Minority-Owned Businesses and Their Impact on the Nation's Economy
People of color in America have begun to make great strides since the last 50 years, in terms of economic mobility and the level of education they have attained. Continuing to break through previously erected barriers that prevented them from achieving parity and the same level of success as other ethnic groups, people of color have been increasingly making great impacts on the workplace and economy in ways previously considered improbable.
When you go shopping or when you apply for jobs at companies, there is a high statistical probability that you don’t think of the individuals who own the business. To be honest, I personally believe nobody thinks of this and why should they? After all, that’s not what you’re concerned about right? Whether the business owners are male or female, black or white, old or young it does not matter, right? Well, as hard as it may be to conceive, knowing the type of people who own businesses and create jobs in this country are important in the sense that it acts as a barometer for economic mobility, social mobility, and equality.
As previously stated, in the past, the opportunities for people of color to engage in entrepreneurship was negligible and it was very difficult for them to make headwinds into the business market because of prior systemic impediments. With the introduction of anti-discrimination measures and a general shift in attitude towards the perception of people of color in American society, people of color have had the ability to change the landscape of the job market by opening businesses and contributing billions of dollars to the economy.
Engaging in minority business and diversity initiatives have been extremely beneficial to the economy. As objectified as it sounds, people of color, Hispanics and African Americans mainly, have been a previously untapped, valuable resource in regards to their potential contribution to the economy and the country on a grand scale. Minority-owned businesses have generated a large amount of capital wealth which directly translates over to an increase in jobs, economic growth, and increase in personal wealth for many people across the country.
A study that was compiled by The National Minority Supplier Development Council (NMSDC) calculated the impact that minority-owned businesses have in the United States and the results are quite significant. These minority-owned businesses have created a grand total of $400 billion dollars in wealth and have led to the creation of over 2.2 million jobs in the year of 2014. These results highlight the massive impact that minority entrepreneurs and businesses have had on not just the American economy, but on everybody’s lives.
Considering the fact that African Americans and Hispanics still have a considerable way to go before they reach the same level of equality as Caucasians and certain Asian demographic ethnicities, this is even more promising. It is promising in the sense that a large number of disenfranchised individuals will also have a turn for being properly integrated into society and as a result, they will inevitably bring about their own unique skills. Having said that, their integration into society will reinvigorate the economy and the workplace because of the many contributions that they will contribute. Similar to the increasing number of people of color entrepreneurs, along with their substantial economic contributions to the nation’s economy, these other individuals are crucial to the future of the country’s economic vitality.
This concept or cycle on newly generated wealth from businesses is known as the Multiplier Effect. The multiplier effect takes into account the “increased economic activity that comes from sales being generated, and expenses being incurred” by these minority-owned businesses. When these businesses undergo sales, they use a portion of this newly generated income as a tool to reach out and hire people. In addition, they use these sales to purchase items or products that are essential to the maintenance and operation of their business. When more people are hired, this allows these individuals’ purchasing power to grow exponentially which allows them to engage in a lifestyle that they previously were unable to live. It ultimately creates more demand in the economy, given that society is heavily consumer-driven, and really helps assist local communities to become more prosperous.
Given the fact that communities that are populated by African Americans and Hispanics are generally less prosperous as other more affluent areas in the United States, these business initiatives to assist POC in penetrating the market place are hugely beneficial. Minority-owned business contributions to their communities are extremely important for many people who are living in destitution or poverty. Often times these small businesses are the critical lifeline for stricken neighborhoods, that is why it is so important to emphasize the need for minority-owned businesses.
As said, most of us don’t think about whether or not a business is owned by a minority, nonetheless the ethnicity of that individual. Thinking about the ethnicity of business owners is simply not within a vast majority of people’s interests nor is it a thought that is common in our day to day life. However, it is important to ask ourselves when we go shopping, “who owns this store and what are they doing to contribute to the local and regional economy.” For people concerned with the status of people of color and minorities in the United States, knowing the level of development and involvement of minority-owned businesses is important in the sense that it shows the progression of society.
This particular level of business activity helps identify the status of economic and social mobility in the United States because it informs us whether or not there is diversity in the business market. Not long ago there was a large quantity of racial, social, and economic inequities so it is pertinent that we, as responsible citizens, ensure people of color are given the same chances that others are given. In the end, minority-owned businesses have a considerable impact on the state and functionality of the United States’ economy so there is quite a bit left at stake here. By excluding and disenfranchising a large segment of the population, we are only engaging in self-deprecating behaviors by limiting the growth potential of our future economy.