The State of Black Business Report for Arizona highlights challenges, opportunities, and urgency.
Several community groups worked with the State of Black Arizona to compile key data points to provide a snapshot of the economic contributions of Arizona’s African American community. The group says it’s the first time such a report has been produced.
Five percent of Arizonans identify as Black or African American. Their labor participation rate is 68% compared to the state’s 60% rate, while their median annual household income is $9,200 lower than the statewide median. The income disparity is larger in metro Phoenix at nearly $13,300.
During a Greater Phoenix Economic Council webinar to address the report, Robin Reed, president and CEO of the Black Chamber of Arizona, said action is needed now to close disparity gaps.
“I believe the time for talk is over,” he said. “Studies, questions are great, but it’s time to do something. Again, just because you can’t do everything, doesn’t mean you can’t and shouldn’t do something. I think that’s what each person and each company needs to do. We need to figure out what we can do and do that.”
“We know that Black owner-businesses need more support, more access to capital, networks and other mechanisms for growth,” said Teniqua Broughton, executive director, State of Black Arizona.
The report finds investments in Black-owned businesses have failed to keep pace with demographic growth trends.
Based on 2017 data for Arizona, the average Black-owned employer firm had 10 employees and generated $1.1 million in revenue compared to 23 employees and $5.4 million in revenue for all state employer firms.
Nearly 60% of Black-owned employer firms are under six years old compared to 40% of all state employer firms, and only 12% of Black-owned firms are more than 15 years old compared to 27% of all firms in the state.
“This disparity could be indicative of a couple different things,” said Drew Callow, research analyst for GPEC. “It could indicate a growing recent trend, an influx of Black entrepreneurship here. On the other hand, it could be indicative of systemic barriers to Black-owned businesses as they attempted to scale.”
While expert say improving access to capital would help address the wealth gap, Reed, who used to own a mortgage company, offered another avenue: “We need more people of color in construction, we need more people of color in real estate sales, both commercial and residential, we need more people of color in real estate finance because without that, the Black community isn’t hearing the story of the value of real estate, which then converts as to why we are very low in terms of real estate ownership.”
Oye Waddell, founder and CEO of Hustle Phoenix, said the conversation about financial, intellectual and social capital must be local, personal and immediate.
“How are we supporting African American entrepreneurs? Are we actively using their businesses? Personal, what are we doing personally to contribute to the growth of African American entrepreneurs in this community? And then immediate-we have to do it now,” he said.
In September 2020, Citigroup released a report that addressed economic losses attributed to racial inequality in the United States. The Citi Global Perspectives and Solutions report estimated the lost gross domestic product (GDP) of systemic and societal racism and discrimination faced by Blacks to over the last 20 years to be $16 trillion. The figure includes gaps in wages, access to housing and higher education and investment in Black-owned businesses. If the gaps were closed today, the report said $5 trillion could be added to the U.S. GDP over the next five years.
May Mgbolu, assistant director of policy and advocacy at the Arizona Center for Economic Progress, said the Arizona report is about more than businesses, it’s about Black lives.
“We moved to this state, we’re from this state, we want to be contributing to the economy, we want to be part of the economy and I think this report is an opportunity for leadership to really figure out what changes and actions they can adopt to really start bringing in this community that has been forgotten and left out,” she said.
The report includes four areas to improve opportunities:
- Leverage research or conduct a study on the viability and retention of Black-owned businesses.
- Leverage regional connections to drive internal and external investment.
- Increase support for Black-owned businesses.
- Design comprehensive statewide directory of Black-owned businesses.
“The only way that this report, you know, provides value is if we become action-oriented civic leaders that work to advance the provisions that are set forth in this report, and you can count me in to being a stark leader that’s going to support these efforts,” said Chris Camacho, GPEC president and CEO.
The State of Black Business Report 2021 can be downloaded here.