Activists Say There Is A Lack Of Black

In 1986, a top executive at Revlon made a prediction about the future of the beauty and hair care industry. “In the next couple of years,” he told Newsweek, “the black-owned businesses will disappear. In 1993, IVAX Corp. purchased Johnson Products Co., the thirty-nine-year-old maker of Ultra Sheen, beginning a decade-long series of acquisitions that wiped out remaining black ownership in the hair care industry. Funds once channeled into research and development, University at Buffalo professor Robert Mark Silverman explains, now were accrued as profits by the larger firms. Treasury Department, plays a vital role to help lesser-served U.S. business owners by increasing access to capital. Business owners can search for local financial institutions that have received money from the CDFI Fund and that, in turn, should be able to provide tailored assistance. Some of those encounters led to her having conversations with other people about what life would be like if there were more black-owned businesses in Freeport.

Black-owned banks flourished in the 50s and 60s, but from 2001 to 2018, the number of Black-owned financial institutions declined over 50%. Today, that number is down another 9%, leaving only 21 Black-owned banks in the United States. For comparison, Wells Fargo, Bank of America, and JPMorgan Chase each manage well over $1 trillion in assets. It's I think unrealistic to expect traditional banks to all of a sudden be responsive to the needs of communities they have neglected and failed to invest in previously. Black-owned banks flourished in the 1950s and 1960s, but from 2001 to 2018, the number of Black-owned financial institutions declined over 50%, leaving only 21 Black-owned banks in the United States, and not one manages over $1 billion. The book also provides a new compilation of estimates of racial patterns of business ownership rates and business outcomes from the most widely used and respected sources of government data. Estimates of business ownership rates and performance are generated from public-use and restricted-access microdata, taken from published sources, and obtained from special tabulations prepared for us by the U.S.

St. Louis has the highest ratio (0.56), demonstrating that while it is doing the best, it still has ample room to improve. Black-majority neighborhoods are home to over 3 million business, according to 2018 Census Bureau data. In addition to garden-variety consumer shifts, Black businesses have to deal with consumer declines due to racism. A Brookings analysis of Yelp reviews found that businesses owned by people of color in Black neighborhoods score as high or higher on the consumer ratings platform, but get less revenue as the concentration of Black people increases in a ZIP code.

Brookings’s Sifan Liu and Joseph Parilla found that small businesses experienced disproportionate job loss during the Great Recession of 2007 to 2009. The authors note that smaller firms have more credit constraints and greater sensitivities to consumer fluctuations. Consequently, strategic investments in young firms can help them weather economic storms, improve survival rates, and incite innovation. But nothing grows without investment, which the corporate sector recognizes.

According to the most recent Census Bureau data available, Black people comprise approximately 14.2% of the U.S. population, but Black businesses comprise only 2.2% of the nation’s 5.7 million employer businesses . A broader shift in the corporate psychology needs to occur and support Black entrepreneurs and bankers. Corporations cannot effect enough change if they focus only on hiring more Black employees.

Cohee says Black-owned banks entertainment offer more than just capital, and reinvestment of capital, to their communities. OneUnited spearheaded the recent #BankBlack movement and continues to mobilize its community. "Black-owned banks are at the forefront of these pushes for change," he said. Part of why Black-owned banks are struggling to offer more financial support is their own lack of capitalization. The history of the financial services sector weighs heavily on today's conditions, Groce said. The underwriting models and racially blind financial systems used today may have been created with good intentions but ultimately don't help communities already underserved by banks. The pandemic and George Floyd killing have escalated focus on racial injustice and economic inequity, and the lack of capital markets access for Black founders.

What’s behind these trends, and what’s the implication for American society as a whole? To be sure, at least some of this entrepreneurial decline reflects positive economic developments. A slowly rising share of black Americans now hold white-collar salaried jobs and have more options for employment beyond running their own businesses. Last June, Black Enterprise magazine marked the forty-fourth anniversary of the BE 100s, the magazine’s annual ranking of the nation’s top 100 black-owned businesses. At the top of the list stood World Wide Technology, which, since its founding in 1990, has grown into a global firm with more than $7 billion in revenue and 3,000 employees.