An entrepreneurial spirit is moving across the Black community today and taking hold of the next generation.
The changing face of new entrepreneurs in America signals that young and more diverse populations are embracing our market-based system to achieve their dreams.
Free enterprise is the vehicle that will take Millenials and Gen Z to places the broken-down, big-government bus could never go.
Instead of undermining economic independence with woke corporate equity mandates and government handouts, we should knock down the roadblocks that hinder entrepreneurship in the Black community.
Younger Blacks are energized by cultural movements to normalize upward mobility, luxury, and generational wealth in the Black community.
They are turning their passions and pain points into analog businesses in health and wellness, hospitality, personal services, and communications.
Prior to the pandemic, Black-owned businesses were growing in America. According to the U.S. Census Bureau, Blacks owned 3.12 million non-employer businesses in 2018 which generated $73 billion in annual revenue.
The number of Black-owned non-employer businesses rose 5.6% from 2017.
Another 125,000 Black-owned businesses employed at least one person in 2018—representing just 2.2% of all businesses with workers. However, these businesses grew by 31.2% from 2002-2017, according to a congressional report.
Among new entrepreneurs, the Kauffman Foundation found that from 1996 to 2020, the share of Blacks increased substantially, from 8.4% to 13.1%.
While that lags behind the growth of Hispanic and Asian shares, it outpaces that of whites, whose share actually fell from two in three to just over half.
The early months of the pandemic were devastating to small business as the number of small business owners plummeted by 3.3 million (22%) from February to April of 2020.
Black businesses owners were disproportionately affected, experiencing a 41% drop. While we do not have a full picture of the pandemic’s impacts, we do know that some Black enterprises are still in weak financial positions and others thrived.
The insecurity of traditional employment during the pandemic, the meteoric rise of cryptocurrency, and the refusal to accept generational poverty are fueling entrepreneurship among young Blacks. Many are also looking for alternative paths to the college-to-middle-class pipedream.
Burdensome student loan debt creates significant financial challenges for too many younger Blacks, even as promised income gains and wealth have not broadly materialized. Millennials and Gen Z carry debilitating debt loads.
Eight out of ten college-educated Black households in their 30s have student debt.
Their median debt load is $44,000.
Compare them to their baby boomer parents: just a third carried student loan debt at the same age, and their median debt load was less than $6,000 (adjusted for inflation).
Despite a 7% increase in household incomes of Black grads over the last three decades, their median household wealth of $76,000 lags behind their White counterparts.
Overall, Millennials made significant household wealth gains just before the pandemic, but this wealth comeback was not equal across demographics.
Wealth among older Black Millennials remained 52% below expectations while White and Hispanic Millennials nearly closed their wealth expectation gap significantly from 2016 to 2019 to being nearly on track.
The racial reckoning of the past two years accelerated commitments by corporate America and the public sector to use equity-not equality-as tools to remedy racial disparities.
From corporate boards to staffing, venture capital to philanthropy, pundits and policymakers imagine they can fix the socio-economic situations of Blacks and minorities by prioritizing them above others.
Economist Thomas Sowell challenged the notion that racial disparities result primarily from racial discrimination and that this requires remedies from well-meaning public policy.
He emphasized the powerful role that other factors play, such as personal agency, family, and community. The popularity of entrepreneurship and underlying principles of hard work and risk-taking may be a sign that many younger Blacks tacitly agree.
Instead of good intentions, we need common-sense policies that encourage small business formation and growth.
Individuals should be free to contract out their skills and talent on their schedule without fear of being reclassified as employees.
Excessive occupational licensure should not block young people from entering occupations. Value creators should not be straddled with unfair and high taxes.
Businesses should not be stunted by outdated, unnecessary, or arbitrary business regulations that carry no public health or safety rationale.
Blacks have built strong communities in part by building and investing in their own businesses. As the next generation leans into entrepreneurship, public policies must not undermine their advancement.