August is Black Business Month, a designation that began in 2004 to bring attention to Black-owned businesses in the United States.
The US Census Bureau has conducted many surveys documenting business ownership and the self-employed. While the surveys show Black Americans form a disproportionately smaller share of these groups, there are aspects of entrepreneurship that are unique to the racial group.
The agency’s most recent count of businesses, the 2018 Annual Business Survey (ABS), found that Black or African Americans owned 124,004 employer businesses (firms with at least one paid employee) in 2017. This accounted for 2.2% of the 5.7 million employer businesses in the United States.
Nineteen percent of all employer-based businesses were female-led—but 36.1% of all Black-owned businesses were headed by women. When comparing women-owned businesses of all racial categories, Black (non-Hispanic) women have the highest percentage of ownership compared with men in their racial category.
Black-owned businesses are concentrated in three sectors: healthcare and social assistance businesses comprised 11.4% of all employer businesses, the sector made up 32% percent of Black-owned businesses. Of these, 53% (21,321) were led by women. Thirteen percent of Black-owned businesses (16,392) were in professional, scientific, and technical services. Here, the numbers swap: 62% were male-led. Lastly, businesses in the administrative & support and waste-management sector comprised 8.2% of Black-owned businesses (10,136).
Black ownership of employer businesses has increased since 2002
In 2002, there were 94,518 Black-owned businesses with employees. That increased to 124,000 in 2017, up 31.2%. For comparison, the Black population increased 16.7% during that period.
The 2007 and 2012 Survey of Business Owners, predecessors of the ABS, also included data of businesses that did not have employees. Between 2007 and 2012, these Black-owned businesses grew from 1.8 million to 2.5 million, an increase of 36.3%. There is no equivalent business data for 2017.
A 2018 Census report on the self-employed population — people who don’t work for an incorporated business — found that 5% or 852,000 of 17.2 Black Americans working were self-employed. Self-employed people made up 9.6% of the total working population.
Black Americans make up a disproportionately smaller share of traditional business owners and the self-employed workers than the population overall. While the economic effects of the pandemic on Black entrepreneurship isn’t clear yet, it will be worth watching how it may shift trends in business ownership going forward.
