The federal government just revealed that private-sector firms created 159,000 new jobs in October. The unemployment rate, however, remains persistently high, at 9.6 percent. Policymakers continue to search for ways to help those looking for work find jobs.
The minority business community should be at the center of that conversation. Minority firms have been an engine of job growth for the U.S. economy, outpacing growth within the general business community, for most of the last decade. According to the U.S. Census Bureau, the number of people employed at minority-owned businesses jumped 27 percent—from 4.7 million to 5.9 million—between 2002 and 2007. Job growth for non-minority-owned firms was less than 1 percent during that time.
In those five years, the number of minority-owned firms in the U.S. grew 46 percent, to 5.8 million. Meanwhile, the number of firms in the overall economy expanded at less than half that rate. The revenue of minority-owned businesses is also growing much faster than that of nonminority-owned businesses. Between 2002 and 2007, minority-owned firms' revenue jumped 56 percent to $1 trillion annually. At nonminority firms, receipts were up just 21 percent, although average gross receipts for nonminority-owned firms remain much larger than those of minority-owned firms.
Minority businesses are emerging as leading exporters, too. They exported to 41 countries on six continents between 1992 and 2009. Minority firms are twice as likely to generate sales through exports as nonminority firms. With these figures in mind, there's no doubt that minority entrepreneurs will lead the American business community's charge to double its exports within the next five years, as the president's National Export Initiative has challenged.
Yet while minority-owned businesses are growing at a breakneck pace, disparities continue to exist between minority- and nonminority-owned firms. Only 800,000 of America's nearly 6 million minority firms have more than one employee. The annual revenue for the average minority-owned firm is about $300,000 less than that of a nonminority-owned firm. Closing the entrepreneurial revenue gap between minority- and nonminority-owned businesses based on the share of the adult minority population could add $2.5 trillion to our nation's economic output, create 11.8 million more American jobs and unleash the innovation of a long-undervalued economic sector.
Corporate America can strengthen its efforts to make minority-owned businesses a larger part of its global supply chain, and minority business owners can and should do a better job of embracing aggressive growth models and capitalizing on opportunities for alliances, mergers and strategic partnerships.
The most successful minority-owned businesses in this country have embraced aggressive models to join the upper echelons of the American economy—and have created thousands of jobs in the process. Many of the largest black- and Hispanic-owned businesses were created through mergers, acquisitions or joint investment projects. For instance, McDonald's collaborated with a Hispanic entrepreneur to form Lopez Foods, a top supplier that now generates $500 million annually in revenue. Johnson Controls partnered with a minority management team to create Bridgewater Interiors—now a billion-dollar company. And more than 20 years ago, Coca-Cola partnered with a minority investment group to create the Philadelphia Coca-Cola Bottling Company.
Minority-owned firms don't have to pursue these growth strategies blindly. The Minority Business Development Agency at the U.S. Department of Commerce supports more than 40 business centers nationwide to help minority-owned firms secure access to capital, contracts and assistance in entering growing foreign markets.
As we look for ways to create more jobs, shining a light on the economic potential of the minority business community can significantly benefit the American people and economy. Minority businesses are creating jobs at a rate faster than nonminority owned businesses of similar size and are an increasingly important source of economic opportunity for all Americans.
David Hinson is the national director of the Minority Business Development Agency at the U.S. Department of Commerce.