Importance of Entrepreneurship for African Americans
My mother sacrificed a lot, working two jobs early on in my life to make sure I could have more than she had as a child. She had me at the age of 21 and wasn’t able continue her college education, which made her a big proponent of education. Growing up my mother always preached to me that it was important to exceed her successes, no matter what I decided to do. My mother’s generation was taught to get an education and join a corporation that would take care of you. I am taking her advice in trying to shift the African American mindset from corporations to starting our own businesses.
by Rashaun Riley, who will graduate with a BS in information systems from Carnegie Mellon U. in May, 2013. Rashaun is captain of the men’s basketball team and a member of the Black Student Advisory Council.
I believe that generations should always strive to be better than the previous one. And I especially think this is important for the Black population in America. We have yet to reach economic equality. I believe the theme for African Americans should be focused on entrepreneurship and not jobs in large corporations. With this attitude I believe that there are two problems that can be solved. The first is the unemployment rate of African Americans – Black unemployment always exceeds any other ethnic group. Secondly is the wealth gap, where the median net worth is less than $5,000 for Black families compared to the $110,000 median net worth of white families.
Unemployment is undoubtedly the biggest indicator of how our economy is doing. I want to go further and say that the unemployment rate is a bigger indicator of how different ethnic groups are doing. In June of 2012, the Black unemployment rate was 14.4% compared to 7.4% for Whites. Of course a major cause of that was due to the loss of jobs in the public sector. However I believe that the lack of focus on entrepreneurship has a big impact on Black unemployment. It is widely known that people are more likely to hire people that are more like them; many studies have been done proving this hypothesis. Now I am not putting the blame on employers for not hiring Blacks; I believe that we should be looking at ways to not only grow the number of Black businesses, but also to grow the size of these businesses. It has been reported that out of 26 million small businesses there are about 2 million owned by Blacks. However, only about 100,000 of the 2 million have employees. This is a critical observation when thinking about Black unemployment. Imagine if these Black owned businesses increased their size by 2 employees, which would create around 4 million jobs, most likely within the Black population.
Secondly, the wealth gap between Blacks and ethnic majority groups seems to always be a concern in the media. Many argue this is because African Americans have not been able to establish wealth. I want to avoid the blame argument, due to the fact that other ethnic groups like Indians and even Hispanics have passed our Black median net worth. So what is the real issue here? Eddie Jenkins, NFL professional, stated: “Integration [into corporations] distracted us from the benefits of building our own businesses.” I believe that the integration of Blacks into corporations (instead of into our own businesses) is one of the main causes of the wealth gap.
Now I am familiar with the plight of the Black borrower. Many Black figureheads such as Don Peebles and Reverend Jesse Jackson say that it is very difficult for African Americans to raise capital. Generally, banks won’t lend to African Americans because of their lack of credit history. Another contributing factor is that most Blacks don’t have the wealth to invest their own money. Although there are many external forces affecting the plight of Blacks in entrepreneurship, I am not an advocate of government aid or outside handouts. I think that financial literacy is something that isn’t passed down in Black families. To me, it makes no sense for Allen Iverson, a former NBA basketball player, who earned over $150 million playing basketball, to go bankrupt. The same applies to Mike Tyson and other professional athletes who go from riches to rags. Imagine if these millionaire athletes believed in the importance of establishing wealth in the Black community? Instead of spending millions on a bathtub, spend $1 million investing into a pool of Black businesses. I think that by changing our attitudes from spending to investing in our own businesses and ourselves we would vastly improve the wealth gap and create jobs.
As you can see, I place the biggest blame on us, even though many may disagree. I think it doesn’t hurt us to accept the blame. If we keep blaming outside forces we become passive, waiting for a handout which prevents us from taking action to improve. I made the claim earlier that we must exceed the success of the generation before us. The generation before us focused on integrating themselves into large corporations; today our focus now should be on entrepreneurship and investing in ourselves. I believe that Black media should highlight Black entrepreneurs more than NBA players and rappers. I believe there should be a push to improve education in the Black community about entrepreneurship and financial literacy. And I don’t mean just educating through courses in Black colleges, but there needs to be a push in our own community starting at a younger age. I think it is important for upcoming generations to enforce this mindset not only to improve the current economic issues facing Blacks, but to also set the bar higher for the next generation to exceed.