Growth of Black Businesses is a Sign of Progress for All

This week, both the Richmond Times-Dispatch and Washington Post trumpeted the rapid rise in the growth of African-American owned businesses over the past few years. Citing data from the Census Bureau, the media outlets noted that there are, “1.2 million black-owned businesses in the U.S., a figure that rose 45 percent from 1997 to 2002, according to a report released yesterday by the Census Bureau. There are roughly 23 million U.S. companies.” Thus, black-owned firms account for around 5% of total firms nationwide.

The picture in Virginia and in Metro Washington is even brighter, where “about 8 percent of Virginia’s roughly 530,000 businesses are run by a black entrepreneur.” In Metro Washington, “the increases included huge jumps in the previously small number of black-owned firms in Prince William County, which increased 103 percent, to 2,010, and Howard County, where black businesses grew by 87 percent, to 3,293.”

This amazing growth is both a sign of social progress, as well as, an indicator that the economic fortunes of black Americans are continuing to look upward. Entrepreneurship is the bedrock of the American economy, and only through full participation in what Alexander Hamilton deemed, “the commercial republic” can some of the more pressing issues that the African-American community faces be adequately addressed.

This rise in black entrepreneurship also has political ramifications. As blacks gain greater access to the upper-echelons of the economy, it can be expected that they will take on similar voting behaviors as their socioeconomic cohort. Inevitably, their individual economic circumstances will influence their outlook on government, for reasons as simple as keeping more of their hard-earned paychecks or as complex as advocating business-friendly regulatory schemes.

As the Post article noted, “black-owned businesses appear to be going the way of the…black population, which for the past decade has been increasingly lured into the suburbs.” This increased suburbanization, coupled with higher income-earning opportunities brought on by increased “boot-strapping” entrepreneurship, stands to redefine the relationship of both the Democratic and Republican Party to the African Americans.

In the end, this latest economic good news is not about honing in on race as much as it is about acknowledging the steady march of progress that has been powered by the American marketplace. In the words of one Richmond area businessman, “What I’m seeing now is more and more people are realizing there are more quality businesses out there that are minority-owned.” Black business owners are managing to overcome negative perceptions and prove their ability to compete. As such, their continued growth will pay dividends for all Americans.

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7 responses to “Growth of Black Businesses is a Sign of Progress for All”

  1. James Atticus Bowden Avatar
    James Atticus Bowden

    Hmm,so the Republican Party is for entrepeneurs and the Democrat Party is for others? The bold and the brave vs those looking for hand outs?

  2. Will Vehrs Avatar
    Will Vehrs

    What I liked about the RT-D article were the quotes from those in minority business development who had to simultaneously say more needed to be done while trying to take credit for the good news, even while much of their efforts had nothing to do with the numbers.

    Within the statistics are the numbers that tell us why minority state procurement numbers, the holy and seemingly only grail of the past and current administration, are low. Minorities are drawn toward businesses that aren’t necessarily in areas where the state spends a lot of money, i.e., auto sales, service, and parts.

    Stubbornly trying to raise state procurement numbers by concentrating on the relatively small number of businesses that are in markets where state procurement purchasing is high doesn’t seem like the best strategy to me.

    Luckily, minority businesses are doing just fine without the state help that only seems to go to state vendors.

    In my job, I talk to lots of entrepreneurs of all stripes every single day. I will tell you that there is no difference in the overall approach among groups, insofar as I can tell who’s who over the phone or in an email. Some are looking for handouts; others are confidently striving to build a real business with sweat equity and whatever advice and assistance they can find. Very few are counting on state contracts to make their business succeed, but if they are asking for minority programs, that’s pretty much the only specialized assistance out there.

    “The steady march of progress that has been powered by the American marketplace,” is indeed where I give credit for minority business success. I think it will continue.

  3. Avatar

    JAB: In all honesty, I’d say that it depends on the industry, with Democrats favoring New Economy firms (IT, biotech, etc.) and Republicans (manufacturing, banking, etc.) favoring Old Economy firms. Neither party has a monopoly on entrepreneurship, both have been bold and brave at various points in time (JFK/LBJ on Civil Rights, Reagan/Bush on Cold War), and both have equally guilty records on hand-outs to their special interests (Labor v. Oil/Farmers). But, when those special interests are ethnic minorities, everyone gets especially frothy.

    Will: To me, the big problem with government procurement is the preferences toward companies of certain sizes. As for targeted “help” programs, private-sector minority supplier dealer and diversity efforts have probably played a more significant role in the development of black business enterprises in recent decades.

  4. James Atticus Bowden Avatar
    James Atticus Bowden

    Conaway: I was just joshing.

    But, I did teach American Government. The ‘classical’ definition of politics dating to the 50’s is Lasswell’s “who gets what”. To which I had when, where, why and how.

    It is indeed amusing how government and business in a mixed economy produce ‘partnerships’ to one and ‘handouts’ to another.

    Politics is why the Federal Tax code is tens of thousands of pages and the Commonwealth’s is plenty long too.

  5. Ray Hyde Avatar

    “black-owned businesses appear to be going the way of the…black population, which for the past decade has been increasingly lured into the suburbs.”

    This is interesting to me in the light of my previous arguments with EMR on this subject.

    Below, I mention a recent study that indicates what the actual travel costs are wich are associated with lower density vs higher density. It turns out that a greater proportion of higher income families live in lower density areas: It is now hard to say that these people don’t have the “choice” to live in the high cost areas, but rather they have chosen not to.

    Jim Bacon will no doubt say the operative word is “lured”, but the question is lured by what, opportunity?

  6. Avatar

    Lured by what attracts tons of Americans: good schools, lower crime, ample space for housing, and employment opportunities.

  7. Jim Bacon Avatar
    Jim Bacon

    Random comments on this thread:

    As I recall from reading the Times-Dispatch article that Conaway alludes to, the vast majority of African-American businesses in the Richmond region are micro-enterprises employing only a handful of people. By contrast, Fairfax County is home to three of the largest black-owned businesses in the country. I would wager that the African-American population in Fairfax has a significantly higher level of education than in Richmond (as it probably does among all ethnic groups). The rising level of education, I would guess, is the single-most important variable in explaining the increase in entrepreneurial activity among African-Americans.

    I’m not minimizing the importance of micro-enterprises, by the way. Most people have to walk before they run. Some of those micro-enterprises will prosper and grow into significant businesses over time.

    Regarding Will’s comment that African-Americans seem to be drawn to certain sectors of the economy… No surprise there. As Thomas Sowell has observed, almost every ethnic group that has come to America has differing cultural attributes that have made them more competitive in certain sectors of the economy…. I would add this comment, though: Based on personal observation, it seems that a lot more African-Americans are entering tech fields these days than did 15 or 20 years ago. I suspect that we’ll see more African-American technology entrepreneurship in the next generation.

    Finally, on Ray’s point… I’m not sure what the point is. African-Americans who could afford to have left failing inner cities just as whites have. And I’ll wager that affluent, empty-nester African-Americans are moving back into urban cores to enjoy the benefits of shorter commutes and more vibrant cultural opportunities — just like affluent, empty-nester whites are doing. The phenomenon of wealth in the African-American community is relatively recent, however, and the number of affluent African-Americans of empty-nester age is relatively small, so the reverse migration (if it exists, as I hypothesize) may be too small to notice.

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