The growth of Black-owned businesses has measurably out-paced the growth of new businesses overall and appears to have done even better in Washington State. According to data from the 1992 Economic Census, the number of Black owned firms grew by 46 percent since 1987—the point of reference for the last economic census. These data were compiled during the 1992 Economic Census. The U.S. Department of Commerce, Bureau of the Census, conducts an economic census every 5 years, the last one being in 1992. The schedule for these tallies is staggered with the decennial census.

The Bottom Line

The number of U.S. businesses owned by African Americans in the United States increased 46 percent from 424,165 to 620,912 between 1987 and 1992. Receipts for these firms increased by 63 percent during the five-year span, from $19.8 billion to $32.2 billion. The total number of all the nation's firms increased 26 percent from 13.7 million in 1987 to 17.3 million in 1992. Receipts for these same businesses grew 67 percent, from just under $2 trillion to over $3.3 trillion.

Black Share of Firms

The District of Columbia had the largest percentage of African American-owned firms, followed by Maryland and Mississippi (see Figure 18) . The lowest percentage was found in Montana, followed by Idaho, Maine, North Dakota, South Dakota, Vermont, and Wyoming. Only 1.2 percent of all firms in Washington State were owned by African Americans. The share of African American-owned firms is primarily a function of the population share of Blacks in these regions. Blacks accounted for almost two-thirds of the population in the District of Columbia in 1992, over one-fourth of the population in Maryland, and well over one-third of the population in Mississippi. On the low end of the spectrum, less than 0.5 percent of the population in Montana, Idaho, and Maine were African American. In Washington State, 3.2 percent of the population was African American.

Access Rates

So, analyzing black-owned businesses as a share of all businesses does not give a complete picture. Without knowing the Black population percentage, it is nearly impossible to ascertain whether the 6.5 percent share by Black-owned businesses in Alabama is better or worse than the 4.9 percent share in Delaware. A more meaningful statistic would measure the share of Black-owned businesses relative to the Black population share. This would be akin to a Black-owned business formation rate or an "access" rate. Using access rates, the picture of Black-owned businesses changes a bit. While the share of Black-owned businesses in the District of Columbia was 28.6 percent in 1992, the Black population share was 65.6 percent. As a result, the access rate in DC was 43.6 percent (28.6/65.6=43.6). Contrast that with the 29.0 percent access rate for Black-owned businesses nationwide. Despite its above-average access rate, the District of Columbia was not tops in this measure. Leading the nation were Vermont, New Hampshire, and Idaho, all with access rates in excess of 50 percent. The access rate in Maine also surpassed the DC figure. Those states where the access rate was below average are an interesting mix. Wisconsin, Arkansas, Pennsylvania, Wyoming, and Oklahoma all had access rates below 25 percent. Yet, in terms of size of state, share of Black population, and geographical location, they are literally and figuratively all over the map. Washington State had an above average access rate of 37.4 percent. That was a result of a 3.2 percent population share, and a 1.2 percent Black-owned business share.

Improved Access

In 1987, the access rate was 25.6 percent nationwide. Since then, the access rate improved in most states, in some instances, dramatically. Utah showed the most marked improvement, with a gain of over 10 percentage points. Washington recorded an improved access rate on the order of 7 percentage points. It must be noted, however, that states that start from the lowest base will likely report the greatest improvement. Some states did exhibit a decline in their access rate. Vermont is noteworthy in that, despite the lower access rate (55.6 percent vs. 67.5 percent), it still had the highest rate in the nation. Again, other declines may be partially explained by modest changes in small base figures and measurement error.

Characteristics

Two-thirds of African-American businesses operated as a service or retail trade business in 1992. Contrast that with the national average of 58 percent. Receipts per firm averaged $52,000 for African American-owned firms, compared with $193,000 for all U.S. firms. Fifty-six percent of African American firms had receipts under $10,000; little more than 3,000 firms had sales of $1 million or more. At the state level, receipts per firm ranged from a high of over $160,000 in Idaho to a low of $29,890 in Kansas. In Washington, receipts per Black-owned firm averaged $56,175. Nationwide, receipts per firm among Black-owned establishments was 26.9 percent of the all-firm average in 1992. This measure varied significantly by state. In Idaho, receipts per firm were over 115 percent of the all-firm average, while in the District of Columbia, the ratio was 14.3 percent. This measure is also quite volatile over time, no doubt because of the lack of continuity in the Census Bureau sampling. As an example, in 1987, the receipts per firm among Black-owned establishments was 32 percent of the all-firm average. On the surface, it would appear that Black-owned firms lost some ground during this period, but the quick growth in numbers of Black-owned firms indicates that many of these businesses were in their infancy and thus subject to lower-than-average receipts. Approximately 94 percent of African-American firms were sole proprietorships in 1992. Partnerships and subchapter S corporations comprised 2 and 4 percent, respectively. (A sole proprietorship is an unincorporated business owned by an individual; a partnership is an unincorporated business owned by two or more persons; a subchapter S corporation is an incorporated business with 35 or fewer stockholders.) The survey also showed that 10 percent of African American-owned firms which had paid employees, accounted for 70 percent of the gross receipts of African American firms. Of these firms, 342 had 100 or more employees and accounted for $6 billion in receipts.

Conclusion

In the great majority of these economic measures, Black-owned firms have shown meaningful gains. And trends among Black-owned firms have been measurably above the national average in Washington State. Despite these gains, however, it is apparent that there are still significant gaps to be bridged. The differences in receipts per firm and the low access rates are evidence of continued economic disparity. The challenge for public and private institutions is to maintain a vibrant national economy in which new firms can grow and flourish and where risk-taking is encouraged. For further information on Minority-owned businesses, contact the Census Bureau's Minority- and Women-Owned Businesses Information Staff at (301) 763-5726.