What many economic observers anticipated for years has finally become a palpable reality: women and Latinos are the majority of business owners in the United States.
This, logically, leaves white men as the minority for the first time in history.
According to a recent analysis that venture capitalists Seth Levine and Elizabeth MacBride conducted with the help of researchers at Stanford University, the 12.5 million white male business owners represent about 41% of the 30.5 million small business owners in the United States. There are about 11.6 million women-owned businesses (about 65% of them are owned by white women), and 6.5 million businesses are owned by men of color.
The analysis was conducted using two sets of 2017 U.S. Census Bureau data, those for employer and non-employer firms, and demonstrated a shift in the country’s economic structure, driven by the rapid growth of women and Latino-owned businesses, and one that has profound implications for the financial infrastructure, MacBride wrote in her column for Forbes.
“This is a really powerful opportunity for the country to prosper in the future,” said Jerry Porras, Lane Professor of Organizational Behavior and Change, Emeritus and Stanford Graduate School of Business and co-director of the Latino Entrepreneurship Program. The new groups of founders are entrepreneurial and determined, he said. But the “ecosystem is not conducive to supporting their success.”
The analysis verifies the phenomenon observed by analysts and economists between 2018-2019, where women started more than 1,800 businesses a day. Over the past five years, women-owned businesses have grown at twice the rate of the general population, and women of color have been starting businesses at 4.5 times the pace of the general population, according to American Express State of Women-Owned Business.
For their part, Latina-owned businesses have grown at two to four times the general population rate since 2015, when Porras’ organization began surveying them. He estimates that there are 1 million net new Latinx-owned businesses created every five years.
“A key part of the Latino culture is owning a business. People are entrepreneurial. They make do with what they’ve got. If it means starting a business, they start a business,” Porras said. “I think another factor is this: If you ask yourself the question, how do you generate wealth in this society, the classical answer is you go to college, you climb the corporate ladder. That doesn’t work for Latinos.”
However, and as was well observed during the COVID pandemic, small and BIPOC-owned businesses often face the greatest obstacles to financing, something that this new analysis could begin to change.
For McBride and Levine, who have substantially argued the case in their new book The New Builders, one of the keys to future economic growth is precisely keeping pace with the changing demographics of founders.
“The systemic racism, sexism, and ageism that pervades our culture mean that today’s entrepreneurs often don’t get enough support,” they wrote in the book, released two weeks ago. “Our systems of capital and networks are dominated by White men.”