Black consumers produce a buying power of $1.3 trillion annually – a number that many corporations have been actively moving to capitalize on, as seen by the increase of “ethnic” sections in retail stores across the nation. But let’s be clear – Black people are more than just a few shelves or an aisle. While many large companies are advertising or packaging their products to appeal to the Black consumer, their leadership does not often indicate a true commitment to diversity and the economic advancement of those same Black people. In fact, a 2020 report on the largest corporations in the US finds that only four of them have a Black CEO. That means that although Black people make up approximately 13.4% of the US population, less than 1% of Fortune 500 CEOs are indeed, Black.
One of the greatest factors that contributes to wealth and economic disparities is ownership, or lack thereof, in the Black community. Only 43% of Black families own a home – almost 30% lower than white families and the lowest of all races in the United States. Limited access to viable financing options, high interest rates, and lack of capital directly contribute to the disparity. But that’s not just limited to home ownership. Black businesses are not afforded the same opportunities and access to capital as other businesses – directly limiting their ability to grow and thrive. A 2017 report indicates that minority-owned businesses are historically able to invest less capital at startup, are twice as likely to be denied for loans, and have less than half of the average amount of recent equity investments when compared to non-minority owned businesses.
Financial and economic crises disproportionally negatively impact minority groups in the US. In 2010, shortly after the economic downturn, Black unemployment sat at 16% – almost double the 8.7% for the white population and higher than any other minority group. The COVID-19 pandemic shows little differences with Black unemployment hovering around 15%. Black employees will undoubtedly continue to see the unemployment rate rise as there is a significant lack of representation in white-collar jobs that are more likely to be performed virtually. A report from the National Bureau of Economic Research indicates that from February to April 2020, 41% of Black small-business owners had to shut their doors.
In a country where Black people have been historically undervalued, underpaid, and mistreated, supporting Black entrepreneurs is about more than simply supporting a business. Patronizing Black businesses builds and supports Black communities. By using your purchasing power to support more Black-owned businesses – you’re directly contributing to job creation, investing in local Black economies, and impacting change on important social issues.
An increase in revenue for businesses increases the need for employees. Even with limited access to resources, minority-owned businesses outpaced the growth of non-minority owned businesses in the areas of total gross revenue, number of employees and total annual payroll from 1997-2002. The same report finds that Black businesses on average pay more when compared to non-minority owned businesses, which directly contributes to closing the racial pay gap.
Buying Black puts more money specifically into the Black community. When you purchase from large retailers, the money very rarely supports the local community. By spending more at Black-owned businesses, you are directly contributing to more money staying in the Black community from employee payroll to the business owner’s purchases from other local businesses and manufacturers. The longer the money stays in the community, the more people that can benefit from the use of the money to purchase products and services.
Consumers have the power to encourage, and in some cases, demand actions from companies. For example, large corporations such as Disney and McDonalds, were challenged to ban or significantly diminish the use of single-use plastics – not from legislation, but from their consumers. Nielsen finds that 42% of Black adults expect the brands they purchase from to support social issues, which is 16% higher than the national average. Collectively harnessing our power as Black consumers forces companies – large and small – to hear our voices and support and advocate for issues that matter to us.
Here’s the thing – buying Black is not a fad or trend. Supporting Black businesses shouldn’t just be something that we do and check off our list before returning to our shopping cart on Amazon. It’s a commitment to improving the country not only for ourselves, but also for our children and future generations. In order to truly support Black businesses and subsequently the economic growth of the Black community, we must continue to advocate for their creation, pay them their worth and speak up for their existence.
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