Minority–owned businesses critical measure of the nation’s economic health
Sunday, June 26, 2016 at 9:26PM
The controversies earlier this year surrounding the Oscar nominations and the Twitter workforce grabbed headlines, but the race toward diversity is not limited to increasing the numbers of minorities in the workplace — it is also a dynamic process taking place within the nation’s supply chains. Minority–owned businesses are increasing in number at twice the rate of non–minority–owned businesses, a trend that will accelerate as the country’s demographic composition transforms and, by the year 2045, minorities constitute more than 50% of the population.
Minority–owned businesses are a critical measure of the nation’s economic health. The National Minority Supplier Development Council (www.nmsdc.org) prepared a study in 2014 that illustrated the economic impact of certified minority business enterprises (MBEs), which generate more than one billion dollars in economic output every day. In 2014, MBEs created 2.2 million jobs, and also contributed $49 billion in local, state and federal tax revenues. MBEs now number more than three million or 21% of all U.S. businesses.
Minority supplier development is crucial to the process. NMSDC and its 23 regional affiliates are forging supply chain links with its 1,750 corporate members who wish to purchase products, services and solutions from approximately 12,000 certified MBEs.
Joset Wright-Lacy, president of NMSDC, points to the automotive and telecommunications industries as early adopters of supplier diversity; in general, customer–oriented companies, that sell their products to consumers, are more aware of the need to support supplier diversity. On a macro-economic level, this awareness is vital to the nation’s commerce, because a contract with a minority–owned business is more likely to create a job for a person of color.
“It seems obvious that the more jobs consumers have and the more wages they earn, the more they are able to participate in the economy, whether that means buying healthy foods or snacks, durable goods or over–the–counter drugs, life’s essentials or entertainment, even cars and houses. We cannot expect to have a truly robust economy unless everyone can participate. Putting people to work at good wages is good for what ails the American economy. Corporations that understand this macro-economic principle are figuring out ways to make sure MBEs have the opportunity to participate in job creation so people of color can participate in the economy,” according to Ms. Wright-Lacy.
Although many corporations and MBEs have been engaged in minority supplier development for more than forty years, MBEs in the nation’s supply chains still face obstacles that other suppliers do not experience. Minority suppliers lack access to capital on the same terms and conditions as non–minority suppliers. Because minority personal and family wealth is dramatically less than that of non–minority entrepreneurs, minorities have less opportunity to fund their own businesses. MBEs often lack access to opportunities even to demonstrate their qualifications and show their capabilities to decision–makers within corporations. And yet despite these barriers, minority entrepreneurs are still three times more likely to start a business, NMSDC’s study shows. They are, moreover, significantly more likely to hire minority employees, thus having a positive impact on employment levels in minority communities.
Now is the time for corporations to affirm their commitment to minority entrepreneurs who live in the communities and among the consumers that they serve, not only because it is the right thing to do but indeed to ensure their own corporate financial well–being and the country’s social prosperity.