Black Business Owners Hit Hardest by Virus Shutdown Black: Other Minority Groups, Immigrants Also More Heavily Affected

Daily Herald (Arlington Heights, IL), May 26, 2020 | Go to article overview

Black Business Owners Hit Hardest by Virus Shutdown Black: Other Minority Groups, Immigrants Also More Heavily Affected


Byline: Hannah Knowles The Washington Post

The number of working black business owners in the United States plummeted more than 40% as the coronavirus shut down much of the economy a far steeper drop than other racial groups saw, according to an analysis confirming fears the pandemic would deepen inequalities in the business world.

Closures and social distancing to slow the virus's spread have taken a disastrous toll across racial groups, with the total number of active business owners dropping 22% from February to April, based on granular data from the federal government's employment surveys that was made available last week. But minority-owned businesses have suffered disproportionately in a crisis that's also killing nonwhite Americans at higher rates and eliminating more of their jobs.

Experts have voiced concerns that wealth gaps, trouble accessing government aid and concentrations in reeling industries have left these companies and the families they support more vulnerable to the pandemic's fallout. But they're still working to understand and measure the colliding hardships making the future of minority-owned businesses especially precarious. The new data on ownership by racial group is "devastating," said Robert Fairlie, an economics professor at the University of California at Santa Cruz, who plans to post a working paper on his findings.

"We already have disparities. African Americans have the lowest business-ownership rate in the population. ... And so here we're creating a situation of closures that's hitting the groups with the lowest rates even harder," he said.

Minority-owned companies often create jobs for people from the owner's ethnic or racial group, he said, and their success radiates out in the community. Research links business ownership to long-term wealth.

"We're just going to see further increases in inequality that has been so hard to change," Fairlie said.

As of April, the country lost nearly 450,000 active black business owners as the pandemic intensified, he found. But the disparities extended into every minority group. The number of working Latino business owners dropped 32% from February to April, while the number of Asian business owners decreased by about a quarter.

Immigrant business owners were also deeply affected, with their numbers shrinking by 36%, according to the data from monthly nationally representative surveys by the Census Bureau and the Bureau of Labor Statistics.

One reason for the uneven toll, according to Fairlie's analysis: Minority-owned businesses tend to occupy parts of the economy most shaken by the coronavirus and the shutdown orders states have embraced to combat it. High shares of black-owned ventures, for example, are in industries such as beauty salons, taxi services and day-care centers that have had to close or have faced precipitous drops in demand.

However, industries appear to account for only some of the inequalities, Fairlie said, adding that he suspects many other factors that are difficult to quantify right now. …

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