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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