PROVIDENCE – Greater Providence has the fourth-lowest share of minority-owned businesses relative to its minority population among major metropolitan areas nationwide, according to new analysis by consumer financial site Smartest Dollar.
While minorities comprise just over a quarter of the population of the Providence-Warwick metropolitan area – per the latest U.S. Census Bureau numbers – just 7.5% of businesses within that area are owned by people of color, according to the report published Thursday.
When compared with other major metropolitan areas nationwide – defined as those with 1 million or more residents – Providence ranked poorly, coming in 38th out of the 41 large metro areas analyzed for their share of minority-owned businesses.
Statewide, Rhode Island did not fare much better, ranking 43rd out of 49 states analyzed based on the 7.6% of state minority-owned businesses, relative to its 29.2% minority population.
The gap between the state’s increasingly diverse population and share of minority business owners is not a new problem, nor is it one faced by Rhode Island alone, PBN has previously reported.
Systemic barriers such as access to capital and support networks continue to make it harder for minority business owners to start and grow their companies, according to the Smartest Dollar report. And the COVID-19 pandemic didn’t help, with the economic and health effects disproportionately hurting people of color, including business owners, the report stated.
Nationwide, non-white Americans now comprise 40% of the population as of the 2020 Census, yet just 19% of business owners are minorities.
Efforts to level the playing field for minority business owners in Rhode Island have garnered increasing attention from state lawmakers and advocacy groups, particularly when it comes to winning government contracts through the state’s Minority Business Enterprise program. Lack of compliance with the state’s own mandates for contracting with minority businesses, as well as problematic reporting of its data and questions around who qualifies as a minority in the state definitions, have sparked criticism of the MBE program and calls for reform.
The Smartest Dollar report found that states and cities with higher levels of immigrants as well as higher levels of education among their minority population were more likely to have a larger share of minority-owned businesses.
Urban Honolulu and Hawaii as a whole had the highest share of minority businesses relative to its population as a metropolitan area and state, respectively, according to the data.
The report also analyzed the percentage of a city or state’s employment from minority-owned companies, as well as their share of payroll.
In Rhode Island, minority-owned businesses employed 3.4% of the state workforce, covering 1.7% of total state payroll. In the Providence-Warwick metropolitan area, 3% of workers were employed at minority-owned companies, and their earnings accounted for 1.8% of the total payroll.
The rankings and analysis is based on 2020 Census data as well as the latest Annual Business Survey, also through the Census Bureau. The business survey only reflects companies with employees.
The Providence-Warwick metropolitan area, as defined by the Census, includes all of Rhode Island and Bristol County, Mass.
Nancy Lavin is a PBN staff writer. Email her at Lavin@PBN.com.
