Since slaves landed in the British colony of Jamestown, Va., in 1619, a spirit of innovation and entrepreneurship was prevalent in the black community. During the 19th and early 20th centuries, African American innovators and entrepreneurs were prolific. They included the likes of Thomas Jennings, the first black patent recipient for a dry cleaning process; Lewis Latimer, who invented a method for making carbon filaments for the electric incandescent lamp; and Madam C.J. Walker, the first woman millionaire who revolutionized the hair care industry; and countless others.
Despite the rich history of black innovators and entrepreneurs, the economic impact and full potential of African American ingenuity has yet to be fully embraced and realized. Despite continuous job growth, the black unemployment rate is nearly twice that of whites and 24 percent of black households have a zero net worth. African-Americans own only 7 percent of the country's businesses and occupy just 3.2 percent of the senior roles at large companies. According to the Corporation for Enterprise Development and the Institute for Policy Studies, it will take African-American families 228 years for their household wealth to reach that of white families.
While there are historical structural factors that contributed to these imbalances, these facts alone point to the need for a greater focus on unlocking the benefits that black entrepreneurs can bring.
I grew up in a small town in South Carolina, where the textile industry was once the mainstay of our local economy. Connected to that textile economy was a vibrant district of black entrepreneurs and business owners called The Hill. It was reminiscent of Sweet Auburn in Atlanta and Harlem in New York City. It was where one could find the offices of doctors and lawyers, retail stores, restaurants, fresh seafood markets, and other service businesses. The Hill was not just where we bought products and services; it was the epicenter of our social organizational structure.
The textile industry dried up, and The Hill, as I knew it, is gone - replaced by empty storefronts and hollowed-out buildings. The same story once played out in Detroit where auto-parts factories shut down; and Gary, Ind., where steel plants disappeared. Communities were left with few, if any, good-paying jobs and a dismantled social structure, leaving young, capable men unemployed and disengaged from society. Joblessness and underemployment often lie at the root of many of our country’s social problems, such as crime, neighborhood decay and broken families.
This problem defies easy solutions and it would be unwise to think that we can simply revitalize overnight communities that lost thousands of jobs over past decades.
We must think bigger and encourage more black entrepreneurs to develop high-growth, high-demand companies in industries such as technology, transportation and clean energy. Targeted government programs help, but strategic private-sector investment is also critical. Finally, we need sound policies and initiatives that inspire innovation; close the workforce skills gap; free up capital for minority-owned enterprises; and help minority businesses access international markets.
At the U.S. Chamber, we are stepping up our efforts to engage and educate companies about the economic imperatives for greater diversity. I recently testified before the U.S. House of Representatives Committee on Small Business on the importance of participation by minorities and other underserved communities in our patent system. Our $1 million grant from the W.K. Kellogg Foundation is helping to advance a dialogue on the benefits of racial equity and how best to achieve it. Our Next-Gen Business Partnership with Historically Black Colleges and Universities is developing the next generation of minority business leaders. And in cooperation with the Minority Business Development Agency of the U.S. Department of Commerce and other business organizations, we are strengthening the growth of minority-owned enterprises.
The minority community is a key driver of America's economy. Consider that African-American spending power alone now exceeds $1 trillion annually and makes “Black America” the 15th largest economy in the world in terms of Gross Domestic Product, the size of Mexico. In addition, the minority working-age population is dramatically increasing. We should not view these shifts as threats, but opportunities to make America more economically inclusive and competitive.
Rick C. Wade is Vice-President for Strategic Alliances and Outreach at the U.S. Chamber of Commerce.