Juneteenth is celebrated June 19th to commemorate the emancipation of enslaved Black people in the U.S. Being able to start businesses and hire their own employees is a measure of how far Black people have come from being owned, mortgaged, and traded.

Despite corporate pledges to support Black businesses after the 2020 racial uprisings, Black Americans still form the smallest share of business owners in the country. According to findings from the recently released Brookings Institution report Who Is Driving Black Business Growth?, Black people represented 14.2% of all Americans in 2020, but only 2.4% of all employer-firm owners (businesses with more than one employee). Comparatively, White people were 61.6% of the population but a staggering 82.6% of employer-firm owners. Latino or Hispanic people represented 18.7% of the population and 6.5% of employer-firm owners, while Asian Americans represented 6% of the population and 10.6% of employer-firm owners.

In 2020, corporations faced significant pressure to address racial inequities around the killing of George Floyd. Corporate leaders were backed into making commitments toward racial justice and equity, and collectively pledged $340 billion, according to McKinsey & Company. The commitments felt more like charity rather than investments that would yield targeted economic and social returns, and it’s uncertain what impact their pledges will have.

Although Juneteenth is celebrated differently across the country, corporate leaders should establish their own traditions to increase the share of Black-owned employer firms. Businesses can commemorate Juneteenth every year simply by reporting on the returns their commitments are yielding for Black Americans.

Who’s leading the growth? Black women, but more needs to be done

Although the share of employer firms is increasing, there is still room for growth.

The Brookings report found that from 2017 to 2020, the number of Black-owned firms across the country increased by 13.64%—a larger increase than all other businesses, which increased by 0.53% over the same period. In addition, Black business revenue growth outpaced all other groups combined. Much of this growth was fueled by Black women who seemingly used pandemic recovery dollars as start-up revenue. Despite the impacts of COVID-19, the number of businesses owned by Black women rose to 52,374 during this same period—representing almost 40% of all Black businesses. Most of this business growth came from increases in sole proprietorships.

Given the historic discrimination against Black people in pay, lending, and wealth development, the rise of Black business during a pandemic shows the untapped potential of the population. However, though Black women accounted for about 7% of the total U.S. population and 13.9% of American women in 2020, they only owned 0.91% of all businesses and 4.23% of women-owned businesses. We must find ways to invest in this overlooked talent.

Cities naturally compete with each other to be competitive in a global market, establishing conditions for business growth and attraction. Consequently, city and economic development leaders should establish regional competitions to see who can have the percentage of Black-owned businesses reflect the proportions of the Black population in the area.

The Brookings report found that no metro hosts Black businesses equal to or greater than its share of Black residents. However, some metros earned a head start on the field. The 10 metros with the highest proportional representation of Black-owned businesses are all in the Southeast, including three in North Carolina. The metro areas with the largest number of Black businesses track many places with large Black populations.

The figure below shows the largest trends towards and away from equitable rates of business ownership by metro. For example, between 2017 to 2020, Columbus, Georgia saw a 2.35 percentage point increase in the proportion of Black-owned businesses. On the other end of the spectrum, Albany, Georgia saw a 2.42 percentage point drop in the proportion of Black-owned businesses.

Corporations should approach increasing the number of Black businesses the same way they seek growth in other areas – with time-bound goals and objectives. That means making discerning investments in firms that can hire more employees or in businesses that can acquire other enterprises. Lower levels of wealth compel Black entrepreneurs to turn to personal credit cards as a source of startup capital than bank loans. Character-based lending, which acknowledges the impacts of historic discrimination as well as trustworthiness of the entrepreneur, can go a long way.

Corporate leaders can also receive executive coaching, such as through The Path to 15|55 initiative, which endeavors to transition 15% of Black-owned sole proprietorships into employer firms.

Of course, any serious effort to increase the share of Black businesses requires corporate leaders to dismantle discrimination that underlies business development. For instance, most people start businesses using the equity in their homes. Housing discrimination that manifested in lower homeownership rates and housing devaluation throttles business creation. Black people are denied business loans twice as often as their White peers and when we do get loans, they come with higher interest rates. Corporate engagement in these areas can help change society.

However, business leaders must see the value in Black lives when applying sound business principles. Business leaders learned to make a business case for exploitation, contributing to the inequities we currently have. It’s past time that we learned the business case for inclusion and equity. Based on our calculations, if the share of Black businesses matched the population, we would add about 800,000 more firms to the economy. In this regard, equity is stimulus.

As the country takes stock of the emancipation of the enslaved this Juneteenth, corporate leaders must reflect on what business ownership means for Black Americans and for the greater good of the country.

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Andre M. Perry is a senior fellow at the Brookings Institution and is the author of “Know Your Price: Valuing Black Lives and Property in America’s Black Cities.”

Tynesia Boyea-Robinson is President and CEO of CapEQ.

Manann Donoghoe is a Senior Research Associate in Brookings Metro, conducting research for the Valuing Black Assets Initiative.

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