Supporting Black Businesses Requires Addressing Deeper Inequities
1. FALL 2020
WE SHOULD SUPPORT
BLACK BUSINESSES, BUT
FULL RACIAL EQUITY
WILL REQUIRE MUCH
MORE
by Brian Reyes, Berkeley ‘21
Edited by Eva Magyar, Davenport ‘22
1THE YALE HISTORICAL REVIEW
1701 Project
institutions and organizations in support of Black com-
munities.1
At the simplest level, supporting a Black small bu-
siness means supporting a Black household.Most Black
businesses are not operating at the level of a major cor-
poration; most do not hire paid employees or bring in
particularly high levels of revenue.2
There has been a
steady stream of excitement around supporting these
1 Matthey J Belvedere and Michelle Gao, “Netflix Makes $100 Million Commitment to Support Black Communities in the U.S.,” CNBC, June
30, 2020, https://www.cnbc.com/2020/06/30/netflix-makes-100-million-commitment-to-support-black-communities.html.
2 “U.S. Business Fact Sheets,” Minority Business Development Agency, accessed September 6, 2020, https://www.mbda.gov/page/us-busi-
ness-fact-sheets.
entrepreneurs because there is a justified understanding
that helping keep them in business is a good and al-
truistic thing to do.
Beyond this,many Black businesses contain not only
monetary but cultural meaning.For example,one of the
most famed Black millionaires, Madam C.J. Walker,
built her company by selling hair products that catered
to Black women. During the early to mid-20th century,
long with the renewed mainstream focus on racial ine-
quality this summer came a resurgence of interest in
Black-owned businesses. Lists proliferated on social
media showcasing businesses to support in various cities, inclu-
ding New Haven.Even Netflix pledged $100 million to financial
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2. 3THE YALE HISTORICAL REVIEW
Black women suffered hair loss as a result of malnutri-
tion and constant labor. White business leaders had no
interest in providing a product that would solve this, so
Walker stepped in and filled the void.3
Decades later,
current Yale senior Alyse Robinson is doing something
similar with her digital skincare business, SkinBloom
Kits. For Robinson, owning a Black business is about
much more than just monetary gain.It’s also about pro-
viding experiences that help “Black women to reclaim
pleasures that have been historically denied to them”so
that they can, in turn, feel free enough to pursue social
activism for their communities as a whole.4
For reasons like these, we should continue to give
our support to Black businesses. That being said, we
should be wary about the way that we do so. The rhe-
toric around Black business can be misused to divert
claims for transformative change: the success of Black
entrepreneurs can be heralded as a sign that structural
change is not needed, and people who view themselves
as allies can easily spend money on Black businesses
without confronting the tougher questions that acti-
vists are raising. This would be a mistake. A close look
reveals that Black businesses are plagued by the same
underlying conditions that produce inequality in other
realms of Black life, and that the best way to help them
is to help Black Americans as a whole—and this, in
turn, requires us to go beyond individualistic notions of
achievement that might otherwise accompany support
for small businesses.
First, I’ll start by painting a numerical picture:
Black Americans are about 13.4 percent of the U.S.
population, and whites are about 76.3 percent5
; Black
Americans own 2.6 percent of all U.S. businesses as op-
posed to whites’ 70.9 percent; Black businesses employ
1.7 percent of U.S.employees as opposed to white firms’
86.5 percent; and Black businesses bring in about 1.3
percent of all U.S. sales, as opposed to the 88 percent of
white companies.6
These disparities are the direct result
3 Mehrsa Baradaran, The Color of Money: Black Banks and The Racial Wealth Gap (Cambridge, Massachusetts: The Belknap Press of Harvard
University Press, 2017), 54.
4 “SkinBloom Kits’s (@skinbloom_kits) Instagram Profile • 4 Photos and Videos,” accessed September 6, 2020, https://www.instagram.com/
skinbloom_kits/. Quotations are from a text conversation with Alyse Robinson.
5 “U.S. Census Bureau QuickFacts: United States,” accessed September 6, 2020, https://www.census.gov/quickfacts/fact/table/US/
PST045219.
6 “Are We There Yet? - The State of Black Business and The Path to Wealth,” BLNDED Media (blog), February 13, 2019, http://blndedmedia.
com/are-we-there-yet/.
7 For statistics on Black business, see Mels de Zeeuw, “Report on Minority-Owned Firms” (Federal Reserve Bank of Atlanta, December 2019),
https://www.fedsmallbusiness.org/survey/2019/report-on-minority-owned-firms. For statistics on the racial wealth gap, see “Examining the Black-
White Wealth Gap,” accessed September 6, 2020, https://www.brookings.edu/blog/up-front/2020/02/27/examining-the-black-white-wealth-gap/.
8 Baradaran, The Color of Money, 182-183.
9 ibid., 183.
of a long history of racism that have created abhorrent
inequalities in social, human, and financial capital. For
example, Black business owners tend to rely more on
personal savings and their credit scores to acquire ca-
pital, despite facing an immense 10:1 wealth gap and
struggling with credit histories weakened by the effects
of lasting discrimination.7
The federal government’s attempts to address this
problem have been paltry at best and harmful at worst.
When the federal government finally got involved in
financing Black business, its efforts originated as an an-
ti-Black political tactic rather than a real attempt to help
the community. In 1969, President Nixon established
the Office of Minority Business Enterprise (OMBE),
fulfilling campaign promises that he would use his ad-
ministration to further an agenda of “Black capitalism”.
Officials at the newly created agency initially took their
role seriously, putting together an ambitious $8.6 bil-
lion plan to create 400,000 new minority-led businesses
in ten years. This idea, however, was short-lived. Upon
hearing of the plan, Secretary of Commerce Maurice
Stans immediately shut it down: Stans informed his
employees that they had misjudged their new positions,
explaining to them that they were not there to create
widespread material uplift, but success stories: “What
the black people, the minority people, need more than
anything else today is a modern Horatio Alger.”8
As
Baradaran writes, the agenda of Black capitalism was a
“public relations strategy”meant to appease the calls for
economic empowerment coming from the Black Power
movement.9
The OMBE has since become the Minority Bu-
siness Development Agency (MBDA), a less symbolic
entity than its predecessor and the only federal agency
that exists to foster the economic well-being of Black
Americans and other people of color. However, the
MBDA has incredibly weak support from within the
federal government: in fiscal year 2020, it was allocated
3. 4
$42 million, just 0.0003 percent of total discretionary
spending.10
Entrepreneurs can also acquire finance ca-
pital from the Small Business Administration (SBA),
though Black Americans only receive three percent of
SBA loans despite being thirteen percent of the popu-
lation. But the issue with the MBDA and the SBA is
not only one of magnitude; they also have their eyes on
the wrong target. In trying to revitalize communities
simply through loans, and leaving Black communities’
other systemic problems unaddressed, these agencies
were already drastically limited in the impact they could
have.This problem is best highlighted by the history of
a particular kind of institution: Black banks.
For decades, Black banks have been trying to solve
these problems by funneling capital into Black com-
munities. In her book The Color of Money: Black
Banks and the Racial Wealth Gap, Mehrsa Baradaran
documents the history of these financial institutions
and comes to a grim conclusion: despite more than a
century of trying to support their communities, Black
banks have struggled to achieve long-lasting success, a
result that stems directly from how deeply this nation
has entrenched the problem of Black poverty. Because
many of their consumers, on average, have little to no
wealth and lower incomes, Black banks’ deposits are
smaller and more volatile (i.e., there’s less predictabi-
lity as to when they’ll be withdrawn and/or deposited
again).They also face higher losses on their investments
for similar reasons. As a result of this instability, they
end up investing a large chunk of their own funds in
U.S. government securities, which are more stable;
however, the more money invested in securities, the less
they are investing in their own communities. Perhaps
the most major issue facing Black banks is undercapi-
talization. Capital, invested by shareholders or retained
from profit, acts as a cushion against losses that finan-
cial institutions incur; this makes capital integral to an
institution’s ability to maintain and expand their ope-
rations. However, a bank attracts more capital by being
profitable—and for all the aforementioned reasons, this
is something Black banks have trouble doing.11
The in-
tricacies of Black banking are important because they
10 Connor Maxwell et al., “A Blueprint for Revamping the Minority
Business Development Agency,” Center for American Progress, ac-
cessed September 6, 2020, https://www.americanprogress.org/issues/
race/reports/2020/07/31/488423/blueprint-revamping-minority-busi-
ness-development-agency/.
11 Baradaran, The Color of Money, 243-245.
12 “Black Socialists in America,” accessed September 6, 2020,
https://blacksocialists.us/.
reveal that Black business success is constrained by the
current economic landscape of the U.S. What Black
businesses need, then, is not just goodwill or more
consumer dollars; they need a redistribution of wealth
not only targeted towards entrepreneurs but the whole
of the Black community. In other words, thriving Black
entrepreneurship might be best envisioned not as a path
towards racial equity, but as a result of it.
The question then becomes: how do we get to that
kind of economy and society? Broadly speaking, we
need bold, new ideas. Policies like universal basic in-
come, baby bonds, and reparations for American des-
cendants of slavery deserve serious consideration. The
emerging conversation on social democracy and socia-
lism also holds serious relevance to questions of racial
justice.12
Underlying these ideas is a shift from indivi-
dualism to political and economic solidarity, as well as
an acknowledgement of the lasting impact of history.
For those who would decry certain recommendations
as being based in harmful identity politics, I would
point to the history of the term: identity politics was
originally conceived by a group of Black women called
the Combahee River Collective, for whom “identity
politics”meant recognizing the unique oppressions and
privileges that impacted different people, identifying
common ground, and productively grappling with any
tension that may arise, so that they could ultimately
work together towards related goals. Following in the
spirit of the Collective, we must be comfortable with
supporting policies that uniquely and disproportiona-
tely help Black Americans, especially those whose an-
cestors were enslaved in the United States.
In short, the fundamental reasons why supporting
Black business is a good idea still stand—when we
do so, we support Black households and the cultural
meaning that these businesses bring. But supporting
Black businesses should be one piece of a much broader
framework. Racial economic justice will not come from
well-meaning people pledging their dollars; it will come
when we as a nation are able to systemically address our
centuries-long problem of anti-Black racism in a radi-
cal and unforgiving way.
THE YALE HISTORICAL REVIEW
Brian Reyes is a senior at Yale University and a Senior
Editor of the Yale Historical Review. As a history major
and a Mellon Mays Undergraduate Research Fellow, he
studies race, capitalism, and social movements from the late
20th century to the present.