Black, Latino and Native American businesses remain underrepresented in Wisconsin’s economy, a series of UW-Madison reports show.
The university’s Community Economic Development program recently released the reports on Black, Latino, Asian, and Native-owned companies in the state, detailing their growth over time as well as persistent challenges for each minority group.
“Despite growth and success, business owners of color face key challenges, including access to financing, business locations, and anti-Asian racism stemming from the pandemic,” report authors wrote.
One report shows the number of Black-owned businesses in the state rose from 4,848 to 19,339 between 1997 and 2012, the highest growth rate of any racial or ethnic group. But as of 2019 — the latest year covered in the reports — Black companies made up 4.3% of the state’s business community, lower than the 6.44% of Wisconsin’s population that identifies as Black.
Similarly, the number of Latino-owned businesses in the state grew from 3,020 to 8,830 from 1997-2012. But these companies made up just 3.12% of the state’s businesses in 2019, well below the Latino/Hispanic population share of 7.09% for that year.
Meanwhile, Native-owned businesses saw “modest” growth over the 15-year study period, going from 2,338 to 3,115. These companies make up 0.84% of Wisconsin businesses, just below the population share of 0.94%.
Of the four groups analyzed in the reports, only Asian residents were represented at parity among the state’s businesses, authors found. From 1997 to 2012, the number of these companies rose from 3,752 to 9,848. The share of Asian-owned businesses in the state was at 2.94% in 2019, above the population share of 2.88%.
Each report includes a section detailing “key issues” for the group in question. One report shows trends for Black-owned companies in Wisconsin largely follow national trends, with Black entrepreneurs generally being underrepresented in business ownership, especially in sectors with high sales and growth potential.
“The concentration of Black-owned businesses in low sales and low-growth industries contributes to the disparities in firm size, revenue, and payroll receipts,” report authors note.
For Latinos in Wisconsin, businesses tend to be smaller and are far less likely to have employees, leading to greater profit disparities “since nonemployers tend to be less profitable” relative to employer businesses.
Report authors highlight the “uniqueness” of the Native business environment in Wisconsin, noting it’s largely driven by geography. More than half of the state’s Native American population lives in rural areas, largely on or near tribal lands.
“Given their large presence in many rural communities of the state, the social and economic health of certain areas are greatly influenced by the Native-owned businesses in the area,” authors wrote, adding “remoteness can stunt the performance and growth of rural businesses by limiting their customer base, potential employees or business partners.”
The report also notes remote locations can mean higher costs for transportation, infrastructure and maintenance.
In contrast, authors say Asian-owned businesses are “relatively successful” compared to other minority groups in Wisconsin, in both representation and sales. That’s attributed to higher rates of financial and social capital, higher education levels and other factors. Plus, Asian Americans tend to have higher levels of household wealth, making it easier for them to start a business.
Still, Asian business owners in the state face barriers to success as well, authors say. The report notes 69% of Asian entrepreneurs reported facing financial difficulties in operating their business in a 2019 survey, and were less likely to receive funding when applying for financing than white-owned firms.
See the reports.
