Black-owned businesses can help close the racial wealth gap. US needs more of them, study says

A new study suggests that increasing the number of Black-owned businesses could be a critical step in addressing the racial wealth gap in the United States. Despite Black-owned businesses driving significant increases in employment, revenue, and payroll, they represent only a small fraction of employers compared to the overall population.

According to the study, approximately 70 percent of Americans are employed by small businesses that play a vital role in their local communities. However, Black-owned businesses constitute just 2.7 percent of employers, despite Black Americans making up 14.4 percent of the population.

Dwight Hutchins, a key contributor to the report titled “Gather Against the Gap,” highlighted the importance of small businesses in creating local jobs and emphasized that the limited presence of Black-owned businesses contributes to the persistence of the racial wealth gap.

While there has been some growth in the number of Black-owned employer businesses from 2017 to 2021, their overall share remains disproportionately low compared to their representation in the population.

Researchers argue that increasing the number of Black-owned businesses would lead to more job opportunities for Black individuals, thereby helping to narrow the economic disparity. This is crucial given the substantial gap in wealth between the average white household and the average Black household, which stands at US$215,000.