“Does business ownership reduce the wealth disparity between Black and White households? The author uses Panel Study of Income Dynamics (PSID) data on family wealth in 1999 through 2009 to examine the levels of wealth and changes in wealth of entrepreneurs and workers among Black and White families. Black entrepreneurs (self-employed) have higher wealth levels and more upward wealth mobility than do Black workers. The upward wealth mobility of Black entrepreneurs is equivalent to that of White entrepreneurs, while the wealth mobility of White entrepreneurs is greater than that of White workers. These findings are consistent with Black entrepreneurship reducing the wealth disparity between Black and White families.”

~ Abstract from William D. Bradford

Entrepreneurship can help reduce wealth disparities

“In Minnesota, the median household wealth for White households is $211,000. In contrast, the median household wealth for Latino/a families is $18,000—and for Black households, it is $0. Some research on the experiences of entrepreneurs of color—specifically, Black entrepreneurs—finds that Black and White entrepreneurs have similar upward wealth mobility, and that Black entrepreneurship can help reduce overall racial wealth disparities. However, if Black-owned businesses are more likely to fail than White-owned businesses, this might not be the case. A recent paper argues that for entrepreneurship to reduce the wealth gap, it’s necessary to first raise the success rate of Black-owned businesses. The ability to generate strong revenue and cash reserves is key to this success; national data suggest that businesses owned by people of color survive at similar rates to White-owned businesses when they have similar revenues and cash reserves.”

~ Federal Reserve Bank of Minnesota