By Darrell Byers
In the United States, we have wider disparities of wealth between rich and poor than any other major developed nation. This gap is wide – and growing.
As I am writing, I am reading headlines about how unemployment is at a record low. But look beyond the headlines and you’ll find that almost all the US jobs created since 2005 are temporary jobs. What’s more, unemployment remains at 15-20% in economically distressed communities. As far back as national job numbers go in the US, black unemployment has consistently been approximately twice the rate of joblessness for white people.
“Record low unemployment” doesn’t tell the full story.
This is what’s clear to Interise: If we are to uplift underserved communities, we need to invest in minority-owned small businesses, and small businesses located in low-income areas. Established small businesses have the staying power to create and retain good jobs, where they’re needed most.
Interise data shows that growing established small businesses can increase jobs and revenue for businesses and their communities. In 2017, 70 percent of Interise businesses increased their annual revenues by an average of $400,000, with eighty percent of businesses retaining profitability; 60 percent created new jobs, with an average salary of $61,300 – that’s $10,800 above the national average.
Business ownership can be a path towards closing the wealth gap. For example, African-American business owners have levels of wealth that are 12 times that of African-American non-business owners. Additionally, employers of color are more likely than whites to hire people of color.
This past weekend, the Boston Globe featured as its front page story, “Boston tries to boost local contract numbers.” The story cites that less than 1 percent of the City’s $664 million in 2018 contracts went to women and/or minority-owned businesses. “Part of problem,” writes the Globe’s Milton Valencia, “appears to be Boston’s inability to make it easier for these businesses to navigate a process that includes a complex application system and burdensome paperwork.”Through Interise’s extensive research, we know that contracting with anchor institutions like universities and hospitals, corporations, and government is an important factor to revenue growth. If established small businesses are integrated into the supplier and procurement system, a cycle is created where purchasing benefits the contractor and leads to local wealth and job creation. That’s an inclusive model to close the gap.
As Interise explores in its issue paper Small Business and the Racial Wealth Gap, the wealth gap cannot be explained by individual choices or single factors. It is complex and is compounded by societal factors, economic conditions, and public policies. Procurement contracting, along with capacity and capital, needs to be more available to minority small business owners seeking to grow their companies.
Boston is now where I make my home, and where Interise is based. The City of Boston, Interise, and other community groups must come together to ensure that everyone participates in the procurement process and economic expansion of the city.
In the coming months, you will learn about several new initiatives from Interise that expand our reach to underserved groups of entrepreneurs, including an initiative with a specific focus on equitable anchor procurement. Only by increasing our investment and deepening our collaboration can we successfully build a more equitable and inclusive economy.