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Atlanta, GA | Posted: June 15, 2011
Rebecca Keane – 404.894.1720
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Dr. Thomas "Danny" Boston"Minority Report: Expanding Opportunity for All" is an essay by Thomas "Danny" Boston, Professor in the School of Economics, written for a symposium entitled "From the Ground Up: Fostering Entrepreneurship." The symposium was published by Democracy: A Journal of Ideas and funded by the Ewing Marion Kauffman Foundation.
Boston's essay appears alongside contributions from William Galston, Vivek Wadhwa, Maryann Feldman, and Amy Rosen. A pdf file of Boston's essay can be found here.
In the new economy, small businesses, rather than Fortune 500 corporations, are the engine of American innovation and job growth. The Great Recession and subsequent jobless recovery have made this clear. Between 1992 and 2010, the economy gained 16.7 million jobs, 33 percent of which came from businesses with less than 50 employees and 32 percent from businesses with 50 to 499 employees. Between 2000 and 2010, the economy saw a net loss of 3.4 million jobs. Large businesses—those with 500 or more employees—accounted for 65 percent of that loss. In contrast, net employment in businesses with 50 to 499 employees was unchanged, while businesses with fewer than 50 employees experienced a 35 percent reduction.
Minority-owned small businesses play a crucial role in this economic picture. Such businesses employed 5.9 million workers in 2007, or 5 percent of the workforce. Furthermore, the number of minority-owned businesses, as well as their earnings and employment capacity, is growing at rates that far exceed the respective rates of growth for nonminority-owned businesses. Over the last decade, the rapid rise in revenue and employment among minority-owned firms suggests that those firms are extremely well positioned to help reduce the extraordinarily high rates of unemployment in minority communities.
But while minority-owned businesses have made tremendous advances over the last decade, they also face serious challenges. The ups and downs of the new economy are hurting all small businesses, but especially minority-owned firms. And while they can help make a dent in the unemployment problem, minority-owned businesses are still too much an afterthought in current thinking about the economy. Recent initiatives by the Obama Administration, such as the new Startup America campaign to accelerate entrepreneurship, show that policy-makers understand that entrepreneurship and small business lie at the heart of any recovery plan. Yet few policy-makers have homed in on the potential of minority-owned small businesses to help the United States out of the economic ditch.
Compounding minority business owners’ worries is the changing face of the global economy. Serious competitors to U.S. global economic leadership have emerged. In response, U.S. corporations have sought to become leaner, meaner, and more flexible, downsizing and transforming their operations by reducing the number of suppliers they depend on and requiring suppliers to have more capacity and demand flexibility. The government has also implemented changes in procurement policies that are somewhat analogous to the changes occurring in the corporate sector. To save more money, procurement departments are starting to bundle contracts and in-source more services. On top of these changes, new financial regulations have amplified the difficulties minority business owners face regarding access to capital. All of these developments have made it more challenging for minority business owners to increase their scale of operations. To ensure the continued development of these businesses, some changes in government policy need to be made.
To read the rest of Boston's essay, go to Democracy: A Journal of Ideas
