Welcome

This site was created by Nicholl McGuire, Inspirational Speaker and Author. Feel free to comment, share links and subscribe. If you have a business or would like to guest post feel free to contact. Check out topics on this blog and select what interests you. They are found at the bottom of this page. Peace and Love.

Wednesday

Why Blacks are not as Wealthy as Whites?

In Capitalist America, owning a business is the main ingredient in the recipe for creating wealth. Although the number of self-employed Black Americans doubled from 1984 to 2003, the Black American self-employment rate is less than half the national average and still lags behind Latino, Asian and White Americans.

According to the Small Business Administration, only 4.5 percent of blacks own their own business, compared with 7 percent of Latinos and 11 percent of white and Asian Americans. Black-owned businesses generate dramatically lower annual sales than firms owned by white and Asian Americans, and they are more likely to fail.

For years, University of California Santa Cruz (UC Santa Cruz) Economist Robert Fairlie, has analyzed data to understand these disparities and along with Alicia Robb of the Foundation for Sustainable Development, has uncovered the main factors that account for the lack of black owned businesses compared to other races:

• Insufficient amounts of startup capital

• Lack of self-employed work experience

• Lack of educational attainment

"Half of all Asian Americans in the labor market have a college education or higher," said Fairlie, emphasizing the importance of education.

"Business ownership is an alternative to unemployment and discrimination in the labor market, and political influence comes with success in small business," he said. "Historically in this country, we've seen rapid growth of business ownership among immigrants, including Chinese, Japanese, Jews, Italians, Greeks, and, most recently, Koreans."

Yet business ownership rates have been stagnant among Black Americans, said Fairlie, who presented his research during a conference titled "Race, Families, and Business Success: A Comparison of African American-, Asian- and White-Owned Businesses." His presentation was sponsored by the UCSC Equal Employment Opportunity/Affirmative Action Office as part of its diversity lecture series.

In his analysis, Black-owned businesses average annual sales of about $60,000, compared with $167,000 for Latino-owned businesses, $219,000 for white-owned businesses, and $245,000 for Asian-owned businesses.

Only 14 percent of black-owned businesses generated annual profits of $10,000 or more, compared with 30 percent of white-owned businesses. Business failure rates during the first four years are 27 percent for black-owned businesses compared with 22.5 percent for white-owned businesses.

Sufficient startup capital, prior work experience in a family-owned business, and education emerged as the biggest differences in the success and survival of black, white and Asian-owned businesses. Having sufficient start-up capital accounted for 43 percent, self-employed work experience - 11 percent, and educational level about 6 percent of the difference in business ownership success.

Businesses launched with $100,000 or more of startup capital were twice as likely to prosper, but only 1.7 percent of black-owned businesses start out with more than $100,000, compared with 4.9 percent of white-owned firms, said Fairlie. Furthermore, only 6.5 percent of black-owned businesses start a business with more than $25,000 in capital, compared with 11.1 percent of white-owned firms and 12 percent of business owned by Asian Americans.

Why the large differences in start-up capital? Not surprisingly: Wealth! The net worth of blacks and whites accounts for the disparity in startup capital, said Fairlie. Defined as total assets, including home equity, automobiles, and savings, net worth for average Black Americans is about $6,000; Latino net worth averages $7,000; and White and Asian Americans net worth is about $70,000.

"Wealth inequality leads to these low levels of capital, which is a huge factor in determining the outcome of a business," said Fairlie, adding that, "Economists tend to focus on wage and income inequality, but there really needs to be more attention paid to wealth inequality in this country."

The alternative source for start-up capital are Bank and Government (SBA) loans. Not surprisingly, Asian Americans have been the leaders in snagging SBA business loans. Over the past ten years, Asians obtained 12.2% of the $85 billion in loans guaranteed by the SBA, while Latinos received 5.6% and Blacks 2.8%.

The USA Today also reported earlier this year how self-employed Asian Americans assist each other in business with alternative financing:

"Many Asian immigrants finance start-ups through informal loan associations. How they work: Twelve established Asian U.S. business owners will contribute $1,000 each to a fund. That $12,000 is loaned to a new immigrant entrepreneur. Loans are often interest-free, and agreements are sealed with a handshake," says Greg Fairchild, a professor at the University of Virginia. "It's a new version of what people have negatively called the good old boys' network," he says."

These types of business associations are dated back to the early 20th century in the United States when Asians were the primary foreign immigrant group. Unfortunately, there are no direct equivalents in other minority communities. Harry Alford, president of the National Black Chamber of Commerce, hopes one day there will be. Asians don't form loan pools "because they love each other," he says. "They see it as a necessity for business growth. We African-Americans have a natural dependency on waiting for the government to do something."

After reflecting on their discoveries, Fairlie and Robb point out several issues for government review, including improving bank lending laws to further protect Black Americans from financial discrimination, addressing wealth inequality, and developing internships that would help narrow the gap for the lack of work experience in family-owned businesses available to Black Americans.

Create Wealth, Enjoy Life!


Written by James Bird Guess

President & Founder The Black Economy.com

James "Bird" Guess graduated college with dreams of climbing the corporate ladder and becoming a prominent financial executive. But after only working a year in "Corporate America", James grew bitter of the politics and bureaucracy associated and decided to venture out on his own to become a full-time entrepreneur.

With a repossession and other unpaid debts on his credit, James had a negative net worth. Starting with only $1,000 saved from college, he single-handedly built a quarter million dollar apparel business from the trunk of his car. Shortly thereafter, his business model would transition from retailer to wholesaler of apparel, which generated $750,000 dollars in revenue.

James could now take one step closer toward financial freedom. As an entrepreneur, he has bought and sold over $1.5 million of apparel. He now uses his financial acumen to help individuals, entrepreneurs, businesses and investors create wealth in their lives! James is now the President & Founder of BlacBird Investments LLC. http://www.BlacBirds.com & http://www.theblackeconomy.com, Create Wealth! & Enjoy Life!
at
Labels: ,

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)

Search This Blog

Labels

a abortion about us absent fathers abuse abusive men abusive women adopted black children affirmative action africa african american african american achievers african american art african american audio books african american authors african american beauty african american bloggers african american books african american bookstores african american brothers african american business african american celebrities african american children african american chinese african american christian women african american christians african american churches african american clothing styles african american communities african american community african american cuisine african american culture african american dating african american dating sites african american deceivers african american dining african american documentaries african american drama african american drug dealers african american education african american elite african american entertainment african american family african american fathers african american friendships african american gamers african american genealogy african american gifts african american girls african american gods african american grandparents african american grants african american hair loss african american haircare african american hairstyles african american health issues african american heritage african american heterosexuality african american history african american holidays african american home owners african american homosexuality african american idols african american inventors african american korea african american lawyers african american leaders african american lifestyle african american magazines african american marriages african american media african american men african american mental illness african american ministers african american models african american mothers african american movies african american museums african american music african american music videos african american natural hair african american news african american occult african american online surfing african american opinion african american paintings African American parade african american parents african american photographers african american photography african american poets african american police officers african american political prisoners african american preachers African American producers african american prostitution african american radio shows african american relationships african american religion african american researchers african american russia african american samoan african american scholarships african american self-hate african american sex african american singles african american skin care african american skincare african american soldiers african american sons african american speakers african american spirituality african american statistics african american studies african american television networks african american thinking african american thoughts african american tips african american toys african american transhumanists african american travel african american voters african american wealth african american weaves african american wigs african american women african american women groups African American women in science african american women inventors african american workers african american writers african americans african americans and africans african americans jail african americans respect african americans workers african americans workplace african art african consciousness african decor african food african history ai tools american holidays ancestry anger management angry angry black man angry black woman angry black women angry blacks atlanta aunt tammy banks Barack Obama be encouraged bible big girls biracial people birth control bisexual black men black alliance for just immigration black american ignorance black american quotations black american racism black art websites black athletes black attitudes black business black celebrities black celebrity children black celebrity masons black cinema black conscious community black conscious women black dating services black dolls black education black elite groups black English people black family black feminists black grandmothers black greek organizations black history black history month black inventors black love black men black men and white women black music black national anthem black nationalism black panthers party black people and summer time black people attitude black preachers black racists black radio stations black scholars black singles black sitcoms black skin black stereotypes black toys black women blacks with an attitude blessings and curses blog owner boule boxer brainwashed blacks celebrities and god cheating childhood childless women children activities chris brown chris rock christina milian civil rights civil war cold-blooded african americans colorism communication communication skills community assistance confrontation construction in haiti constructive criticism contract with black america controlling black folks controlling men controlling women counselors crazy blacks crisis dark skin dating dating violence death deceased black legends depression difficult people disorders diversity domestic violence down low celebrities dreaming eastern stars ebola economics educated blacks education elderly black folks employment eugenics exes experiences faith family history family issues fat african americans fearful blacks fema camps financial assistance first black president food stamps fools fraternal organizations free stuff freemasons french african friendships funny african americans funny black man funny black people funny black woman funny stuff gay black men generational curses ghetto gifted african americans going green good black men gospel music gossip government Haiti haiti earthquake haiti fault line happiness harlem haters helpful links hidden medical experiments high blood pressure highly sensitive blacks hip hop culture hip hop fashion homosexuals honest black folk housing assistance how to approach a black woman how to get exposure on this site human trafficking hurricane relief ignorant black people illuminati insecure women inspiration internet dating interracial relationships israel jamaicans jealous men jealous women jealousy jobs juneteenth keep it real kwanzaa laboring to love an abusive mate liars light skin lottery loud mouth blacks love lust lynching make money manhood manipulative media manmade earthquakes martin luther king barack obama medicine memorial day menopause mental issues michael jackson michael jackson children mother michelle obama mike tyson mike tyson daughter military mind control minority women scholarships misogyny modern day slavery money moors motivation multiracial celebrities music lyrics music videos narcissism natural disasters negro spirituals nelson mandela nicole richie nonblack not african american Obama obama campaign Obama sworn in obese black people offended blacks old school overweight african americans paranoid paranormal patience patti labelle paula abdul pedophilia perimenopause poems police poor african americans population control positivity post traumatic slave syndrome postpartum depression poverty prayers prejudice prescriptions president barack obama president elect barack obama prideful prostate cancer and black men protests racial problems racism racist republicans rb music groups reality shows recycling reggae music relationships relatives religion revenge reverse discrimination rhianna rich african americans samples and trials SARS scammers scams scandalous pastors scary blacks schizophrenia secret societies self esteem self hate self righteous senator barack obama sex sexual harassment shopping siblings skin bleaching skull and bones slavery social issues social networking society sociopaths sometimey black folks soul food spiritual african americans spiritual warfare sports state of the union address strange black folks stubbornness superstition surveys terri seymore the man tired black man tired black woman toxic parents travel trends twitter uncle tom unemotional unemployment ungrateful black folks voter privacy war whistleblowers white american racism white people wisdom women friends work at home youtubers
Creative Commons License
African American Planet: Relationships, Education, Products & Lifestyle by Nicholl McGuire is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.
Based on a work at africanamericanplanet.blogspot.com.

Translate