Despite years of effort, minority-owned businesses are still drastically underrepresented in the U.S. economy. Blacks made up 11.8 percent of the population and owned 5 percent of all privately held businesses, but Black-owned firms? share of business receipts was a mere 1 percent, according to the U.S. Census Bureau?s most recent figures, compiled in 2002.
That?s a nearly 12-to-1 underrepresentation. ?Hispanics, 13.5 percent of the population, owned 6.6 percent of businesses and earned just 2.5 percent of revenues. ?White-owned businesses pulled in 92.5 percent of revenues.
The U.S. Small Business Association analyzed the ?racial effect on business earnings? and concluded that for each $1 a white-owned firm made, a Black-owned business made 43 cents while a Hispanic- or Asian-owned business made 59 cents. Because the data from Census Bureau?s 2007 business survey hasn?t been analyzed yet, we don?t know the direction of the trend since then. ?But it wouldn?t be surprising if the recession is hitting minority-owned businesses, which are often more vulnerable, particularly hard.
There is a ray of hope. ?The economic stimulus program, designed to jolt the moribund economy into life, also provides an unparalleled opportunity to help bring more minority businesses into the economic mainstream. ?If the plan is carried out in a sound manner, it will be a win for minorities and everyone else.
But some would argue that affirmative action of any kind is dated, and it?s time for minority businessowners to stand on their own without special consideration. ?We?re ready and able to compete with anyone, but that line of thought ignores two realities. First, it doesn?t recognize that pervasive discrimination still exists. It?s often subtler than in years past, but it?s discrimination nevertheless. ?Many minority-owned businesses are successful firms with top people and excellent long-term track records. ?But far too many people think that ?minority-owned business? is code for ?struggling firm in a shabby storefront,? or that the business is making it only because of (nonexistent) government subsidies and set-asides.
Some minority businessowners do indeed run tiny firms on a shoestring. We should applaud their entrepreneurial sprit. ?But it is wrong to think that all minority businesses are at this early stage in their development. ?Many are mature organizations that can compete with anyone ? if they?re just given a fair chance.
Second, white businessowners usually have better networks, connections and visibility in the business and political spheres and in the more-affluent white community. This isn?t anything to do with discrimination; it?s just a fact. As a result, minority businessesowners don?t learn of opportunities and are not on the radar screen of potential clients. So even if we could magically abolish all discrimination and racism immediately, minority businessowners would still be at a disadvantage.
Additionally, minority businesswomen face both racial and gender barriers. While fairness demands that minorities get a piece of the stimulus action, economics is an equally compelling argument. When all segments of society are prospering, everyone benefits. ?Prospering minority communities help the majority prosper, too. And private enterprise offers the surest route to prosperity for minorities.
Minority-owned businesses hire and train minorities in their communities. ?They show young people that hard work and responsibility pay off. Both businessowners and their employees spend money in their communities, further invigorating them. ?Every dollar that a minority-owned business earns probably has a bigger positive impact than one earned by a majority-owned business.
Diversity and more competition are good for everyone. Minority-owned businesses themselves are diverse, too. They range from tiny startups to some of the highly respected businesses. They?re in every industry, from the local merchant to banks, insurance, and cutting-edge technology. ?Minority businessowners are young and old, male and female, Black and Hispanic, Asian-American and American Indian.
The stimulus program will pump almost $800 billion into the economy over the next two years. Most of it ultimately is expected go to businesses that will rebuild our infrastructure and create renewable energy resources ? and the firms that provide services to them, from accounting to food service to insurance. If minority-owned businesses don?t receive their fair share, Mr. Obama would be wasting a golden opportunity to accomplish the many changes he has envisioned for our great country. ???
Ernesta G. Procope is chairman and founder of E.G. Bowman Co., Inc., a leading minority-owned insurance brokerage in Manhattan, founded in 1953.