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April 12, 2024

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Black biz owners facing unprecedented challenges

By Stephanie Anderson Forest

“From Reconstruction to Jim Crow to the present day, our economy has never worked fairly for Black Americans — or, really, for any American of color.”

This statement was among comments by U.S. Treasury Secretary Janet L. Yellen during a speech at the 2022 National Action Network breakfast honoring Dr. Martin Luther King Jr.

Perhaps, truer words have never been spoken. On the surface, it looks like Black business owners are doing fairly well. According to the U.S. Census Bureau’s 2022 Annual Business Survey — which covers reference year 2021 and is the most recent study — there were an estimated 161,031 African American-owned employer businesses. That number represents a 14.3% increase — about 20,000 businesses — the largest annual increase since 2017. In addition, those businesses produced $183.3 billion in annual receipts, had 1.4 million employees and about $53.6 billion in annual payroll.

Still, Black business owners are facing daunting challenges. For example, a June 2023 U.S. Supreme Court decision prohibits all colleges in the country from using race as a consideration in admissions, effectively striking down decades of precedent on affirmative action.

Not only have some states — including Florida, Texas and Utah — embraced the Supreme Court decision, but they are also dismantling diversity, equity, and inclusion (DEI) departments in colleges and organizations that receive state funds altogether.

On another front, earlier this month, a federal judge in Texas ruled that the Minority Business Development Agency (MBDA) must aid all individuals, regardless of race. The verdict was rendered in a lawsuit brought by several white business owners who claimed that MBDA’s policies were unconstitutional.

Established in 1969, MBDA became a federal department of the U.S. Department of Commerce in 2021 as part of The Bipartisan Infrastructure Law, as enacted in the Infrastructure Investment and Jobs Act, which authorized up to $108 billion for public transportation — the largest federal investment in public transportation in the nation’s history.

MBDA is the only federal agency dedicated to the growth and competitiveness of U.S. minority business enterprises, including African Americans, Asian Americans, Hispanics and Native Americans. Its programs and services have helped MBEs create jobs, build scale and capacity, increase revenues, and expand regionally, nationally and internationally.

In response to the Texas ruling, Eric Morrissette, acting under secretary of commerce for minority business development,  Minority Business Development Agency, said “When we expand economic access for socially and economically disadvantaged individuals and their businesses, we create more jobs, generate more revenue and uplift communities. I disagree with the court’s decision, and we are exploring our options in the case. In the meantime, we will continue MBDA’s programs and work to assist businesses owned by socially or economically disadvantaged individuals in a manner consistent with the court’s decision.”   

We recently caught up with the leaders of two of America’s foremost organizations dedicated to the advancement of African Americans and Black-owned businesses across the entire DEI spectrum to discuss challenges and opportunities for Black-owned businesses in the supply chain.

• Marc H. Morial – mayor of New Orleans, Louisiana, from 1994 to 2002 – is president and CEO of the National Urban League, a position the attorney has held since 2003. Founded in 1910, the organization is a historic civil rights organization dedicated to economic empowerment, equality and social justice for African Americans.

• Ken L. Harris, Ph.D., is president and CEO of the National Business League. Founded by Dr. Booker T. Washington in 1900, the organization is the first and largest independent not-for-profit trade association for Black-owned businesses and professionals in the United States.

What is the state of African American-owned businesses in the supply chain?

Morial: In short: imperiled. A vocal minority of ideologically motivated voices who ignore both facts and the law are on a crusade to close off every pathway to economic opportunity for Black business owners and other historically marginalized groups.

Harris: Black-owned businesses have made significant strides in the supply chain, but challenges persist. While there has been an increase in visibility and support for Black-owned businesses, disparities in access to capital, resources and opportunities still exist. Efforts to promote diversity and inclusion within supply chains have brought some positive changes, but more must be done to ensure equitable representation and participation.

What impact has (or will) last year’s Supreme Court affirmative action ruling have on Black- and minority-owned businesses? 

Morial: While the Supreme Court’s June 29 [2023] decision gutting efforts to promote racial diversity in college admissions did not address DE&I initiatives to create opportunity in business, lower courts already have begun citing in decisions blocking such initiatives. The federal judge [in Texas] who ruled the Minority Business Development Agency may no longer focus on minority-owned businesses cited that decision 32 times in his opinion.

Harris: Last year’s Supreme Court affirmative action ruling has the potential to affect Black- and minority-owned businesses by influencing diversity initiatives and procurement practices. The ruling may lead to shifts in policies and strategies aimed at promoting diversity and inclusion within supply chains.

However, the full impact remains to be seen, and ongoing advocacy efforts will be crucial in safeguarding the interests of Black and minority-owned businesses. Nevertheless, it’s imperative to note that the composition of the Supreme Court greatly influences the interpretation and enforcement of such rulings.

With the current imbalance and until there is more equitable representation, there are concerns that the viability of DEI initiatives may be compromised. The recent dynamics of the court may signal a challenging period for civil rights measures such as affirmative action. Therefore, proactive advocacy and legislative efforts to ensure fair treatment and opportunities for marginalized communities are more vital than ever.

What are the major challenges ahead for African American-owned businesses, and what must they do to overcome them?

Morial: The biggest threat to Black-owned businesses at this moment in history is anti-racial justice activists and hostile courts advancing an unpopular, anti-growth and anti-competitive agenda to undermine the growth and competitiveness of the U.S. economy. 

The National Urban League recently joined with other business and racial justice groups to urge the CEOs of Fortune 500 companies to expand their commitments to and investments in diversity initiatives, including supplier diversity programs.

Harris: Major challenges facing Black-owned businesses include limited access to capital, systemic barriers and underrepresentation in key industries. To overcome these challenges, concerted efforts are needed to address structural inequalities, expand access to funding and resources, and foster mentorship and networking opportunities. Collaboration with government agencies, corporations and community organizations can also help create a more supportive ecosystem for Black entrepreneurs.

What are major opportunities ahead for African American-owned businesses, and what must they do to take advantage of these opportunities?

Morial: Build Up Local is a project we created with the National Minority Supplier Development Council [Inc.] and other partners as a one-stop shop for all business owners — with a special focus on those in systematically excluded communities of color — to learn about resources and programs made available through the Bipartisan Infrastructure Law. This initiative represents an unprecedented opportunity for businesses to access contracts, workforce development programs, and to relationships with stakeholders in local and federal government.

Harris: Despite challenges, there are significant opportunities for Black-owned businesses, particularly in emerging industries, technology and innovation-driven sectors. To capitalize on these opportunities, businesses should focus on building strategic partnerships, leveraging technology to enhance efficiency and competitiveness, and investing in workforce development and skills training. Additionally, initiatives that prioritize diversity and inclusion in procurement processes can create new avenues for growth and expansion.

What is your outlook for African American-owned businesses in the supply chain over the next three to five years?

Morial: The anti-DE&I crusade is anti-growth and regressive, aimed purely at harnessing racial resentment for short-term political gain. Businesses that are focused on growth and productivity recognize the value of a diverse workforce and supply chain.  We are sailing through choppy seas, but rationality will defeat the forces of hysteria.

Harris: Over the next three to five years, I am optimistic about the prospects for Black-owned businesses in the supply chain. As awareness of diversity and inclusion continues to grow, there will be increased demand for diverse suppliers and a greater emphasis on equitable business practices. With the right support and investment, Black-owned businesses have the potential to play a more significant role in shaping the future of the supply chain, driving innovation and fostering economic empowerment within their communities.

To learn more about the National Urban League, visit nul.org.

To learn more about the Build Up Local initiative, visit builduplocal.org.

To learn more about the National Business League, visit nationalbusinessleague.org.

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