By Harry C. Alford
Each February for more than 40 years, our country has proudly come together to celebrate the rich heritage and significant contributions of African Americans during Black History Month. This month represents a time to reflect on the accomplishments of great leaders and innovators — the teachers, lawmakers, scientists, and entrepreneurs, who overcame significant barriers and helped to shape modern society for the better.
Many household brands and iconic American businesses were founded by trailblazing Black innovators. In 1821, Thomas Jennings became the first African American patent holder in the United States, and we have him to thank for modern-day dry cleaning technology. The first self-made female millionaire, Madam C.J. Walker, created a hair-care line in 1906. Johnson Products became the first Black-owned business on the American Stock Exchange in 1971. In 1999, Franklin D. Raines became the first Black CEO of a Fortune 500 company, Fannie Mae. And Oprah Winfrey, who broke the glass ceiling after facing much adversity to pave the way for Black television personalities, became the first African American female U.S. billionaire in 2003.
Our history is long and is still being made. We have much to be proud of as a community, but there are still challenges that must be overcome for Black-owned businesses.
In 2020, our nation underwent a long-overdue national reckoning over issues of race and social justice. The country — for the most part — came together to recognize the racial disparities that continue to exist in the United States. For centuries, Black Americans have fought for equality, including the right — and opportunity — to own and operate a business in America.
Despite there being more than 124,000 Black-owned businesses in the United States in 2017, African Americans own just 2.2% of the nation’s 5.7 million businesses with employees, according to the U.S. Census Bureau. And these disparities, which have persisted for years, have only been exacerbated by the onset of a global pandemic, which has disproportionately affected minority communities.
In early 2020, what began as a year of steady economic growth quickly turned into the direst economic crisis our nation had experienced since the 1930s. No industry was immune to the effects of the COVID-19 pandemic. Black-owned businesses were disproportionately impacted, causing an existing gap in business ownership to grow.
The National Bureau of Economic Research released data early on in the pandemic that showed active Black business ownership decreased by more than 40% from February to April 2020 — nearly double the rate of decline the nation had seen overall. Another study conducted in May 2020 found that more than half of African American business owners were very or extremely concerned about the viability of their businesses.
Since the onset of the pandemic, businesses have continued to struggle. A study conducted by researchers at the University of Michigan found that less than 1% of Black business owners stated they received government assistance from March through May 2020. And a recent survey found that 83% of minority-owned businesses claim that they are in need of additional financial assistance from the government to survive under current COVID conditions.
Navigating the pandemic has been incredibly challenging, but technology has served as an invaluable asset for business owners. Technology has allowed them to operate virtually, protecting their employees, while continuing to run their day-to-day operations online. It has also opened up new business opportunities while foot traffic has declined and some shop doors have been required to temporarily close. The internet has provided a platform for businesses with smaller budgets to communicate and engage with customers and market their products amid social distancing requirements. A study by the U.S. Chamber of Commerce found that roughly three-in-four small businesses utilize digital platforms for sales.