Minority-owned businesses are on the rise. Over the past twenty years the United States has seen steady growth in the number of businesses owned by minorities of all sorts. The African-American, Hispanic, Asian, and Native American communities all saw significant surges in small business start-ups and growth during this period. This success has been attributed both to generally positive economic trends and to advances in the realms of education and access to capital.
Most observers agree, however, that minority entrepreneurs—like women entrepreneurs of all races—still face challenges that their white male counterparts are able to avoid more easily. Racism remains a sad reality in some communities, industries, and corporate environments. In addition, many minority entrepreneurs believe that affirmative action programs and "set-asides," which became a subject of considerable debate in the 1990s, remain important factors in the success of many minority-owned businesses.
COUNTING MINORITY-OWNED BUSINESSES
Despite lingering racism and the uncertainty surrounding affirmative action, minority entrepreneurs have carved out significant business niches for themselves across the nation. The U.S. Census Bureau is charged with collecting data on Americans. The Census Bureau performs surveys of businesses as one of their many data collection efforts and the most recent surveys included data on the minority status of the business owners. To qualify as a minority-owned business, the Census Bureau explained, 51 percent or more of the stock or equity of the business must be owned by a person or persons of the minority group being measured. The following figures on minority-owned businesses in the United States, as of 2002, are from Census Bureau data and reports.
African-American-Owned Businesses
In 2002, there were 1.2 million firms owned by African-Americans in the U.S., employing more than 756,000 people. The 1.2 million black-owned firms generated nearly $89 billion in revenues and accounted for 5.2 percent of all U.S. nonfarm businesses.
When the data on African-American-owned businesses for 2002 are compared with the data from 1997, interesting trends appear. The number of black-owned firms has grown by 45.4 percent over the period, a rate that was substantially higher than the national average for all businesses (10.3 percent). However, the number of black-owned firms with paid employees has grown by only 1.5 percent, a rate of growth under the national average of 4.3 percent. This suggests that a lot of African-Americans have gone into business for themselves and are self-employed but that far fewer have created businesses that are in need of, or can support, employees. Only 7.9 percent of African-American-owned businesses in 2002 had paid employees other than the owner. For this measure, the average for all businesses was 24.1 percent.
The areas in which black business ownership is highest are in the retail trades and in health care and social assistance. Of the revenue generated by black-owned retail businesses, 54 percent was from businesses in the industry classified as "motor vehicle and parts dealers."
Hispanic-Owned Businesses
Hispanics owned 1.6 million nonfarm businesses in the United States in 2002. These businesses employed 1.5 million people and generated $222.0 billion in business revenues. These Hispanic-owned firms accounted for 6.8 percent of all nonfarm businesses in 2002. Of all Hispanic-owned businesses, 187.3 percent had no paid employees in 2002.
When the data on Hispanic-owned businesses for 2002 are compared with the data from 1997, a trend similar to that seen with black business ownership is seen. The number of Hispanic-owned businesses has grown at a faster rate than the rate for all business (31.1 percent versus 10.3 percent respectively) but the number of Hispanic-owned businesses with employees actually dropped between 1997 and 2002. In 1997 Hispanic-owned businesses with paid employees represented 4 percent of all firms with paid employees but in 2002 they were only 3.6 percent. So, again we see a case in which the number of self-employed Hispanics is growing but the number of Hispanic-owned businesses with paid employees fell by 5.8 percent between 1997 and 2002.
Hispanic-owned businesses are diversified but many, 29 percent, operated in construction and other services, such as personal services, and repair and maintenance. In fact, Hispanic-owned businesses owned 8.5 percent of all such businesses in the U.S. Retail and wholesale trade accounted for 35.9 percent of Hispanic-owned business revenue. Again, as with the African-American-owned businesses, a large part of the retail trade revenue (80 percent) was concentrated in the automobile industry, and motor vehicle and parts dealers.
Asian-Owned Businesses
The 2002 business ownership data show that there were 1.1 million Asian-owned non-farm businesses in the U.S., employing over 2.2 million persons and generating more than $326 billion in business revenues. Asian-owned firms accounted for 4.8 percent of all U.S. nonfarm businesses.
The number of Asian-owned businesses grew by 23.6 percent between 1997 and 2002. The number of Asian-owned businesses with paid employees also grew, 11.3 percent, a rate more than twice that of the national average for all businesses with paid employees (4.3 percent). Asian-owned businesses with paid employees account for almost a third (29 percent), a higher level than for either black-owned or Hispanic-owned businesses, and higher than the average for all businesses in the U.S. in 2002 (24.1).
The single industrial area in which the greatest number of Asian-owned businesses operate is wholesale trade. Retail trade and the services also rank high in terms of areas of concentration for Asian-owned firms.
