For decades, African Americans have struggled to achieve the same economic prosperity as white individuals and business owners. However, as of the COVID-19 pandemic, things have changed for the better. In fact, many recent statistics indicate that Black business ownership has risen and will continue to rise in the future. Let’s take a closer look at these statistics to determine the reasons why.
More Black Small Business Owners
First and foremost, there are now more Black small business owners than ever before.
According to a collection of census data compiled by Robert Fairlie, there were 28% more Black small business owners in the third quarter of 2021 than before the COVID-19 pandemic. While this was somewhat true for other minority business owners, like those from a Latino background, Black business owners saw the greatest rise in business ownership.
This is primarily true in major metropolitan cities like San Francisco, Los Angeles, Pittsburgh, Boston, and New York City, but it’s also true throughout the country. Note that many of these individuals are self-employed or run very small businesses or startups.
Because of this, small business churn has to be taken into account. The majority of small enterprises do not survive more than a few years, either because of economic difficulties or because their founders have different goals. Regardless, this rise in Black small business ownership is a positive sign and one we should all celebrate.
Self-Employed African Americans
Speaking of self-employed African Americans, there’s also been an improvement in this metric. According to certain studies, there were over 1.2 million self-employed African Americans in February 2022, a significant increase compared to the 1.1 million self-employed Black individuals in February 2020.
Furthermore, the website domain company GoDaddy indicated that Black small business owners are responsible for 26% of new website creation since the beginning of the COVID-19 pandemic, compared to just 15% before the pandemic.
This relates to the above trend. Black entrepreneurs are now starting more small businesses – whether or not they have employees – in record-breaking numbers. But many Black small business owners are opting to jump into the freelance arena, working for themselves instead of someone else.
Of course, this trend was repeated across other demographic groups throughout the pandemic. Many people had no choice but to begin freelance work or start self-employed enterprises if they wanted to keep bringing home money. Still, the number of Black self-employed business owners has risen dramatically.
Job Creation From Minority-Owned Businesses
Many of these Black businesses have led to positive boosts to the economy. According to certain studies, minority-owned businesses have created 4.7 million jobs and have accounted for more than 50% of all new businesses created in the last decade and last two years, respectively. Simply put, Black business owners are not just achieving prosperity for themselves but also helping to drive the overall American economy.
This trend is particularly important in the wake of the pandemic since the economy has slumped significantly. Thanks to Black small business owners, however, the economy is recovering much more quickly than it might have otherwise.
Reasons for These Statistical Shifts
There are many potential reasons for these statistical shifts. For example, the COVID-19 pandemic caused many people to look at their professional paths more critically, as they suddenly had much more time on their hands. It’s possible that many Black entrepreneurs or would-be business owners decided to take the leap of faith required to start a new entrepreneurial endeavor after lockdowns shut down the country.
More broadly, widespread protests over the killing of George Floyd in 2020 led to a much greater, heightened awareness of social justice. As a result, businesses and government organizations alike took serious steps to improve and increase contracts with Black-owned businesses. For example, Google began highlighting Black-owned businesses so patrons and customers could consciously choose to “buy Black” when possible.
In addition, the COVID-19 pandemic led to some financial breathing room for certain Black families who benefited from stimulus checks. According to one study of eight states that was published by the National Bureau of Economic Research, there was a positive correlation between the formation of new businesses in Black neighborhoods and stimulus checks.
But it all might truly be due to shifting cultural attitudes and energies among minority communities like African Americans. Though there remain significant challenges in the areas of equity and social justice, there’s never been a better time to be an African American business owner. Rising wealth among Black families means fewer African Americans are feeling the financial stress of covering house-related costs, and more people have the ability to build wealth for generational success.
Will the Trends Continue?
For many, the more pertinent question is whether the positive trends described above will continue or if it is just a short-term blip on the economic radar.
In all likelihood, Black business ownership will continue to rise. As more Black business owners are successful, they serve as positive examples and representatives for their communities, inspiring new future entrepreneurs to take their own steps to business ownership. On top of that, the government has not shown any signs of decreasing its support for minority communities and businesses.
Add to that more positive support from the public for Black-owned businesses, and you have a recipe for positive change across the board. It’s quite possible that Black-owned businesses will control even more of the market in the next decade, particularly if social justice efforts continue to be successful and accepted by the majority of the American public.
Fortunately, positive trends tend to result in more positivity. As Black business owners accumulate financial cushions for their enterprises, they’ll be more likely to stay in business thanks to that increased liquidity.
Wrap Up
Ultimately, Black business ownership is on the rise and will continue – and that’s a good thing! More minority-owned businesses ensure greater economic equity and prosperity, particularly for minority consumers. With the right drive and ambition, Black business owners will become even more integral to the success of the American economy.
