The Decline of Black-Owned Businesses

The Great Recession was particularly hard on black-owned businesses. The National Black Chamber of Commerce, for example, points out that black-owned auto dealerships were severely affected:

Thousands of auto dealers were casualties of the economic crisis. But Lee is part of an especially vulnerable group: black dealers, whose businesses rose and fell with the domestic automakers.

Black dealers have taken a disproportionate hit — “drastic” in the words of one minority dealer spokeswoman — in the past three years. There are 261 black-owned dealerships in the United States today, half as many as three years ago. That’s a much sharper drop than the 18 percent decline in dealerships overall.

Those numbers reflect a seismic shift in the tradition of black business in this country. Just as a UAW factory job provided middle-class security for black workers, owning an auto dealership traditionally has been a path to wealth for black businesspeople.

while Black Enterprise points out that black-owned advertising agencies have suffered:

One devastated sector has been advertising. In fact, our BE Advertising Agencies roster, reeling from corporate clients shifting from targeted messaging to the so-called “total market approach” (see Advertising Overview, this issue), dropped from 10 to eight firms. Many among the Financial Services sector didn’t fare much better.

In that vein according to AfricanGlobe there are about half as many black-owned banks as there were in 2007:

The Federal Deposit Insurance Corp. counted 25 Black-owned banks remaining in the country last year, down from 48 in 2001. That decrease came even as the overall number of minority-owned banks increased slightly, going from 164 to 174. In addition, the majority of Black-owned banks that remain open are on shaky ground and struggling to hold on in the face of the economic devastation that has ravaged many of their customers.

A recent article at Atlantic charts how industry consolidation has affected black-owned businesses:

The decline of black-owned independent businesses traces back to many causes, but a major one that has been little noted was the decline in the enforcement of anti-monopoly and fair-trade laws beginning in the late 1970s. Under both Democratic and Republican administrations, a few firms that in previous decades would never have been allowed to merge or grow so large came to dominate almost every sector of the economy.

This change has hurt all independent businesses, but the effects have disproportionately hit black business owners. Marcellus Andrews, a professor of economics at Bucknell University, says that pulling back on anti-monopoly enforcement was a “catastrophic intellectual and political policy mistake,” and that for the black community, the “presumed price advantages of concentration often do not translate into better economic opportunities.”

I don’t know that I have any great point to make with this post other than to note that indifference to small businesses while catering to big businesses will inevitably be hard on black-owned businesses.