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Active Black Business Ownership Down 41 Percent In US During Coronavirus Pandemic

Active business owners in the United States dropped by 22 percent, the largest drop on record, from February through April with African-American businesses suffering the most declining by 41 percent, according to the National Bureau of Economic Research’s study.

The number of active female business owners declined 25 percent, immigrant-owned businesses 36 percent, and Latinx-owned businesses 32 percent. All much higher than the 17 percent drop in white ownership.

The fallout of coronavirus might be much larger than anyone can imagine, disproportionately impacting minority-owned businesses.

For instance, active small business numbers tend to stay fairly stagnant even through a recession. During the Great Recession, business ownership only declined by five percent, via the NBER. A much smaller number compared to the 22 percent change seen in the last two months. In fairness, businesses in the Great Recession did not have to deal with social distance guidelines that can diminish revenue. But it isn’t right to assume that once guidelines are relaxed business will operate as it did before coronavirus.

“The negative early-stage impacts on minority- and immigrant-owned businesses, if prolonged, may be problematic for broader racial inequality because of the importance of minority businesses for local job creation (disproportionately for other minorities), economic advancement, and longer-term wealth inequality,” NBER’s study said.

The two months where income was nearly impossible to come by for small businesses might be too much for many to overcome likely leading to permanent closures down the line. If the closures during the pandemic are any indication, permanent business closures will also impact owners of color more.

Unfortunately, the data on small businesses is not vast making it harder to predict and fully understand what could be the coronavirus fallout for communities of color. NBER’s study said the shortage of information stems from the “lack of timely business-level data released by the government.”

Maybe if there was a competent President in charge of the United States we could have more information to help understand what is happening to minority-owned small businesses in the pandemic and be ahead of the curve ready to help and fix the problem.

 

*Ryan Lipton is a student at the University of North Carolina at Chapel Hill majoring in Business Journalism. He has written in the past for SB Nation’s Silver and Black Pride, USA Today Sports Media Group, North Carolina Business News Wire, the Daily Tar Heel, and has worked with Ice Cube’s BIG3 basketball league. Ryan writes regularly for meidastouch.com

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