National Black Business Month: Celebrating the Value of Black-Owned Businesses

August 17, 2023
National Black Business Month: Celebrating the Value of Black-Owned Businesses

Since 2004, August has been known as National Black Business Month, highlighting the distinct needs and value of Black-owned businesses in America. Like much of Black history, the history of Black-owned business in this country is a study in perseverance. Many have heard of Oklahoma’s “Black Wall Street,” which was the scene of the grisly Tulsa Race Riot in the early 1900s. However, the first Black-owned business—the African Insurance Company—was founded nearly ten years prior in Philadelphia. Shortly thereafter, Thomas Jennings became the first Black person to be granted a patent for his “dry-scouring” process, predating what we now know today as dry cleaning. Both preceded Johnson Products, which is notable—among other things—for being the first Black-owned company to be listed on the New York Stock Exchange.

There are obviously many other Black-owned businesses across several industries. According to the U.S. Census Bureau’s Annual Business Survey, which was conducted in 2020 and represents the most recent available data, there were an estimated 140,918 US companies with majority Black ownership. That number represented a nearly 15% increase from 2017.  Those companies brought in an estimated $141 billion in gross revenue, an 11% increase over the same period. The greatest number and share of Black-owned businesses are in the healthcare and social assistance (i.e., psychology, rehabilitation, and social work fields) sector. In 2020, 28% of the total number of Black-owned businesses were in this sector. What was second? Professional, scientific, and technical services accounted for 14% of the total number of Black-owned businesses in 2020. Construction, administrative and support, and waste management rounded out the other common sectors for Black businesses.

Though the impact on most private employers may be minimal, the recent U.S. Supreme Court decision to prohibit the use of affirmative action programs at Harvard and the University of North Carolina—where the Court decided that neither school could give an applicant for admission favored treatment based on the applicant’s race—could have an outsized impact on the recent rise in Black-owned businesses and the communities they serve. We addressed SMB concerns and considerations about the historic decision in a previous blog.

Many believe the Supreme Court decision striking down affirmative action will result in decreased numbers of Black students enrolled in our nation’s universities. While this may result in fewer Black professionals, negatively impact diversity at universities and college campuses, and have a chilling effect on Diversity, Equity, and Inclusion (DE&I) programs in the private sector, this could mean fewer Black-owned businesses. According to the Pew Research Center, most Black business owners (60%) had an undergraduate degree or higher. And even with the recent rise in the number of Black-owned businesses, such businesses only account for 3% of all US employers. So, any reduction in the number of Black businesses would be a substantial loss.

It's no surprise that most Black-owned businesses are in urban areas with Florida, California, and New York leading the way. Indeed, these also happen to be three of the four most populous states in the union. However, it is notable that Black businesses make up the greatest percentage of businesses in DC, Georgia, and Maryland, or areas with a significant Black population. In these communities, Black-owned businesses employed 1.3 million people. A decrease in Black-owned business could also lead to a decrease in employment in the communities they serve and could be potentially catastrophic for those communities.

For its part, TriNet is helping businesses—Black-owned and others—including increasing access to and awareness of grants, programs, and other resources available to Historically Underutilized Businesses through a portal on our website. We encourage entrepreneurs to explore these resources TriNet has pulled together, connect with relevant programs, and take advantage of the support available to prepare for potential impacts ahead. Together, we can create a more inclusive and thriving entrepreneurial landscape.

© 2023 TriNet Group, Inc. All rights reserved. This communication is for informational purposes only, is not legal, tax or accounting advice, and is not an offer to sell, buy or procure insurance. TriNet is the single-employer sponsor of all its benefit plans, which does not include voluntary benefits that are not ERISA-covered group health insurance plans and enrollment is voluntary. Official plan documents always control and TriNet reserves the right to amend the benefit plans or change the offerings and deadlines.

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