CREAT: Census Research Exploration and Analysis Tool

Access to Financial Capital Among U.S. Businesses: The Case of African-American Firms

December 2006

Working Paper Number:

CES-06-33

Abstract

The differences between African-American business ownership rates and white business ownership rates are striking. Estimates from the 2000 Census indicate that 11.8 percent of white workers are self-employed business owners, compared with only 4.8 percent of black workers. Furthermore, black-white differences in business ownership rates have remained roughly constant over most of the twentieth century (Fairlie and Meyer 2000). In addition to lower rates of business ownership, black-owned businesses are less successful on average than are white or Asian firms. In particular, black-owned businesses have lower sales, hire fewer employees and have smaller payrolls than white- or Asian-owned businesses, on average (U.S. Census Bureau 2001, U.S. Small Business Administration 2001). Black firms also have lower profits and higher closure rates than white firms (U.S. Census Bureau 1997, U.S. Small Business Administration 1999). For most outcomes, the disparities are extremely large. For example, estimates from the 2002 Survey of Business Owners (SBO) indicate that white firms have average sales of $437,870 compared with only $74,018 for black firms.

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:
enterprise, sale, earnings, corporation, employee, owner, ownership, employed, entrepreneurial, black, venture, proprietorship, entrepreneur, black business, entrepreneurship, minority, business owners, owned businesses, hispanic, white, profit, disadvantaged, racial, disparity

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Characteristics of Business Owners, Internal Revenue Service, Bureau of Labor Statistics, Yale University, Service Annual Survey, Small Business Administration, Center for Economic Studies, University of Maryland, Federal Reserve Bank, Urban Institute, Current Population Survey, Federal Reserve System, Chicago Census Research Data Center, Survey of Income and Program Participation, Social Security, Economic Census, Board of Governors, PSID, Russell Sage Foundation, UC Berkeley, Kauffman Foundation, Survey of Business Owners

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