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More than one in five Black adults in the United States say owning a business is essential to financial success, according to a September 2023 Pew Research Center survey. An analysis of federal data shows that while black-owned businesses in the U.S. have grown significantly in recent years, they still make up a small share of overall business and revenue.
Pew Research Center conducted this analysis to examine the characteristics of Black-owned businesses in the United States. This analysis is primarily based on data from the 2022 Annual Business Survey (ABS) conducted by the U.S. Census Bureau and the National Science Foundation’s National Center for Science and Engineering Statistics.
The survey, conducted annually since 2017, includes all U.S. non-farm businesses with paid employees and revenue of $1,000 or more in 2021. An enterprise is defined as an enterprise “consisting of one or more domestic facilities that it owns or controls.” In the survey, the majority company owner is characterized as holding more than his 51% of the company’s stock or capital. The Census Bureau counts multiracial business owners based on all racial categories they identify with. Hispanic business owners can be of any race. Learn more about ABS methodology here.
In 2021, 161,031 U.S. companies are majority-owned by Black or African AmericansThat number is up from 124,004 in 2017, according to the latest estimates from the Annual Business Survey (ABS) conducted by the U.S. Census Bureau and the National Science Foundation. Total revenue for Black-owned businesses surged 43% during this period, from an estimated $127.9 billion in 2017 to $183.3 billion in 2021.
Despite this growth, majority-Black-owned businesses accounted for only about 3% of all U.S. businesses that can be categorized by the race and ethnicity of their owners in 2021. Additionally, black businesses accounted for just 1% of the total revenue of all classifiable businesses that year. By comparison, in 2021, about 14% of all Americans were Black.
Consistent with previous trends, in 2021 white majority-owned companies accounted for the largest share of classified companies (85%) and their revenues (93%). He was a majority owner in approximately one in ten (11%) of the classified companies. Only 7% were owned by Asian Americans and majority-owned by someone from another racial and ethnic group.
Notes on classifiable companies
The Annual Business Survey classifies a company as “majority black or African American-owned” if black managers own at least 51% of the company’s stock. The same criteria applies to business owners of other racial and ethnic backgrounds. The U.S. Census Bureau counts multiracial business executives based on all racial categories they identify with. Hispanic business owners can be of any race.
Not all U.S. companies can be categorized by the race or ethnicity of their executives. In 2021, approximately 4% of all U.S. businesses will do not have These companies, which can be categorized by the race and ethnicity of their owners, account for 61% of total revenue. The ownership and revenue figures in this analysis are based on approximately 5.7 million companies. was As of 2021, businesses are categorized by the race and ethnicity of their owners, most of whom are small businesses.
How many workers do Black-owned businesses employ?
Businesses majority-owned by Black or African Americans provided income to approximately 1.4 million workers in 2021. Their annual salaries were estimated at $53.6 billion.
Still, most black-owned businesses tend to be small businesses. Two-thirds had fewer than 10 employees in 202113% had between 10 and 49 employees, and only 3% had 50 or more employees; A further 16% said they had no employees. (ABS determines employment size by the number of paid workers during the March 12 pay period.)
What sectors have the most Black-owned businesses?
By far, it’s medical care and social assistance. In 2021, about 45,000 of the approximately 161,000 U.S. companies (28% of the total) that are majority-owned by Black or African Americans joined the sector.
Looking at it another way, 7% all In the same year, the majority of classifiable U.S. businesses in the health care and social assistance sectors were black-owned..
Other popular sectors for the year included:
- Professional, scientific, and technical services (accounting for 14% of all black-owned businesses)
- Administration and Support, Waste Management and Remediation Services (8%)
- Transportation and warehousing (8%)
- Retail (6%)
- Construction (6%)
Where can I find Black-owned businesses?
Most majority-owned Black or African American businesses (87%) are located in urban areas. Only 5% are in rural areas, or areas with a population of fewer than 2,500 people, as defined by the Census Bureau.
Some of the most populous states also have the highest number of majority-black-owned businesses. In 2021, there were 18,502 such companies in Florida, 15,014 in California, and 14,394 in Georgia.
Black majority-owned businesses accounted for the largest number of businesses. share Percentage of all classifiable businesses in the District of Columbia (15%), Georgia, and Maryland (8% each).
Who are the managers of black businesses?
- They are more likely to be male than female. In 2021, approximately 53% of Black-owned businesses were majority-owned by men, and 39% were majority-owned by women. A further 8% had equal ownership rights between men and women. The gender gap is even wider among all classifiable U.S. companies, with 63% majority-owned by men, 22% majority-owned by women, and 14% with equal ownership in 2021. Ta.
- They tend to be middle-aged. Roughly half (49%) of Black or African American business owners who reported their age range were between 35 and 0.54 years old in 2021. The remaining 28% were between 55 and 64 years old, and only 7% were under 35.
- The majority have university degrees. Among owners who said they had completed the highest level of education, 27% had a bachelor’s degree and 34% had a graduate or professional degree in 2021.
What motivates black entrepreneurs?
When asked to choose from a list of reasons why they started a company, nearly 9 in 10 Black or African American majority owners said an important reason was the opportunity to increase income. . A desire to be your own boss. Or you need the best means to bring your ideas, products, and services to life. Balancing work and home life (88%) and flexible working hours (85%) were also frequently mentioned.
For most black or African American majority owners; their business is their main source of income. Seven in 10 of those who reported their 2021 income information said this was the case.
Note: This is an update of a post originally published on February 21, 2023.
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