According to Scott Shane from smallbiztrends.com “From the fourth quarter of 2007 through fourth quarter of 2009, the total number of non-agricultural self-employed people fell. But the number of self-employed blacks increased 5.7 percent. In contrast, the number of self-employed whites decreased 3.4 percent, self-employment among Asians decreased 10.5 percent, and self-employment among Latinos remained flat.
Though he measures self-employment differently from the BLS data described above, analysis by Rob Fairlie, a professor at the University of California at Santa Cruz, shows that between 1990 and 2006 the number of black self-employed increased 58 percent, while the number of white self-employed only increased 6 percent.
Moreover, the 2008 U.S. Global Entrepreneurship Monitor Report shows that blacks “have higher levels of start-up activities than whites (13.9 percent vs. 8.4 percent) while having significantly lower rates of established ventures (8.1 percent vs. 1.8 percent).” Perhaps the strong growth trend in black self-employment resulted in increases during a period when other races experienced declines.
Another explanation might be differences in the prospects of industries in which different races tend to be self-employed. Historically, blacks have been more likely than whites to be self-employed in personal services and have been less likely than whites to be self-employed in construction, manufacturing and finance. The recession’s effects were much worse in manufacturing and construction, than in the service sector. The differences in the industry distribution of self-employment across racial groups might account for the increase in self-employment among blacks and the decline among whites.
Alternatively these patterns could be the result of how the labor market treats different racial groups. As Rob Fairlie of U.C. Santa Cruz speculates, “With fewer opportunities for wage and salary jobs, minorities may be increasingly turning to self-employment.”
Implicit in that statement is the view that when employment gets tight, job losses fall harder on blacks than on others, leading them toward self-employment at a faster rate. We don’t know which of these or any other explanations account for why black self-employment bucked the overall downward trend during the recession.” How about this simple reason: Black people when faced with no other choice will choose to create their own employment! –l. martin johnson pratt
