Black-Owned
Firms Bested National Growth Rate
By SARAH E. NEEDLEMAN
The
number of businesses owned by black men and women grew at
more than triple the national rate in recent years, a trend
that may be linked to a long-stagnating job market.
In
2007, the number of black-owned businesses jumped to 1.9
million, a 60.5% increase from 2002, according to a survey
released Tuesday from the U.S. Census Bureau. By comparison,
the number of U.S. businesses overall rose by just 18% during
the same period.
The government agency, which conducts the survey every five
years, defines black-owned businesses as firms in which
blacks own 51% or more of the equity, interest or stock
of the business.
Many
African-Americans likely turned to entrepreneurship in the
years covered in the study because good-paying jobs were
difficult to come by, says Marc Morial, president and chief
executive of the National Urban League, a civil-rights group
headquartered in New York.
"The
unemployment rate in the black community never got back
down to where it was before the recession in 2001,"
he says. "So you have a bit of entrepreneurship by
necessity."
Mr.
Morial added that many African-Americans also recognized
the potential to become financially secure through self-employment.
"There's
an economic independent streak, particularly among emerging
generations in the black community," he says. "Building
a business gives greater satisfaction, and cushions them
from the shock of working for a place and then finding themselves
out of a job because of economic down cycles."
In
addition to growing in volume, black-owned businesses also
saw their annual sales increase by 55.1% between 2002 and
2007 to $137.5 billion, the Census data show. Further, the
number of black-owned businesses with gross annual sales
of $1 million or more rose by 35.4% to 14,507 during this
period.
Mr.
Morial says the findings suggest that one way for the U.S.
economy to create more jobs today would be for investors
to boost funding to growing black-owned firms. "These
are an incredibly fertile place," he says. "Hedge
funds, private equity and the venture-fund community need
to focus on these businesses."
The
Census show also shows that from 2002 to 2007 the number
of black-owned businesses with employees increased 13.0%
to 106,824, with the majority—55.4%—employing
between one and four people. There were also 1.8 million
black-owned businesses that had no paid employees in 2007,
an increase of 64.5% from 2002.
In
2007, nearly four in 10 black-owned businesses operated
in the health-care and social-assistance sectors, as well
as repair, maintenance, personal and laundry services. The
retail-trade, health-care and social-assistance sectors
accounted for 27.4% of black-owned business revenue.
By
geography, New York was home to most black-owned businesses
in 2007, followed by Georgia and Florida, respectively.
Black-owned businesses were also most prevalent that year
in New York, Chicago and Houston, respectively.
Sarah
E. Needleman
sarah.needleman@wsj.com
