Growing the Minority Business Community

An important goal for the Pittsburgh Region is to improve the economic status of the African American population. Reducing unemployment and increasing rates of homeownership are critically important actions, but so are increasing the number of African Americans who own businesses and making existing businesses more successful.

In August, the Census Bureau released the details of its newest Survey of Business Owners, which was conducted as part of the 2002 Economic Census. These data provide some important insights on the state of the local African American business community.

Based on the Census Bureau’s estimates, there were 4,363 black-owned firms in our region in 2002. Only 452 of them had any paid employees, so the majority were sole proprietorships or partnerships. Pittsburgh had the 6th smallest number of black-owned firms among the top 40 metro regions in the country.

The small number of African American firms is not explained by the smaller than average number of African Americans in the region’s population. In fact, we rank 37th among the top 40 regions in the number of black-owned firms relative to the size of the black population in the region.

Although the bad news is we have a small number of black-owned businesses, the good news is they are larger than the average black-owned business in other metro areas:

• Pittsburgh ranked 17th among the top 40 regions in average sales/receipts for all black-owned firms, and 15th in average sales/receipts for firms with paid employees.
• Over 10% of black-owned firms in the Pittsburgh Region had paid employees, the 12th highest proportion among the top 40 regions. By comparison, in Atlanta, where there are fifteen times as many black-owned businesses as in the Pittsburgh region, only 6% of the black-owned businesses have paid employees.
• Pittsburgh ranked 16th in the average number of workers employed by black-owned businesses, and 19th in the average salary paid, among the 36 top regions that reported this information.

How is the size of the African American business community changing? Unfortunately, the 2002 Economic Census was taken in the middle of the national recession, and the previous Economic Census (1997) was taken in the midst of a growing economy, so comparisons can be somewhat misleading.

• The total number of black-owned firms in the Pittsburgh Region increased by 39% between 1997 and 2002. The number of firms with employees decreased by 19%, but because the numbers are merely estimated, it is difficult to say for sure that this represents a real decrease.
• The average sales/receipts of all black-owned firms in the region decreased by 16%, but they decreased nationally as well. Since the total number of firms increased significantly, this may simply reflect the entry of newer, smaller firms.
• Average sales/receipts increased by 44% between 1997 and 2002 among the subset of firms with paid employees, the 7th highest growth among the 36 top regions for which the Census reported this information.

In summary, although the number of African American businesses in the region is smaller than it could or should be, the businesses we do have provide a solid base to build on. The majority-owned businesses in the region can help increase the number and size of minority businesses by seeking them out as suppliers, and by providing mentoring and support to minority entrepreneurs.

If you’d like to help, contact the African American Chamber of Commerce (http://www.aaccwp.com/) and the Pittsburgh Regional Minority Purchasing Council (http://www.prmpc.org/).