Many diverse-owned businesses still struggle to hire
On the Tucson-based website BlaxFriday, an online directory of Black-owned businesses in Arizona, there are nearly 1,500 businesses listed. Fields range from apparel and beauty products to food services, real On the website BlaxFriday.com, an online directory of Black-owned businesses in Arizona, there are nearly 1,500 businesses listed. The main issue is that many businesses lack the capacity to hire employees. Many are sole proprietorships or family-run, often with no brick-and-mortar shops, and many are also e-commerce. The report by the Brookings Institution suggests that these businesses create an average of only eight jobs per firm, compared to 22 for all businesses. The primary barrier to scaling up businesses is access to capital, influenced by past and present discrimination, according to Andre Perry, a senior fellow at Brookings. This disparity has been addressed by Congress in 1976 to support Special Purpose Credit Programs (SPCPs), which allow lenders to create special programs to reach resources to disadvantaged groups. However, not all banks or applicants are aware of these programs.
ที่ตีพิมพ์ : 10 เดือนที่แล้ว โดย Tucson Local Media Contributor, Jimmy Magahern ใน Business
On the Tucson-based website BlaxFriday.com, an online directory of Black-owned businesses in Arizona, there are nearly 1,500 businesses listed. Fields range from apparel and beauty products to food services, real estate and insurance agents.
However, one thing browsers won’t find on the site is a job search button. Blax Friday creator Ashley La Russa says a career page is definitely in her long-term plans for the site, “but our primary focus is still on business owners right now.”
The main issue, La Russa says, is that many of the businesses listed still lack the capacity to hire employees.
“A lot are sole proprietorships, or they’re sort of family-run — mom helping out or husband helping out,” she explained.
A large percentage of Black-owned businesses are also e-commerce — individuals making and selling their goods online.
“Many of them don’t have a brick-and-mortar shop,” La Russa said — although she noted that’s slowly changing. “In the last year, we’ve had a number of barbers and hairstylists open up physical locations, and just recently, Cinnaholic, a (franchised) vegan cinnamon roll business and bakery, had a ribbon cutting. So we’re growing, but we could absolutely use more.”
Nationally, sole proprietorships make up a disproportionately high share of Black-owned businesses, according to a February 2024 report by the Washington, D.C.-based nonprofit Brookings Institution. Overall, sole proprietorships make up 96.3% of all Black-owned businesses, more than any other racial and/or ethnic demographic group. However, Black-owned businesses in total create an average of only eight jobs per firm, compared to 22 for all businesses.
“The primary barrier Black business owners face to scaling up businesses and becoming employers is access to capital, influenced by past and present discrimination,” said Andre Perry, a senior fellow at Brookings who co-authored the report. “Historical discrimination has led to less intergenerational wealth transfer among Black families, which gives people less resources to start and scale up their businesses.”
As an example, Perry points out that many business owners commonly tap into home equity for start-up capital.
“Most people start and scale their businesses using the equity in their home,” he said. “But if you had past housing discrimination, you’re just going to have fewer resources to invest in yourself. And because you have less collateral, you are less likely to be able to take out debt capital.”
Congress has tried to address this disparity. In 1976, it amended the Equal Credit Opportunity Act (ECOA) to support Special Purpose Credit Programs (SPCPs), recognizing the government’s interest in expanding access to credit for disadvantaged groups. These programs remain on firm constitutional ground, despite the recent Supreme Court decision against affirmative action in education.
“What SPCPs do is they allow lenders to create special programs to get resources out to those groups,” Perry said. “And we need more product vehicles like that, in which people who are doing everything right, but they just didn’t have a grandfather that owned a home or could take advantage of their GI Bill, can get better access to financial resources.”
That way, Perry says, Black sole proprietorships can scale up, hire employees and transition to employer businesses.
But not all banks make use of the programs, nor are applicants always aware they exist.
This widening of the “Black employer gap,” as Perry calls it, comes at a time when many workers — not just Black, but also Asian American, Hispanic and Indigenous as well as those in non-racial minorities like LGBTQ — are seeking work communities that more closely reflect their own.
As company standards on diversity, equity and inclusion, or DEI, weaken the further we get from 2020’s “Black Lives Matter” movement, many non-white jobseekers are looking for workplaces where they feel better understood, supported and less subjected to the microaggressions and tokenism prevalent in predominantly white organizations. It’s a situation that’s worsening, particularly in this election year: conservative legislators in Arizona have already pushed for a bill (AB 1005) that would prevent public entities from requiring DEI training, organizing DEI programs or retaining employees specifically to advance DEI initiatives — a bill Governor Katie Hobbs vetoed.
For these job-seekers, businesses owned by people who look like them hold the promise of more inclusive work environments that value diversity and cultural representation.
“Black-owned businesses often offer a sense of community and cultural affinity that may not be as pronounced in predominantly white organizations,” said Dr. Kim Davis, an Arizona State University grad who now runs a leadership consulting business in Chicago.
Her thesis dissertation chronicled her own personal story as “the only Black woman in (business) meetings,” recounting “the shock of realizing that your hiring was primarily driven by your race and gender rather than your undeniable competence, followed by the relentless scrutiny and micromanagement of your work.”
Getting out of such toxic work cultures can be life-changing, Davis says.
“This can lead to a more comfortable and affirming work environment where Black employees feel genuinely seen, heard and valued,” she said. “Such environments can significantly reduce the feelings of isolation and the pressure to assimilate into the dominant culture, which are common in other workplaces. The psychological safety found in these environments can enhance job satisfaction and reduce turnover.”
But finding such businesses with enough capital and volume to hire employees can be difficult. In the Tucson area, according to the Brookings report, there are 185 Black businesses, but they account for only 1.2% of employer businesses. If Black businesses accounted for a percentage of employer firms equivalent to the city’s Black population, there would be 661 more businesses here with the capacity to hire.
Networking with other diverse-owned businesses is one way to increase access to capital, particularly with regard to government contracts.
“In order for that to happen, you do need programs and initiatives that are deliberate about getting Black and brown business owners to merge and acquire firms so that they have the ability to take on larger contracts,” said Perry. “So much of business development is social in nature, but fractured social networks along racial lines mean that Black entrepreneurs often lack access to customer and capital networks.”
Bringing Black business owners together is one way that Blax Friday tries to create those networking opportunities, pairing senior business owners with younger founders to help bridge this gap.
“This year we held our second annual Black-owned business festival,” said La Russa. “And it was the largest in the state. We got just under 70 Black-owned businesses from Phoenix, Tempe, Chandler — but the majority was from Tucson.”
Like last year’s festival, this one, to be held again over Thanksgiving weekend around Hotel Congress, will showcase the businesses through vendor tents alongside food trucks with live music and performances. Closer to now, the group will host a Juneteenth dinner on June 15 at Downtown Clifton, the only Black-owned hotel in Tucson.
Such networking events help link business owners to others, and increase opportunities to expand. The organization hosts regular “Pitch Black” business pitch competitions — “like a ‘Shark Tank’ for Black businesses,” La Russa explained — that distribute funds through its partnership with Groundswell Capital, a Tucson-based nonprofit lender that specializes in helping underserved entrepreneurs and clean energy firms.
“This year we’ve given out $22,000 to six businesses, and that’s really helped their development,” she said.
Some of the Black-owned businesses that have opened brick-and-mortar locations, in turn, have literally opened the door for others in the community.
“Pure Lotus Scents is really interesting because they’ve also welcomed in other Black-owned businesses to utilize some of their retail space and set up their own little maker’s area in a corner in their shop,” La Russa said.
However, helping diverse-owned businesses has an impact on the entire business community, Perry says — not just other Black, Asian, Hispanic or Indigenous-owned enterprises.
“We need to see the interconnectedness of our various groups,” he said. “Often we cast equity as a zero sum game, that if you support one group you’re taking away from another. The reality is that one group’s well-being is positively correlated with the well-being of all the others. When everyone thrives, it benefits the entire economy.”
That includes helping diverse-owned businesses move beyond just selling their wares online to establishing physical locations with the ability to hire.
“We will always need our commercial corridors and neighborhoods to thrive,” added Perry. “And we need a more diverse set of owners of those neighborhood-facing buildings.”