For centuries, Black-owned businesses have made profound contributions to the United States economy. However, many policies hinder Black businesses from thriving as a result of an inequitable economy. During the month of August, we reflect on the history of Black innovation and entrepreneurship and recognize the successes of Black-owned businesses.
National Black Business Month began in 2004 when historian John William Templeton and engineer Frederick E. Jordan joined together to bring to light the policies and disparities that affect so many African Americans. The intention of the pair was to “drive the policy agenda affecting the 2.6 million African-American businesses and develop greater economic freedom for Black communities.”
Black businesses have been crucial to the American economy for quite some time. Since the 1700s, free and enslaved Black people opened various businesses such as barbershops, shoemaking shops, and other small businesses. During the “golden age” of 1900-1930 when Jim Crow Laws segregated Black and white people, Black people were forced to develop their own businesses. Despite racial disparities and segregation, Black people made significant contributions to American society and developed tight-knit communities.
There have been tremendous strides in Black entrepreneurship since the 1700s. Approximately 10% of all American businesses are Black-owned. The primary sectors in which these businesses belong are health care, social work, beauty salons, restaurants, and more. According to the U.S. Census Bureau, that amounts to nearly two million companies owned by African Americans. About 40 percent of black-owned businesses are in health care and social assistance, repair and maintenance, and personal and laundry services.
Between February 2020 and August 2021, Black-owned businesses increased by 38%, a study by Merchant Maverick found. The highest ratio of Black-owned businesses is in Washington, DC, where 28% of all businesses are Black-owned.
Despite these strides towards a more equitable economy, Black-owned businesses continue to face payroll inequities. The national average payroll for employer businesses is $1.25 million, more than four times the average annual payroll for a Black-run business. Securing capital and investors has been found to be much more difficult for Black-owned businesses. Venture funding for Black startups in the U.S. took a steep drop in the second quarter of this year, at $324 million, after previously showing signs of growth.
To show support for Black businesses, especially during the month of August, be intentional about shopping at Black-owned businesses. Write reviews of Black-owned businesses and share them with your friends! Black business owners have faced tremendous challenges such as systemic racism, inequalities, and wage gaps for centuries. By showing a bit of support, you have the power to be a positive force.
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