Why Black Business Ownership is Rising | National News – Natural Self Esteem

But around 2020 things started to change.

In a normal year, the local urban development office issues around 30-50 loans. In 2020, it made over 350 loans — and nearly half went to black-owned businesses.

Pittsburgh is part of a larger trend. African-American business owners were one of the hardest-hit groups early in the pandemic, with the number of self-employed reportedly falling 31% from the first quarter of 2020 to the second Census data compiled by Robert Fairlieresearch fellow at the University of California at Santa Cruz.

But now this group is making a comeback. Just over 1.2 million African Americans were self-employed in February 2022, compared to just under 1.1 million in February 2020. Another to learn from website domain company GoDaddy found that black owners have created 26% of all websites for new businesses since the pandemic began, compared to 15% before.

The gains are larger than other demographics: According to Fairlie’s analysis of census data, the number of black small business owners was 28% higher in the third quarter of 2021 than before the pandemic, compared to 19%. for Hispanic business owners and 5% for White and Asian business owners.

“I definitely see it happening here in Pittsburgh. … Not only is the narrative shifting, but our actions and results are beginning to trend upwards,” said Diamonte Walker, deputy executive director of Pittsburgh’s Urban Redevelopment Authority, which is Invest $5 million into minority and women-owned businesses.

It is still too early to say how many of these self-employed people will go on to found larger companies and also employ others. Economists suggest interpreting the numbers with caution, as self-employment includes not only small business owners but also gig workers such as Uber drivers. Still, this trend gives hope that the lofty promises made by companies after last summer’s social justice protests to invest more in the black community have led to real, tangible change.

“Healthy Black businesses are key to healthy Black communities,” Walker said.

A pandemic and a racial reckoning

The growth of black self-reliance has several possible reasons. First, there was already African American business ownership growing before the pandemic.

“It’s not a strange coincidence. There’s a lot of demand for goods and services, and a lot of people are realizing I can do that without having to work for anyone else,” said Ron Hetrick, economist at Emsi Burning Glass.

Hetrick also noted that the counties with the largest increases in business formation over the past two years all have significant black and Hispanic populations: Chicago (Cook County), Detroit (Wayne County), Los Angeles, and Houston (Harris County). Miami. Dade County.

“The good news about this whole thing is if you see business creation in very ethnically diverse populations, then that would normally indicate that you would see increasing attitudes from those populations as well,” he said.

But why should African Americans in particular see more self-employment growth than other groups? One possible reason is that the widespread protests over the killing of George Floyd in the summer of 2020 have led to greater awareness of social justice concerns, which has led to more governments and companies pledging to extend their contracts with companies in the United States Prolong ownership of blacks.

“Recently there have been two changes: One is the pandemic, but there’s also been racial reckoning,” said Erica Groshen, senior economic adviser at Cornell University’s School of Industrial and Labor Relations.

Government support may also have helped boost new businesses in the black community. A to learn of eight states, released by the National Bureau of Economic Research, found a correlation between stimulus checks and new businesses in black neighborhoods.

Initially, government support bypassed black business owners. A Small Business Survey A fall 2020 study conducted by the Federal Reserve System found that while 79% of white-owned businesses received all requested funds when they applied for a loan from the Paycheck Protection Program, only 43% of black businesses did. Additionally, black companies that applied were five times more likely than white companies to receive no PPP funding at all.

However, later PPP funding rounds have focused more on supporting small businesses, the self-employed and underserved communities. A to learn The study, published in January by Robert Fairlie and Frank Fossen, found that loans were initially disproportionately less likely to go to minorities in the first round of the program, but later rounds reversed this trend.

“My guess is that the revised PPP program has helped … but also increased awareness of racial inequality among customers and larger companies looking for suppliers,” Fairlie said.

“It signals what is possible”

Despite these successes, there is still much to be done. A Brookings institution report estimates that it will take 800,000 more black-owned businesses to reach equity. Furthermore, just starting a business does not guarantee that it will survive in the long run.

“There are many companies that are starting up, but how do we help them survive?” asked Tracey Clark Jeffries, a black business owner who is CEO of Capital Consulting Services in St. Louis.

Jeffries has found that many businesses in her community are open – but struggling. For example, she’s heard from restaurant owners on Martin Luther King Jr. Boulevard in St. Louis that they’re seeing fewer customers now that more people are working from home.

“What small black-owned businesses need is a more structured model that can help them survive over a three to five year period,” Jeffries said.

Still, Jeffries says her own business has actually gotten stronger since the pandemic. She turned to advising organizations on how to make better use of office space they no longer need with remote workers, and she’s also landed some lucrative government contracts.

And just seeing new businesses being formed can have a powerful impact on a community.

“You see a stark wealth gap between blacks and whites. This inequality is being felt not only on an economic level, but also on a psychological and emotional level,” said Walker of Pittsburgh’s Urban Redevelopment Authority. “As these black businesses begin to thrive, it signals what’s possible.”

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