Is Black business paving the way?

Black Enterprise, June, 1996 by Eric L. Smith

"It's not that [the census report] is not relevant," says Swinton. "It's that you really don't get a true picture of African American business from what they're doing. We should be more insistent that we want reasonable samples because they leave out all of the larger firms."

In contrast, almost 46% of the black-owned firms captured in the Simms study were Subchapter C companies and not surveyed at all in the census report. And more than half of those firms had over $1 million in sales.

"Just to add perspective," says Boston, "keep in mind that even the S corporations are only 3.5% of all the published black-owned businesses in the census survey. But the '92 figures indicate those corporations account for 50% of all employment and about 45% of revenue." Boston says that both research he's done in Atlanta and the Simms data reveal that roughly 60% of corporations are Subchapter C, so a large and unrecognized resource of revenues and employment is going unrepresented in the census study.

"The census report says that [black businesses] have grown by 46%, but we're talking about small firms here, aren't we?" Simms asks. Of the firms included in the census report, 56% had receipts of less than $10,000 and over 90% had no paid employees. The mean sales and receipts for 1992 was reported as $52,000. This figure leads Simms to ask, "What does this mean in terms of the contribution that black-owned businesses make to their communities? What does it even mean in terms of the kind of living they provide for their owners?"

Simms found that including Subchapter C corporations into the mix made for quite a different story. Suddenly, the benefit these businesses were having on their communities came into focus. Many of the firms, by offering tuition loans or grants to their employees, enable them to get additional training. Some firms participate in workplace-based public and private training programs, internships and apprenticeships, further enhancing their employees' prospects for the future.

"So they're not just providing low wage, no-benefit employment then? At least some of the benefits are quite good?" Alexis inquires. "Right," says Simms. "The firms that show up, looking particularly at the BE list of respondents, are providing employment. Many of them have substantial workforces, meaning 100 or more employees. They are recruiting in low-income neighborhoods. Most of them have a majority of black workforces and are providing opportunities not only at the upper end [but at every level]-fulltime permanent jobs with decent benefits."

From a social policy standpoint, says Boston, the research indicates that the highest impact on black employment comes from investment in black-owned businesses because they hire a much larger percentage of black workers. "It's even more important than we know simply because the full employment capacity [of black-owned businesses] is not really recognized," Boston adds.

"And these businesses are doing more than just providing jobs, they're providing training," Conrad emphasizes. "So there are multiplier effects: by providing good entry-level jobs, [companies] help people no longer be labeled as 'that worker from the low-income community' but as 'that worker who's got job experience and training. "