Wisconsin could have about 150,000 more jobs if the state achieves parity in business ownership rates between white and minority entrepreneurs, a UW-Madison economic development expert says.
Matt Kures, a community development specialist with the UW-Madison Division of Extension’s Community Development Institute, spoke yesterday during an online briefing. He highlighted the “significant benefits” Wisconsin would see by reaching parity in business ownership rates — in which the share of the population for a racial or ethnic group matches the share of businesses owned by that group.
He referenced a university report released earlier this year showing most people of color in Wisconsin are underrepresented as owners of employer firms, with the exception of Asian residents.
Based on 2019 figures, Black state residents made up 6.44% of the population but just 0.77% of classifiable employer businesses. And Hispanic or Latino residents made up 7.09% of the population but just 1.51% of business ownership, the report shows. American Indian residents made up 0.94% of the population and 0.36% of business ownership.
While Asian residents buck the trend, with 2.88% of population and 3.25% of business ownership, non-Hispanic white residents made up 80.8% of the population and owned 93.9% of employer businesses.
Under conditions of parity, Wisconsin would have an additional 29,706 non-employer firms and 15,942 more employer firms that provide 151,892 additional jobs, Kures said yesterday. He also noted those jobs would generate more than $4.5 billion in additional income.
“These are not small numbers, and they would have a significant impact on many parts of the state,” Kures said yesterday.
In 2019, about 48,720 businesses or 11% of the total were owned by people of color in the state, employing 55,000 workers and generating more than $1.6 billion in payroll, according to the presentation.
Report co-author Tessa Conroy, an associate professor of agricultural and applied economics with the university, yesterday noted Wisconsin is becoming increasingly diverse over time, particularly among younger demographics. She called for pursuing an inclusive economic development approach that includes diverse residents in both urban and rural areas.
“These diverse populations are also going to be a key source of growth,” she said. “So when we think about the Baby Boomers for example, aging out of the workforce, when we think about the need for in-migration … We want to be an attractive place for people to live, people to move to, and part of that is this inclusive economic development.”
Conroy also pushed back on the narrative that most companies owned by people of color are small businesses, noting some critics believe investments in diverse companies “won’t have that big of a return” due to this perceived trend.
“We want to answer that and make clear that there are businesses across the size spectrum here,” she said, noting “actually for businesses owned by people of color, the largest bucket … is in businesses with $1 million or more” in revenue.
In 2020, the number of minority-owned employer firms in Wisconsin in that category was 1,932, according to Conroy’s figures. That’s well above the next-largest category with 1,354, which is the number of firms with revenue between $100,000 and just under $250,000.
See more from the report.
