By Erika H. Becker-Medina, chief, Data User Outreach & Education Branch, Economy-Wide Statistics Division
Black business ownership is on the rise.
The number of black or African American-owned firms grew 34.5 percent between 2007 and 2012 — from 1.9 million to 2.6 million in 2012. In contrast, the total number of firms in the United States increased 2.0 percent during the same period, from 27.1 million in 2007 to 27.6 million in 2012. However, the proportion of black or African American-owned businesses account for 9.4 percent of all firms, which is still below the 13.1 percent black or African American share of the U.S. adult population (according to the Census Bureau’s July 1, 2012, population estimates).
These business figures are from the Survey of Business Owners, which provides a broad socio-economic picture of business owners across the nation and is part of the Census Bureau’s economic census conducted every five years. Drawing upon a sample of 1.75 million employer and nonemployer businesses, the Survey of Business Owners collects data on firms’ receipts, payroll and employment as well as the gender, ethnicity, race and veteran status of the firm owners. It is the most authoritative source of data on businesses by the demographic characteristics of the owner. The first results from the 2012 Survey of Business Owners were released last year. This blog kicks off an analytical series that takes a deeper dive into the Survey of Business Owners data for different demographic groups.
So, who contributed to the increase of the number of black or African American-owned businesses? Women! The number of black/female-owned firms climbed 66.9 percent, from 900,000 in 2007 to 1.5 million in 2012. Additionally, these 1.5 million black/female-owned businesses accounted for 58.9 percent of the nation’s 2.6 million black or African American-owned businesses. Nationally, women owned just over a third (35.8 percent or 9.9 million) of all firms in 2012.
The sales or receipts from these businesses tell a different story. While the number of black or African American-owned firms represented 9.4 percent of all firms, the $150.2 billion in sales generated from these firms were less than half of a percent (0.4 percent) of the total sales for all firms ($33.5 trillion) in 2012. Included in the grand total are publicly held and other firms that are not classifiable by race (or gender, ethnicity and veteran status), and with $21.6 trillion in sales, these firms amounted to almost two-thirds (64.3 percent) of the total sales for all firms in 2012. When looking solely at firms classifiable by gender, ethnicity, race and veteran status, sales from black or African American-owned businesses made up 1.3 percent of total sales ($12.0 trillion).
This disparity is also visible between genders. Even though black or African American-owned businesses were predominantly women-owned (58.9 percent), the reverse was true for revenue. Approximately two‑thirds (66.7 percent) of the $150.2 billion in sales generated by black or African American-owned firms were from male-owned businesses ($100.1 billion) in 2012.
In addition to gender distribution, economic industries are spread differently among demographic groups. The top three moneymaking sectors for those firms classifiable by gender, ethnicity, race and veteran status were wholesale trade (NAICS 42) with $2.8 trillion, retail trade (NAICS 44-45) with $2.1 trillion, and manufacturing (NAICS 31-33) with $1.3 trillion in sales for 2012. However, neither wholesale trade nor manufacturing ranked among the top three sectors for black or African American-owned firms. Instead, health care and social assistance (NAICS 62), retail trade, and professional, scientific and technical services (NAICS 54), with $24.2 billion, $17.2 billion and $15.7 billion in revenue, respectively, were the top sales generators for this group. (NAICS stands for North American Industry Classification System.)
This is just a sliver of the data available from the Survey of Business Owners. Geographic detail, down to the economic place (a community with at least 2,500 people), is also available, as is the size of firms by employment levels and receipts. Come back to this space for additional blogs about these data!
Additional information on black or African American-owned firms: