The role of black-owned businesses in black community development

Title: The role of black-owned businesses in black community development
Format: Chapter
Publication Date: December 2006
Description: Over the last three decades, central cities have been burdened by high rates of unemployment, significant population losses, and concentrated poverty. The economic expansion of the 1990s moderated this burden to some extent, reducing by 24 percent (to 2.5 million) the number of people living in neighborhoods where the poverty rate was 40 percent or more (Jargowsky 2003). Still, by the turn of the new millennium 67 cities had poverty rates of 20 percent or higher (U.S. Department of Housing and Urban Development 2000). Central-city unemployment and poverty are concentrated heavily in the low-income Black inner-city communities. These neighborhoods have been abandoned by businesses once located in and around the central business district and have been largely sidestepped by investors, who have favored developing businesses in more suburban locations. The lack of jobs within these neighborhoods combined with the dispersal of cities away from the urban core has created an employment barrier in the form of a spatial mismatch. (See Chapters 4 and 5.) The most extreme manifestations of economic distress and neglect are found in the large, densely populated public housing projects within central cities. A recent study of a distressed public housing project found that in 1995 only 18 percent of household heads 16 to 62 years of age were employed, 49 percent depended upon welfare as their primary source of income, 98 percent of households were Black, and 87 percent were headed by single women (Boston 2005a). The presence of these projects has an adverse impact on the surrounding communities, leading to the development of what is known as "underclass" neighborhoods (Wilson 1996). These communities lack many of the attributes and capacities that typically are necessary for economic development. In addition to economic capital, these neighborhoods also lack social capital. Civic organizations and social, religious, and political groups are usually too weak to protect the quality of schools, demand infrastructure improvements, and regulate zoning patterns for commercial and residential development. The poor housing conditions of these communities are compounded by extreme social and human circumstances. Most residents live in constant fear of gunfire, drug traffickers, and other crime. Communities like these, as well as other low-income Black neighborhoods, desperately need economic development. But there remains a good deal of debate about the most appropriate strategy (Ferguson and Dickens 1999; Boston and Ross 1997). Participants in these debates usually argue over whether the development principles are sufficiently holistic and about the role the public and private sectors should play in redevelopment. The debates also include issues such as affordable housing, gentrification, and the relative merits of mixed-income development. An issue rarely considered, however, is the role that Black-owned businesses can play in the revitalization of Black communities.1 Black-owned businesses are often dismissed because they are only a small part of the whole economy. In 1997, these firms comprised only 4 percent of all firms and generated 0.4 percent of all sales.2 Even among a more restrictive universe of minority-owned businesses, Black-owned businesses comprised only 27 percent of firms and generated 12 percent of sales. The aggregate statistics, however, obscure some important characteristics of Black-owned businesses, which are described in detail later in this chapter. First, Black business owners have an affinity for the residents of distressed Black communities and are committed to community development. Second, Black-owned businesses are becoming increasingly important as generators of jobs for Black workers. This has resulted from the rapid growth of these businesses and their tendency to employ Black workers. Third, a significant portion of the workforce in Black-owned firms is drawn from low-income inner-city neighborhoods; indeed, some of the most successful Black businesses are located in low-income neighborhoods. Fourth, the quality of the average job for Black workers in Black-owned businesses is superior to that for Black workers in firms owned by Whites. Finally, revitalization offers numerous opportunities to promote the growth of Black-owned businesses. Ignoring the potential contributions of Black-owned business, therefore, would be an unfortunate oversight. In the remaining sections of this chapter, I explore these themes in more detail and also draw upon the results of a case study of low-income neighborhood revitalization in Atlanta. The chapter draws on national data and information and data and information for the Atlanta region. The next section documents the employment-generating capacity of Black-owned businesses. While Blacks are substantially underrepresented among business owners, they are nonetheless a sizeable and growing source of employment for Blacks. The middle section of the chapter examines the role of these businesses in low-income Black neighborhoods. The evidence shows that Black owners want to help these neighborhoods and contribute to the employment base in these communities. Given Black-owned businesses' potential and willingness, it is good policy to incorporate Black-owned business in efforts to revitalize the most distressed neighborhoods, those with public housing projects. The final section presents a case study of how this can be done by examining an effort in Atlanta through the U.S. Department of Housing and Urban Development's (hud's) hope vi program. The chapter concludes with some recommendations about the role of Black-owned businesses in Black community development. © 2006 by Temple University Press. All rights reserved.
Ivan Allen College Contributors:
Citation: Jobs and Economic Development in Minority Communities. 161 - 175.
Related Departments:
  • School of International Affairs