By Michael Sasso
After suffering a crippling blow early in the pandemic, Black-owned firms are seeing the strongest rebound among U.S. racial or ethnic groups.
The number of African-American business owners in operation surged to almost 1.5 million last month, up 38% from February 2020, before Covid-19 hit the U.S., according to new research from Robert Fairlie, a professor at University of California, Santa Cruz.
The ranks of Hispanic owners rose by 15% in the same period, while White and Asian entrepreneurs fell by 3% and 2%, respectively.
The surge in Black owners is probably the result of multiple factors, including business opportunities arising from the Buy Black movement that started last year and necessity-driven entrepreneurship by workers who lost their jobs, Fairlie said.
Fairlie’s research caught the public’s attention last year, when it found that Black owners’ ranks plunged by 41% in April 2020 from pre-pandemic levels. Data has shown that African-American businesses were among the hardest-hit during the pandemic and many minority neighborhoods were late to receive forgivable loans from the federal Paycheck Protection Program.
The number of Black owners began a slow, rocky rebound throughout 2020, but really began to take off this year, according to Fairlie, who uses U.S. Census Bureau data. In July, their ranks were up 28% from pre-Covid levels, suggesting a sustainable rebound.
“The previous month was high, so it seems like there’s something real there,” Fairlie said.
Even if some of the new entrepreneurs are people who lost their jobs and were forced to find other sources of income, it’s overall positive that they are starting something new and not sitting on the sidelines of the job market as so-called discouraged workers, the researcher said.
Still, the data may not be as upbeat as it otherwise appears, Fairlie said. It’s not clear how much money the business owners are making, since revenue data weren’t available.
Nationwide, the number of business owners rose by 2% in August from before the pandemic, Fairlie’s data show.
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