Community Reinvestment, Utah State University, Brigham Young University, Rutgers University, and Lubin Research found that banks were three times more likely to request follow-up appointments with landlords white businesses than top-rated black business owners and black business owners were subjected to much greater personal and financial scrutiny compared to their equal or less creditworthy white counterparts. Lack of Black-Owned Businesses, especially within the Black Community has huge implications for Black Families. However, perhaps a more relevant metric is the relationship between black companies and the proportion of the black population. But Jannah also reminds black entrepreneurs to “look back to understand that the progress made on black property is based on the struggles of the past”.
Black owners of employing businesses are less likely to seek services such as legal and financial counseling as they are more likely to benefit from them. Black-owned businesses also tend to earn lower incomes in most industries and are overrepresented in low-growth, low-income industries such as food service and housing. Black business owners are encouraged to look back and take time to understand progress made on black property and struggles from past generations. Banks are investing in support programs such as community development financial institutions which lend to black businesses and provide technical assistance to black entrepreneurs.