Current Trends in U.S. Entrepreneurship - Minority and Women's Businesses

As a follow-up to my post yesterday on current trends in entrepreneurship in the U.S., I wanted to highlight another new report available - the Survey of Business Owners (SBO) 2007

While this is not a particularly timely report, it is a deep report, bringing us our best snapshot of U.S. businesses by demographic once every five years. While the SBO has a varied release schedule for reports with many more forthcoming, what came out recently was new data on ownership by gender and race. 

My reaction to the report would fall very close to my colleague Alicia Robb's, which was summarized in a recent Business Week article - it is great to see some growth in the numbers of businesses but extremely troubling to see where the growth is occurring and the many areas of continued lag.


This graphic from Bloomberg captures two things in particular, 1) we are seeing growth in numbers of minority businesses, almost all in non-employer businesses; and, 2) the growth in minority-business ownership is dwarfing growth in non-minority firms. BUT staggering levels of discrepancy in terms of lacking larger minority-owned businesses remains mostly intact. 

In other work from the Kauffman Index, we have shown that the nature of those entering entrepreneurship has changed greatly in the last decade, partly by propensity and partly by changing population demographics. The SBO report does not get into the changing population demographic, which I suspect is driving the change in the Hispanic numbers in the report but cannot be seen as a driver of the large increase in Black-owned businesses.

As for trends with women-owned businesses, in 2007, there were 911,285 women-owned employer firms with 7.6 million persons employed and total payroll of $218.1 billion. This is an increase of 6.2 percent and 25.7 percent respectively from 2002. This compares to 3.2 million men-owned employer firms that employed 41.6 million persons with a total payroll of $1.5 trillion. 

I hate to be a pessimist but given how integrated, educated, and a part of all economic life that women are today, these are numbers that have to change faster. There is no reason we should still be seeing women's employer businesses averaging 8 employees while male-owned firms are averaging 13 employees.

The Census Bureau now has within its grasp the data infrastructure to produce annual data updates on these statistics of business owners by demographic. It absolutely should do so. 

Without more frequent updates on these trends I fear efforts to create more minority and women's employer businesses will never gain traction. There remains a great deal of untapped economic potential in the disparate levels of minority and women's businesses.

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