You don’t get rich working for someone else, or so the maxim goes. And that makes the success of black businesses in Memphis, which is 63 percent black, critical to the city’s overall success.
Black businesses were important enough to make it into Dr. Martin Luther King Jr.’s last speech, delivered April 3, 1968. Nearly 50 years after his assassination, what would he think of the state of black businesses today?
“Memphis Pushes To Level The Playing Field For Black Entrepreneurs” by Madeline Faber of High Ground News and Julia Craven of HuffPost. It’s a thorough examination of black entrepreneurship in Memphis. Below are some excerpts, but the whole story is worth your time.
[V]ery few black-owned businesses have had the kind of success necessary to build a solid middle class. It’s a majority-minority city ― 63 percent of residents are black ― and more than half of the city’s small businesses are black-owned. Yet 30 percent of Memphis’ black residents live below the poverty line, compared to the city’s overall poverty rate of 26.2 percent.
The number of black businesses is going up, but the share of revenue is going down.
Black businesses have struggled with growth. Only 0.83 percent of all the revenue generated in Memphis is coming through black-owned businesses, according to the 2012 U.S. Census of Small Business Owners, down from 1.08 percent in 2007. That number went down even though the number of black-owned businesses doubled between 2007 and 2012.
Black wealth matters. It’s a cushion against the inevitable life emergency, and it’s the capital to invest in a business. At the current rate, the black-white wealth gap will never close. (Yes, never. Like never ever.)
So concludes “The Road to Zero Wealth: How The Racial Wealth Divide Is Hollowing Out America’s Middle Class,” released last week by the Institute of Policy Studies and Prosperity Now.
And if that wasn’t distressing enough, there’s more.
- By 2021, the median white household will own 86 and 68 times more wealth than black and Latino households, respectively.
- If the racial wealth divide stays the same (no worse, no better), median black household wealth will equal zero dollars by 2053. By 2043, racial minorities will be more than 50 percent of the nation’s population.
- Public policy created and maintains the racial wealth gap, from chattel slavery to racially exclusive land redistribution like the Homestead Act to federally sanctioned housing discrimination to a broken tax code that favors the already wealthy (read: white).
If you think that better-educated black people will make more money (to, for example, accumulate the capital needed to start a business), you’re wrong. (Also, the American dream and the Horatio Alger bootstrap narrative are myths. And anti-black job discrimination is as bad today as it was in 1989.)
“It is the unearned birthright of inheritance or other family transfers that has the greatest effect on wealth accumulation, and likewise is the largest factor erecting barriers to wealth accumulation for people of color. White families have had significantly more time to pass wealth from generation to generation.”
- Black families led by a college graduate have about 33 percent less wealth than white families led by by a high school dropout.
- To beat the barriers to racial wealth parity, the average black family would have to save 100 percent of their income for three straight years.
- Between 1975 and 2015, there have been only four years when the black unemployment rate was below 8 percent — and only four years when the white unemployment rate was over 8 percent.
Even when black families own a business, it’s far less likely to make much money.
A white family is three times as likely to own a business as a black family — and the equity in the white family’s business will be more than six times higher — $45,977 compared to $7,483 — than the black family’s business equity. This is according to the 2001/2002 “Racial and Ethnic Differences in Wealth and Asset Choices” report issued by the Social Security Administration.