Small businesses across the US were hit hard by the coronavirus, but Black-owned businesses felt it the most. Black-owned businesses shut down at a rate more than double of white-owned businesses, according to a new report from the Federal Reserve Bank of New York. The pandemic exposed all sorts of inequities in our society, but the connections between physical and economic health may be one of the most profound. Structural racism in the US extends beyond policing and facilitates economic deficiencies through racist laws like redlining and hiring discrimination.
In the same way we cannot shop our way into environmental health, we cannot shop our way into racial justice. But we can use our collective power to show corporations what our values are. So here are six reasons, beyond the damage of the pandemic, to buy from Black-owned businesses—your purchasing power will help:
1. Close the Racial Wealth Gap
Beyond enslavement, we can trace the origins of today’s racial wealth gap to Jim Crow-era practices like redlining, job discrimination, and exclusionary legislation, which segregated Black Americans from higher paying jobs and home ownership opportunities that ultimately prevented wealth building. For example, while the 1935 Social Security Act is heralded as one of the nation’s first social safety nets, it largely left out Black citizens, as it didn’t cover domestic and agricultural workers, nor menial low-wage or off-the-books jobs without payroll information.
As of 2020, African American families held 4% of the country's household wealth, compared to white families holding 84% of that wealth, and one in five Black households have zero or negative net worth according to the Federal Reserve. If current trends continue, $0 will be the median wealth for Black families by 2053, according to a 2017 report by Prosperity Now and the Institute for Policy Studies.
Small businesses and entrepreneurs have always been wealth builders in our society. By supporting Black-owned businesses, Green Americans can create more opportunities for meaningful savings, property ownership, credit building, and generational wealth.
2. Strengthen Local Economies
When small businesses flourish, so do their communities. A 2017 study by the National Community Reinvestment Coalition found that banks were twice as likely to provide business loans to white applicants than Black ones. This makes it harder for Black Americans and other entrepreneurs of color to start businesses or get them off the ground.
Consumer spending accounts for 70 percent of US economic growth, so imagine what directing some of that spending power to Black-owned businesses across the country can do. When compared to national chain stores, local businesses circulate three times as much money back into the local economy, according to the nonprofit Project Equity. Successful businesses can also attract community investors which may provide banking services, loans, and promote financial literacy—all things that build economic strength.
3. Foster Job Creation
While unemployment skyrocketed for nearly all sectors in the US economy at the start of the pandemic, by April, more than half of the adult Black population was unemployed. Black-owned businesses are geographically concentrated in their communities; therefore, when public health crises affect the community, small businesses are deeply affected too. However, during economic recovery, Black-owned business owners are essential to financial stability, as they are likely to hire and provide job opportunities within their communities.
Many Black American business owners self-fund their businesses as a result of the lack of loan opportunities and to avoid racist, predatory lending practices. This makes it hard for Black entrepreneurs to grow and expand their companies beyond their communities.
4. Bring Access to Communities
Some Black-owned businesses are created to service specific needs that are often overlooked by mainstream retailers, whether they be for haircare, apparel, or toys. Green companies like the cosmetic manufacturer SMB Essentials {GBN} provide make up products for people of all skin tones. When you support Black-owned businesses, you get products that promote this kind of accessibility. Plus, you avoid spending money at companies that may exploit Black culture for profit, which brings us to another point:
5. Hold other Companies Accountable
During the summer of 2020, companies across sectors issued statements in support of Black communities. Many of these statements were meaningless recognitions of the struggle of Black Americans and companies’ so-called commitments to Black Lives Matter without addressing the company’s own racist policies, practices, or business models.
For example, Jeff Bezos wrote an Instagram post in support of Black communities, yet Amazon has partnered with more than a thousand police departments across the country through its Ring Doorbell Initiative. This initiative has created a widespread surveillance network across the country, which disproportionately misidentifies Black Americans.
Companies publicly “supporting” minorities yet keeping systems of injustice intact suppresses the structural change that the Black Lives Matter movement demands. Whether it’s Gucci’s sweater design resembling blackface or Facebook’s hiring diversity problem, African Americans and other minorities often bear the brunt of corporate discrimination.
When you choose a Black-owned business over problematic companies, you vote with your dollar to hold companies accountable. Further down the road, you empower successful minority-owned businesses to implement equitable policies.
6. Visibility and Representation in the Green Economy
The prosperity of a green economy depends on embracing true diversity. The green movement has historically and presently wrestled with a lack of diversity in its activism and representation, but Green Americans can change this.
Bringing attention to Black- and minority-owned businesses demonstrates that the green movement is everybody’s movement. When minority-owned businesses have a financial platform to stand on, they inspire more people to join the green economy.
How to Support Black-Owned Businesses
You can find minority-owned businesses that are socially and environmentally responsible on Greenpages.org, our database of certified members of the Green Business Network®. At officialblackwallstreet.com/directory, you can also search for businesses by city, state, and product category and WeBuyBlack.com is an online store that offers a wide selection of products, all sourced from Black vendors.
Beyond buying, writing positive product reviews and spotlighting businesses using your social media accounts can also give them a major boost. If you know a business owner, make sure they know about grant opportunities through organizations like the Minority Business Development Agency and Foundation for Business Equity.
To learn more about ways to take economic action in support of Black communities, visit greenamerica.org/blog/7-actions-support-black-communities-spending-and-investing.
Updated February 2023.
