The State of Minority- and Women- Owned ... - Cleveland.com

Market-Based Disparities in Business Formation and Business Owner Earnings
c. Conclusions
Clearly, minorities and women earn substantially and significantly less from their labor than do
their similarly situated nonminority male counterparts—in the City of Cleveland Market Area
just as in the nation as a whole. Such disparities are symptoms of discrimination in the labor
force that, in addition to its direct effect on workers, reduces the future availability of M/WBEs
by stifling opportunities for minorities and women to progress through precisely those internal
labor markets and occupational hierarchies that are most likely to lead to acquiring the skills,
experience and contacts necessary to take advantage of entrepreneurial opportunities. They also
demonstrate that discrimination results in less opportunity for minorities and women to
accumulate and save business start-up capital through their work as employees. These disparities
reflect more than mere “societal discrimination” because they demonstrate the nexus between
discrimination in the job market and reduced entrepreneurial opportunities for minorities and
women. Other things equal, these reduced entrepreneurial opportunities in turn lead to lower
M/WBE availability levels than would be observed in a race- and gender-neutral market area.
4. Findings: Race and Gender Disparities in Business Owner Earnings
The patterns of discrimination that affect minority and female wage earners affect minority and
female entrepreneurs as well. We turn next to the analysis of race and gender disparities in
business owner earnings. Table 5.4 focuses on the economy as a whole, Table 5.5 on the
construction sector, and Table 5.6 on the goods and services sector. The numbers shown in each
table indicate the percentage difference in that sector between the average annual selfemployment
earnings of a given race/gender group and comparable nonminority males.
a. Specification 1 - the Basic Model 238
Specification 1 in Table 5.4 shows large, adverse, and statistically significant business owner
earnings disparities for African Americans, Hispanics, Asians/Pacific Islanders, Native
Americans, persons reporting multiple races, and nonminority women, consistent with the
presence of discrimination in these markets. The measured difference for African Americans is
39.0 percent lower than for comparable nonminority males; for Hispanics, 22.5 percent lower;
for Asians, 10.3 percent lower; for Native Americans, 38.7 percent lower; for persons reporting
two or more races, 36.7 percent lower; and for nonminority women, 39.4 percent lower.
Turning to the construction sector, Specification 1 in Table 5.5 shows large, adverse, and
statistically significant business owner earnings disparities for African Americans, Hispanics,
Asians/Pacific Islanders, Native Americans, persons reporting multiple races, and nonminority
women, consistent with the presence of discrimination in these markets. The measured difference
for African Americans is 41.6 percent lower than for comparable nonminority males; for
Hispanics, 17.4 percent lower; for Asians/Pacific Islanders, 16.5 percent lower; for Native
Americans, 31.7 percent lower; for persons reporting two or more races, 28.6 percent lower; and
for nonminority women, 44.8 percent lower.
238 See above, section B.3.a., for a detailed description of Specification 1.
NERA Economic Consulting 158