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

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Market-Based Disparities in Business Formation and Business Owner Earnings Table 5.6. Business Owner Earnings Regressions, Goods and Services Industries, 2006–2010 Independent Variables (1) Specification (2) (3) African American -0.387 -0.388 -0.387 (35.77) (35.62) (35.77) Hispanic -0.241 -0.240 -0.241 (24.37) (24.27) (24.37) Asian/Pacific Islander -0.100 -0.100 -0.100 (7.56) (7.53) (7.56) Native American -0.403 -0.404 -0.403 (12.94) (12.94) (12.94) Two or more races -0.381 -0.381 -0.381 (20.28) (20.20) (20.28) Nonminority female -0.394 -0.394 -0.394 (76.17) (75.66) (76.17) Age 0.174 0.174 0.174 (96.07) (96.07) (96.07) Age 2 -0.002 -0.002 -0.002 (84.16) (84.16) (84.16) CLEVMA -0.017 0.017 -0.017 (0.54) (0.42) (0.54) CLEVMA*African American 0.088 (0.73) n/a CLEVMA*Hispanic -0.181 (0.96) n/a CLEVMA*Asian/Pacific Islander 0.025 (0.12) n/a CLEVMA*Native American 0.367 (0.43) n/a CLEVMA*Two or more races -0.023 (0.08) n/a CLEVMA*Nonminority Female -0.089 (1.65) n/a Education (16 categories) Yes Yes Yes Geography (51 categories) Yes Yes Yes Industry (88 categories) Yes Yes Yes Source and Notes: See Table 5.4. N 383651 383651 383651 Adj. R 2 .1724 .1724 .1724 NERA Economic Consulting 162
Market-Based Disparities in Business Formation and Business Owner Earnings c. Conclusions As was the case for wage and salary earners, minority and female entrepreneurs earn substantially and significantly less from their efforts than similarly situated nonminority male entrepreneurs. The situation, in general, differs little in the City of Cleveland Market Area from what is observed for the nation as a whole. These disparities are consistent with the presence of discrimination in commercial markets that adversely affects M/WBEs. Other things equal, if minorities and women are prevented by discrimination from earning remuneration from their entrepreneurial efforts comparable to that of similarly situated nonminority males, then capital reinvestment and growth rates may slow, business failure rates may increase and, as demonstrated in the next section, business formation rates may decrease. Combined, these phenomena result in lower M/WBE availability levels than would be observed in a race- and gender-neutral market area. As this chapter demonstrates, discrimination depresses business owner earnings for women and minority entrepreneurs. Business owner earnings, however, are often directly related to whether an owner has the capital to reinvest (firm size), how long a firm survives (firm age), and how much money a firm takes in (individual firm revenues). These observations illustrate why employment size, years in business, and individual firm revenues are especially inappropriate factors to consider in any sort of “capacity” type analysis. C. Race and Gender Disparities in Business Formation As discussed in the two previous sections, discrimination that affects the wages and entrepreneurial earnings of minorities and women will ultimately affect the number of businesses formed by these groups as well. In this section of this chapter, we turn to the analysis of race and gender disparities in business formation. 241 We compare self-employment rates by race and gender to determine whether minorities or women are as likely to enter the ranks of entrepreneurs as are similarly-situated nonminority males. We find that in most cases they are not as likely to do so, and that minority and female business formation rates in most cases would likely be substantially and significantly higher if markets operated in a race- and gender-neutral manner. Discrimination in the labor market, symptoms of which are evidenced in Section B.3 above, might cause wage and salary workers to turn to self-employment in hopes of encountering less discrimination from customers and suppliers than from employers and co-workers. Other things equal, and assuming minority and female workers did not believe that discrimination pervaded commercial markets as well, this would lead minority and female business formation rates to be higher than would otherwise be expected. On the other hand, discrimination in the labor market prevents minorities and women from acquiring the very skills, experience, and positions that are often observed among those who leave the ranks of the wage and salary earners to start their own businesses. Many construction contracting concerns have been formed by individuals who were once employed as foremen for other contractors, fewer by those who were employed instead as laborers. Similarly, discrimination in commercial capital and credit markets, as well as asset and wealth distribution, 241 We use the phrases “business formation rates” and “self-employment rates” interchangeably in this Study. NERA Economic Consulting 163
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The State of Minority- and Women- O
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About the Project Team NERA Economi
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Notice This report sets forth the i
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Contents C. Race and Gender Dispari
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List of Tables Table 4.5. Services
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List of Tables Table 5.14. Disparit
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List of Tables Table 7.10. M/WBE Ut
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List of Tables Table 8.10. Percent
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List of Tables Table AC.32. Industr
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C. Defining the Relevant Markets Ex
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Table A. Overall Current Availabili
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Executive Summary disparity analysi
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Executive Summary • A greater sha
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Executive Summary Table C. Utilizat
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Contracting Category/ M/WBE Type Ex
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Executive Summary contract performa
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I. Introduction Introduction The Ci
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Legal Standards for Government Affi
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B. Preparing the Master Contract/Su
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Defining the Relevant Markets Table
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• Franklin County, OH (Columbus)
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NAICS Industry Group NAICS Descript
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Defining the Relevant Markets In AE
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NAICS Industry Group 8112 5412 5324
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NAICS Industry Group Source: See Ta
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NAICS Industry Group 4233 NAICS Des
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M/WBE Availability in the City of C
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NAICS Industry Group M/WBE Availabi
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Statistical Disparities in Capital
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1. Qualitative Evidence Statistical
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) Prejudice against women. c) Preju
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Table 6.19. Determinants of Loan De
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Table 6.21. Models of Interest Rate
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2. Differences in Loan Denial Rates
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Table 6.26. Determinants of Loan De
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Table 6.28. Models of Credit Card U
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Table 6.31. Determinants of Interes
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B. M/WBE Utilization M/WBE Utilizat
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M/WBE Utilization and Disparity in
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Anecdotal Evidence of Disparities i
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The City of Cleveland’s Cleveland
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Blanchflower, D. G., P. Levine and
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References Fairlie, R. W. (1999),
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References Ladd, H. F. (1998), “E
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References U.S. Census Bureau (2004
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Appendix A. Glossary Demand-side: R
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Appendix A. Glossary NSSBF or SSBF.
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Appendix B. Master M/WBE Directory
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Appendix B. Master M/WBE Directory
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Appendix C. Detailed Utilization, A
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NERA Economic Consulting Barton Cre
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