For weeks, jobless rates have sky-rocketed and economic activity has contracted as businesses struggle to stay afloat during the COVID-19 lockdown. As an organization committed to improving financial security, Prosperity Now recognizes the importance of providing critical financial assistance during this crisis, particularly for minority-owned small businesses and other traditionally underserved firms. These businesses play key roles in creating and sustaining the economic security of their communities as well as the national economy.
As a founding member of the recently launched Page 30 Coalition, we have joined forces to ensure these underserved businesses receive an equitable share of the federal government relief designed to keep businesses afloat in light of the COVID-19 pandemic. The Coalition has six core priorities, including extending the Paycheck Protection Program to the end of the year and expanding economic resources for small businesses with fewer than 10 employees.
Many of the most vulnerable small businesses in the United States are in retail, health care and hospitality, which, in many parts of the country, remain closed or face reduced sales due to stay-at-home orders and social distancing. These firms are also more likely to be Black-, Latino- or female-owned than businesses in other sectors. Helping these businesses remain viable after the crisis must be a key goal of any relief program.
Reducing the racial wealth divide is a cornerstone of Prosperity Now’s work. According to the latest data from our Scorecard, the median net worth of White households is more than $140,000 while their Black and Latino counterparts have far less–approximately $12,400 and $20,500 respectively. Less wealth means fewer opportunities, both now and well into the future, for these households and for generations to come.
A report on Black-owned businesses by the Association for Enterprise Opportunity (AEO) indicates that there are 2.58 million such businesses in the U.S., generating $150 billion in revenue and supporting 3.56 million jobs annually. Crucially, the median net worth of these business owners is 12 times higher than Black non-business owners, and ownership creates wealth faster than wage employment. This entrepreneurship is building financial security for minority communities and helping to reduce the racial wealth divide.
According to “The Cascading Impact of COVID-19 on Microbusinesses and the U.S. Economy,” a report released last week by Prosperity Now, microbusinesses (defined as business with fewer than 10 employees and non-employer firms) were more vulnerable to financial shock before the COVID-19 crisis. Consequently, they are faring worse during the pandemic, and are not receiving enough stimulus relief funding. This is particularly problematic as 90% of Black-owned firms nationwide have fewer than 10 employees, according to AEO data. If these businesses are not able to keep their doors open, minority communities will be recovering with the economic fallout for years to come.
The financial security of the most financially stressed businesses and communities and the future of racial wealth inequities will be shaped by how this crisis is handled. The Page 30 Coalition is committed to charting an equitable path to economic recovery for underserved businesses.
Originally posted by Prosperity Now on 2020-05-20 19:00:00