Urban One- Black Businesses and Entrepreneurship: We Can’t Repeat History
It is indisputable that minority businesses are key drivers of sustained U.S. economic growth, and it is also indisputable that Black businesses will disproportionately suffer greater fallout from the COVID-19 Pandemic. As evidenced by the fact that while the number of active business owners in the United States plummeted by 3.3 million, or 22 percent over the crucial two-month window from February to April 2020—and that losses were felt across nearly all industries—Black businesses experienced a 41 percent drop according to the National Bureau of Economic Research. This all too common reality for American Black-owned businesses has played out time and time again, as they have faced acute and immediate risks for more than a century. Yet, the facts are clear, if we let Black businesses fail, we cannot do so without detrimental effects on the nation's entire economy.
The persistent racial wealth gap has played a large role in this inconvenient truth. According to a study published by McKinsey & Company in August 2019, "the median white family had more than ten times the wealth of the median black family in 2016." The study further found that the racial wealth gap increases with education, and the familial wealth gap between white and Black families has grown from $100,000 in 1992 to $154,00 in 2016. Closure of the racial wealth gap means a stronger US economy for all Americans, as McKinsey estimates the economy will achieve a four to six percent higher GDP and $1 trillion to $1.5 trillion in economic growth over the next decade through greater economic inclusion for all communities.
Prior to the onset of COVID-19, Black businesses only recently began to recover the gains lost following the 2008 Great Recession, but they were still in a precarious position. A 2020 Brookings Institution analysis showed that "highly-rated businesses in Black-majority neighborhoods earn less revenue than businesses with similar ratings outside of Black neighborhoods, translating to a national annual revenue loss as high as $3.9 billion." This long-standing economic inequality already undermines any ability to close the wealth gap, but COVID-19 has undeniably exacerbated this paradigm.
That is why it was so important that the new Democratic majority in the 116th Congress created the House Financial Services Subcommittee on Diversity and Inclusion that I proudly chair. Since its establishment, I have led numerous hearings with top U.S. financial institutions, industry roundtable discussions, one-and-one meetings with CEOs and community forums to discuss major, critical interventions needed to shore up connection with minority supplier networks and advocate for the utilization of Black asset managers and broker-dealers. As the Subcommittee Chair, I continue to double-down on the business case for diversity and inclusion, since numerous studies clearly show, including the groundbreaking report by McKinsey and Company, that a focus on diversity and inclusion undoubtedly yields greater profitability and performance for a company's bottom line.
Outside of the Financial Services Committee, the Congressional Black Caucus, of which I am Vice-Chair, is pushing an agenda that highlights the needs of our leading bedrock small business entities in Black communities like barbershops, hair salons, family restaurants, gig workers and sole proprietors to name a few. This includes my own piece of the legislation, the Making Opportunities a Reality for Entrepreneurs (MORE) PPP Act, H.R. 6893, a bill to ensure that our nation's smallest small businesses, including minority-owned, independent contractors, and 1099 workers, have fairer access to participate in the Paycheck Protection Program (PPP). I am pleased to report that written in The Heroes Act, H.R. 6800, passed In May of this year, was language similar to my proposal that would mandate 25 percent of PPP funds go to small businesses with fewer than 10 employees. Unfortunately, the bill is languishing in Senate Republican Leader Mitch McConnell's legislative graveyard.
Fast forward ten years from now and I have doubt history will show that unfortunately—while minority-owned small businesses and entrepreneurship have grown since the 2008 Great Recession—the COVID-19 Pandemic will similarly result in a downward wealth trajectory for Black communities. In response, we cannot continue to adopt color-blind policymaking which ignores the insurmountable, structural economic inequities in the Black community. You have my word that I will hold my colleagues' feet to the fire to make good on this promise, so that our Black communities do not needlessly suffer amid another economic crisis that will surely occur at some point in the future.
At this moment, our country is facing the two pandemics of combatting COVID-19 and seeking social justice against racial bigotry, police brutality and the shameless killings of Black people. Congress must be on the forefront of moving us collectively to true equality and justice for all. History cannot continue to repeat itself. To that end, I introduced H.Res. 990, which would recognize racism as a national crisis and seek to begin a truth and reconciliation process, and I will continue fighting to ensure that the gains made by Black Americans are not wiped out yet again.
The work continues because Black businesses matter and Black Lives Matter.
This article was originally published by Urban One on August 8, 2020