State of the Older Entrepreneur during COVID-19

Business ownership has the potential to be a financial bulwark, especially for business owners of color. Age 45+ business owners entered the pandemic with much stronger financial cushions than similar age employees and business owners under the age of 45. However, our analysis of survey data for small employer firms collected in late 2020 and detailed interviews with 25 business owners finds that older small business owners, and particularly business owners of color, had difficulty accessing funds to stay open and have experienced significant personal financial hardship during the pandemic. The future of these businesses—and the owners’ personal financial lives—is particularly salient, given that they are the lion’s share of small businesses.

Promoting Racial Equity through Taxes

Legacies of historical racist policies and ongoing discrimination in areas such as education, employment, and housing have barred many Californians of color from economic opportunities. As a result, Californians of color — particularly Black, Latinx, and American Indian Californians — are less likely to have high incomes and to have built enough wealth to be able to weather periods of income loss, retire comfortably, and pass on wealth to their children. These barriers have also made Californians of color more likely to have experienced health and economic consequences of the COVID-19 crisis. One area policymakers should consider in efforts to address these inequities is the state’s tax and revenue policies. Although these policies may appear race-neutral, they can play a significant role in either worsening existing racial and ethnic income and wealth disparities or promoting greater equity for Californians. A policy need not be explicitly racist in order to have racially inequitable outcomes.1 Because many current state tax policies privilege Californians with higher incomes and wealth, they widen existing racial inequities. Policymakers can also use tax policy as a tool to promote racial equity, both by making the tax code itself more equitable, and by raising revenue to invest in the social and economic well-being of Californians of color.

Wealth Equity & Employee Ownership

Drawing on recent research, this issue brief – co-authored by the Aspen Institute Economic Opportunities Program, the Institute for the Study of Employee Ownership and Profit Sharing at Rutgers School of Management and Labor Relations, and the Democracy at Work Institute – makes a case for why policymakers, funders, and investors who care about racial and gender wealth equity should support employee share ownership. Informed by a roundtable discussion which brought together researchers, philanthropic leaders, investors, policy experts, and advocates, the paper provides a set of concrete policy and practice ideas to expand employee ownership and advance equity and economic justice. We hope this paper contributes to a broader collaborative effort to spread employee share ownership policies and practices that support economic recovery and lay the foundation for a more equitable and resilient economy.

1 Million Black Businesses Survey

HOPE and SurveyMonkey released the findings of the inaugural HOPE Minority Small Business Index survey which examines the sentiments and attitudes of aspiring and established Black business owners. Our inaugural survey, the first of its kind, demonstrates a high level of resiliency on the part of African American business owners.

Science/Tech Workers and Small Firms

Small businesses play a special role in innovation. In 2018, 37% of high-tech workers worked for small businesses. According to the Census Bureau’s data series, Innovation Measurement Initiative, the bulk of STEM-related researchers working on funded research at universities go into the private sector after completing their research, and a significant share go on to work at small businesses.

Women Business Ownership 2017-2018

Women-owned firms made up only 19.9% of all firms that employed people in the United States in 2018 but their numbers are growing.

There were 6,861 more women-owned firms in 2018 than in 2017, up 0.6% to 1.1 million, according to the Census Bureau’s Annual Business Survey (ABS).

Paths to Business Ownership

About two-thirds of business owners start their business from scratch, while less than a quarter of owners purchased the business they own. The starting method for small businesses tends to be relatively stable over time but differs based on owner demographics.

Small Business and Bank Locations

The National Community Reinvestment Coalition (NCRC) analyzed the relationship between large banks that make small business loans and the number of branches those banks operate in each county in the United States.

Effects of Small Loans on Growth

Since 1980, the number of commercial banks has dropped from 14,400 to 4,600. Given the decrease in commercial banking options, it is important to understand the long-term trends of banking industry dynamics by size of bank, as well as the impact of small business lending on bank growth and small business success. This report finds a decline in bank dynamism with falling new bank entry rates and increasing exit rates for small banks. Additionally, the authors found that small business loans are positively associated with the growth of small banks and small business success. Read “Effects of Small Loans on Bank and Small Business Growth” to learn more.

Social Compact for Work and Workers

Through its work, the Future of Work Commission identified critical challenges for California to address for work and workers. Many of the challenges for work and workers have existed for years. Here we focus on those that, if unaddressed, could persist or worsen. These challenges are informed by technological and economic trends underway in California and by anticipated future shocks and opportunities. Many of the challenges identified by the Commission have been exacerbated by the COVID-19 pandemic.