During the height of the pandemic, many companies encountered major setbacks in their business endeavors. However, Black business owners reportedly experienced a higher impact on their earnings causing them to undergo major financial loss, according to a recent study.
According to Chicago Business, Robert Fairlie, an economics professor at the University of California at Santa Cruz, shared statistics in a report distributed by the
National Bureau of Economic Research. The provided statistics show that Black-owned businesses saw earnings decrease by 28% in 2020 as opposed to the 15% drop White-owned businesses encountered and a 17% overall decline.“The disproportionate business earnings losses among business owners of color in the pandemic contributed to widening broader economic inequality setting back one of the long-term goals of fostering minority business development,” Fairlie wrote in the report.
Minority-owned businesses were also majorly impacted by the pandemic in areas including leisure, hospitality, and trade.
“Business owners make up 10% of the workforce and are a significant engine in job creation. Minority business owners tend to hire diverse workers, which in turn narrows economic inequality gaps,” Fairlie wrote. “Losses to business earnings may be especially damaging for job creation and economic stability in low-income and disadvantaged neighborhoods,” he included.
According to Business Insider, a new 2022 report from Meta shows that small Black-owned businesses were experiencing record-low sales following the pandemic. The report surveyed 5,324 small-business leaders in the US, and more than 24,000 globally, and found that businesses run by underrepresented founders were 14% more likely to report lower sales than others. In addition, 51% of Black-owned businesses were experiencing record-low sales compared to January 2021, versus 36% of all US businesses.
“Black-owned businesses have faced additional hardships, such as reducing employment, as a result of the pandemic,” Nicola Mendelsohn, the vice president of Meta’s global business group told Insider. “They’ve also cited cash-flow issues and a lack of demand as reasons behind lower sales.”