Entrepreneurship Provides Economic and Social Stability for Communities – Route Fifty
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Small businesses not only generate two-thirds of new jobs and employ about 47% of the workforce, they provide a crucial path to economic and social stability as well as wealth-building possibilities for many Americans, according to a new report by the National League of Cities released Monday. However, Black, Indigenous, people of color, women, LGBTQ+ and other marginalized groups are often excluded from the opportunity to start and grow a business, the report says.
Entrepreneurship provides one of the main modes of upward mobility for BIPOC Americans who have been historically excluded from capital and institutions and/or systematically disadvantaged in their efforts to start a business, save and build wealth.
However, in the spring of 2020 during the early months of the pandemic, 41% of Black-owned businesses closed, opposed to 17% of white-owned firms. Meanwhile, BIPOC entrepreneurs were disproportionately excluded from federal Paycheck Protection Program loans and other critical financial lifelines needed to stabilize and recover, the report finds.
Bruce Katz, director of Nowak Metro Finance Lab at Drexel University in Philadelphia, said during the news conference that there are challenges for Black and Brown people to becoming entrepreneurs.
“We need to make some structural changes in the next several years to build strong ecosystems that can connect entrepreneurial support, quality capital, quality coaching and sectors, because so many of Black and Brown businesses are in sectors that pay low wages and don’t have the kind of growth trajectories that we need,” Katz said.
Recommendations for Governments
Here are three guiding principles that can help city leaders implement the recommendations presented by the NLC:
“We need all of the steps along the way to have the kind of ecosystem in our respective communities that give us the economy needed to create job creators,” Della Clark, president and CEO of The Enterprise Center in Philadelphia, which helps minority business owners, said at the NLC news conference.
For more information from the NLC report click here.
Andre Claudio is an assistant editor at Route Fifty.
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