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Business Owners of Color in Wisconsin: Representation, Profitability, and Growth

EXECUTIVE SUMMARY

Wisconsin follows the nationwide trend of a relatively small yet growing number of diverse business owners. This recent growth suggests a promising and economically important future for diverse business owners despite evidence that they face significant challenges.

Over 48,000 of Wisconsin’s businesses are owned by people of color. They employ nearly 55,000 workers and contribute over $1,600,000,000 in payroll receipts. These businesses provide specific products and services, generate income for themselves and their employees, create meaningful establishments in their communities, contribute to broader economic development, and aid in wealth accumulation in their communities.

In Wisconsin, the growth of businesses owned by people of color has been dramatic. From 1997 to 2012, American Indian business ownership grew by 33.2% while Asian ownership more than doubled, Latino ownership nearly tripled, and Black ownership virtually quadrupled. For comparison, nonminority-owned businesses grew by 10.7% during the same period.

Despite substantial growth in the last few decades, Wisconsin may be missing out on additional economic benefits from businesses owned by people of color because they remain underrepresented. Businesses owned by people of color represented 10.9% of total businesses in 2019, despite people of color representing 19.2% of the state’s total population at the time. Across states, Wisconsin ranks 50th for the rate of business ownership among minorities.

Business owners of color more typically own businesses without paid employees, called “nonemployer” businesses. Nonminority business owners are nearly 2 times more likely to run a business with employees. The prevalence of nonemployer businesses among business owners of color may signal barriers to growth and/or barriers to entry in some sectors such as large capital requirements.

In the wake of the pandemic when entrepreneurial activity has reached historically high levels, it is important to create inclusive business ecosystems that provide opportunities for wealth building, social and economic mobility growth, and community development.




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