Go South, Young Black Man, Go South

black_business

The South is by far the best region in the United States for blacks to own businesses, and the Golden Crescent is one of the best places in the South — at least if you put any credence in the methodology created by NerdWallet.

The credit card blog has ranked the 111 metropolitan regions with populations exceeding 100,000 according to two equally weighted sets of measures — economic environment and black-owned business success — to determine where black-owned businesses succeed.

Georgia clearly ranks as the best state in the country by these metrics, with Columbus ranking No. 1 on the list, Atlanta No. 3 and Savannah No. 9. But Virginia’s major metros also appear to be hospitable territory, with Washington ranking No. 5, Richmond No. 11 and Hampton Roads No. 13. Remarkably, with the exception of Salt Lake City (No. 19), every one of the top twenty metros are located south of the Mason-Dixon Line.

Metros in the West Coast, the industrial Midwest and the Northeast consistently scored dismally.

There are two possibilities here: that (a) the South is more fertile field for black businesses, or (b) the ranking methodology is skewed toward metros with high percentages of African-American residents. The second interpretation is entirely possible, given that 30% of the entire score is based upon “the percentage of black-owned businesses” in a metro area. All other things being equal, a metro area where 30% of the population is black will tend to have ten times the percentage of black-owned businesses as a metro area where 3% is black. A better indicator would be to compare the percentage of blacks who own a business versus the percentage of the population as a whole that owns a business. I tried contacting NerdWallet this morning for clarification but had no luck.

Another finding: The vast majority of black-owned businesses are sole proprietorships — fewer than one in ten actually hire employees. In other words, most are self-employed. Do self-employed people — many of whom are free-lancers — really count as businesses? How do those numbers compare to the rate for the population as a whole? Sadly, NerdWallet doesn’t say. Yet another question: How does the average revenue of black-owned business compare to that of other racial groups? Again, NerdWallet doesn’t say.

As much as I would like to crow that Virginia is great location for black entrepreneurship, I hesitate to do so on the data provided here. This data needs polishing before we can draw any meaningful conclusions from it. If someone is inclined to do the grunt work and submit results to Bacon’s Rebellion for publication, I would be most grateful.

— JAB

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3 responses to “Go South, Young Black Man, Go South

  1. I don’t have time right now to get into the other questions, but I will address this quickly:

    “There are two possibilities here: that (a) the South is more fertile field for black businesses, or (b) the ranking methodology is skewed toward metros with high percentages of African-American residents.”

    The answer is both…the South is more fertile field for black businesses because the South has metros with higher black populations and historically higher black populations.

  2. so I’m looking down the actual table and I see this:

    Metro area Average revenue of black-owned businesses

    Los Angeles-Long Beach-Santa Ana, CA $187,348
    Little Rock-North Little Rock-Conway, AR $56,075
    Corpus Christi, TX $75,861
    Cleveland-Elyria-Mentor, OH $86,820
    Salem, OR $102,593
    Lynchburg, VA $81,137
    Gainesville, FL $109,868
    Springfield, MA $91,870
    Pittsburgh, PA $113,247
    Madison, WI $83,247
    Topeka, KS $62,936
    Minneapolis-St. Paul-Bloomington, MN-WI $71,342
    Phoenix-Mesa-Scottsdale, AZ $65,913
    Buffalo-Niagara Falls, NY $57,223

    so that leaves me wondering…about the premise… or have I dummied up and missed something?

    the other thing – is the percent of sole proprietorships different for blacks than other races?

    we seem to have a ton of Asian restaurants and cleaners, etc in our area.

  3. Many black businesses in the South, started because the white businesses would not serve blacks. This was true of restaurants, barber shops, motels, even country stores, and service stations even doctors and dentists – and they actually led to a publication called The Negro Motorist Green Book – https://en.wikipedia.org/wiki/The_Negro_Motorist_Green_Book.

    but for every black business there were thousands of blacks so poor they could barely afford to feed and clothe themselves and kids with no hope of improving their lot in life because they had miserable educations.

    Churches became not only the place of worship and fellowship but places where black folks could find plumbers and electricians and other trade services that just calling in the phone book would result in “we don’t serve your kind” responses.

    so the point here is – that how black businesses came about was different than how white businesses came about. A white business would go down to the bank and get a loan.. the black folks need not to apply. The same even continued after desegregation where banks “redlined” not only residential but commercial.

    and whenever a black business formed – it was not often to serve the general public including whites – it was oriented to black culture.. black culture clothes and shoes, black taste in food, and even toiletries and hair products.

    One of the things that changed was the Federal Govt and changes it made to it’s contracting such that a certain percentage was set aside for minority enterprises (that included women!).

    one of the movies that I found that touched on the subject of black entrepreneurial efforts in weird and somewhat comical ways – was Coming to America

    http://youtu.be/3d4oRunE39E

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