When it comes to growing the economy, minority entrepreneurs often make unheralded contributions that are disproportionate to their actual numbers.
But a new report from the Center for Global Policy Solutions, a policy think tank, paints a vibrant picture of just how big those contributions are. It turns out minority entrepreneurs have been key drivers of growth since the financial crisis, adding more than a million jobs to the economy between 2007 and 2012, and increasing the number of firms with paid jobs at a rate many times that of white-owned firms, which primarily saw flat growth over the same time period.
By the numbers, Asian American women made the biggest gains, increasing the number of firms with employees by 37.6 percent to 126,328 for the five-year period of the survey. Hispanic women came in second, growing 26.5 percent to 67,079 firms. Asian American men were third, growing 22.5 percent to 52,073 companies. Black women landed in fourth place, increasing the number of companies with workers by 20.2 percent to 38,609.
By contrast, firms with workers that are owned by white men--which make up the majority of companies in the U.S.--increased at a rate of 0.3 percent to just about 3 million over the same time frame. Much of the flat growth can be attributed to the hard hit-construction sector, which lost 61,000 companies and shed 1 million jobs, the study reports.
Nevertheless, certain minority groups had difficulties. For example, firms owned by Hispanic women experienced some of the weakest revenue growth, despite the high growth rate of number of firms, with an average annual decrease in sales of 7.2 percent. Similarly, businesses owned by American Indian women increased by 14 percent, but sales plunged more than 22 percent.
And the number of black male-owned companies with workers decreased by 2.3 percent to 60,439, the only minority group to experience such a decrease, according to the study.
On the other hand, black men increased their average annual revenues at a rate of 3.9 percent, the second highest rate after Hispanic men, who increased average annual revenue at a rate of 7.2 percent. Similarly, companies owned by black men were the only ones to increase average annual pay, which they did at a rate of 1.2 percent, to $32,061.
The Center for Global Policy Solutions points out that a number of things can be done to support minority entrepreneurship more. For example, a big factor in determining business formation is personal access to capital, a point that has been well-established in other surveys. Programs that encourage wealth building in communities of color could be useful, as well as tax credits to promote investment in minority-owned companies. Minority entrepreneurs might also benefit from incentives like tax credits for their businesses.
Improving mentorship opportunities and encouraging better data tracking would also help build minority businesses, the study says.