Minority & Small Business Week
PageAI2
September 24, 2008
Racial Disparities in Business Outlined
Investment would yield big employment gains
A frican A m ericans aren't
getting the same boost from
self-employment that Asians
and whites enjoy, largely be
cause they lack financial
capital, education, and op
portunities to work in a fam
ily-ow ned business before
setting out on their own. says
a leading expert on entrepre
neurship.
Business ownership has
been the ticket to a higher
standard of living for millions
of entrepreneurs, but these
persistent racial disparities
ham per w ould-be African
American business owners,
according toeconom ist Rob
ert Fairlie, who says targeted
support programs would yield
big employment gains for Af
rican Americans and other
minorities.
"If black business owner
ship and performance im
proved to white levels, total
earnings inequality inthiscoun-
try would drop by roughly 20
percent," said Fairlie, a pro
fessor of economics at the
University ofCalifomia, Santa
Cruz, and coauthor of the new
book Race and Entrepreneur
ial Success: Black-, Asian-,
and White-Owned Businesses
in the United States.
"If w e’re serious about
wanting to reduce wealth in
equality in this country, help
ing black entrepreneurs suc
ceed is a worthwhile invest
ment," he added.
M in o rity -o w n e d b u s i
nesses currently em ploy a l
most 5 m illion people in the
United States, but with a little
encouragem ent, they could
be the source of 2 million
new jobs, at least half o f
which would go to m inori
ties, said Fairlie.
Race and Entrepreneurial
Success is the first com pre
hensive exam ination of why
some racial groups succeed
in business w hile others
struggle. Fairlie and coau
thor A licia M. Robb, a re
search associate in econom
ics at UCSC, conclude that
the lack of startup money for
black businesses and the lack
of pre-business work expe-
Robert Fairlie
rience severely ham per A f
rican A m erican en trep re
neurial success.
"Nearly half of all black
families have less than $6,( XX)
in total wealth, so the lack of
capital is a huge impediment."
said Fairlie. "And it's acatch-
22, because without black-
ow ned businesses, family
members can't get the experi
ence that turns out to be a vital
factorin business survival and
performance."
Entrepreneurs who work i n
a family business before start
ing their own company have
business outcomes that are 10
to 40 percent better than those
who lack that experience, said
Fairlie. The authors used both
business longevity and perfor-
• Racial patterns in busi
ness outcomes have remained
largely unchanged over the
past two decades.
• A 10 percent increase in
both the number of minority-
If we 're serious about
wanting to reduce wealth
inequality in this country,
helping black entrepreneurs
succeed is a worthwhile
investment.
— Robert Fairlie
mance to determine business
outcomes.
Other highlights o f Race
and E ntrepreneurial Suc
cess include:
•Black business ownership
rates are 45 percent of white
rates, and average sales among
black-owned firms are one-
sixth white levels. (White-
owned firms have average
sales of $440,(XX), compared
to only $75,000 for black-
owned firms.,
owned firms and the average
number of employees per firm
would create nearly I million
new jobs for minorities and an
additional I million more jobs
for nonminorities.
• About one in 10 workers
in the Unites States owns a
business, yet businessowners
hold nearly 40 percent of total
wealth in this country.
"T he c o n c e n tra tio n o f
wealth among entrepreneurs
underscores the social value
of targeted policy initiatives
designed to open the door to
business ownership for more
minorities," said Fairlie. One
o f the goals of government
programs that promote minor
ity-owned businesses is to re
duce wealth inequality, he
noted.
Fairlie suggests the cre
a tio n o f p r o g r a m s th a t
would:
• Prom ote educational at
tainm ent to overcom e d is
parities betw een Asians and
b la c k b u s in e s s o w n e rs
(A sian business ow ners are
tw ice as likely to have aco l-
lege degree as are black busi
ness ow ners);
• Provide mentoring, intern
ships, or apprenticeship-type
training to help would-be busi
ness owners acquire neces
sary and relevant skills, as a
substitute for the lack o f op
portunities to work in a family
business.
"An added benefit o f these
initiatives is that they would
im prove business p e rfo r
mance for all entrepreneurs,
not just those from minority
groups," noted Fairlie.
Technical Assistance Project Serves Small Businesses
The H ispanic M etropoli
tan C ham ber has added a
Business D evelopm ent C o
o rd in a to r^ serve small busi
ness ow ners in Portland.
Carlos Calderon will over
see the effort as part of the
“Sm all Business Technical
A
- ssistance Project" funded
by the city o f Portland.
The purpose of this project
is to increase the capabilities
of Portland small businesses
Bank in New Y ork City and
Puerto Rico and also the
Royal Bank o f C anada.
C alderon also served as
the T reasurer and Executive
-cartoscaideron
Vice President for the G ov
ernment Development Bank
and to add a person with so for Puerto Rico.
the city.
S m a ll b u s in e s s e s can
Gale Castillo, the president much experience in business
contact C alderon for an ap
of the Hispanic Chamber, said and finance."
C alderon has w orked in pointm ent at 503-222-0280
"W e are very pleased to offer
e -m a il
h im
at
a new program that will serve both the public and private o r
all the residents of Portland sector. He worked for Chase ccalderon @ hmccoregon.com.
by providing technical assis
tance services in the areas
such as: marketing, manage
ment. financing and contract
procurement. These services
will be provided to local busi
nesses throughout Portland
and will include: one-on-one
advising, business education
workshops, assistance in pro
curement and contract i ng, and
educating clients regarding
other business resources in Carlos Calderon
------------------------------[ B ank
We are very pleased to offer a
new program that will serve all the
residents o f Portland...
of the
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