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

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Market-Based Disparities in Business Formation and Business Owner Earnings Table 5.11. Business Formation Regressions, Goods and Services Industries, 2006–2010 Independent Variables (1) Specification (2) (3) African American -0.036 -0.036 -0.036 (88.94) (88.51) (88.95) Hispanic -0.027 -0.027 -0.027 (74.86) (74.79) (74.83) Asian/Pacific Islander -0.015 -0.015 -0.015 (32.22) (32.36) (32.34) Native American -0.022 -0.022 -0.022 (16.28) (16.38) (16.37) Two or more races -0.016 -0.017 -0.017 (18.91) (19.06) (19.05) Nonminority Female -0.023 -0.023 -0.023 (91.09) (90.39) (90.38) Age 0.009 0.009 0.009 (131.62) (131.62) (131.62) Age 2 -0.000 -0.000 -0.000 (90.97) (90.98) (90.98) CLEVMA -0.002 -0.002 -0.001 (1.89) (1.10) (0.71) CLEVMA*African American 0.006 (1.18) n/a CLEVMA*Hispanic 0.006 (0.74) n/a CLEVMA*Asian/Pacific Islander 0.031 0.030 (3.67) (3.58) CLEVMA*Native American 0.094 0.093 (2.51) (2.48) CLEVMA*Two or more races 0.037 0.036 (2.77) (2.71) CLEVMA*Nonminority female -0.005 -0.005 (2.13) (2.51) Education (16 categories) Yes Yes Yes Geography (51 categories) Yes Yes Yes Industry (25 categories) Yes Yes Yes N 4178050 4178050 4178050 Pseudo R 2 Source and Notes: See Table 5.9. .2266 .2266 .2266 NERA Economic Consulting 172
Market-Based Disparities in Business Formation and Business Owner Earnings c. Conclusions This section has demonstrated that observed business formation rates for minorities and nonminority women in the City of Cleveland Market Area are, in most cases, substantially and statistically significantly lower than those that would be expected to be observed if commercial markets operated in a race- and gender-neutral manner. With some exceptions (see below), this is true in the construction sector and the goods and services sector as well as in the economy as a whole. Minorities and women tend to be substantially and significantly less likely to own their own businesses than would be expected based upon their observable characteristics including age, education, geographic location, industry, and trends over time. Moreover, as demonstrated in previous sections, these groups also suffer substantial and significant earnings disadvantages relative to comparable nonminority males whether they work as employees or as entrepreneurs. These findings are consistent with results expected to be observed in a discriminatory market area. D. Expected Business Formation Rates—Implications for Current M/WBE Availability 248 In Table 5.12, the Probit regression results from Tables 5.9, 5.10 and 5.11 for the overall economy in the City of Cleveland market area, the construction sector, and the goods and services sector, respectively, are combined with weighted average self-employment rates by race and gender from the 2006–2010 ACS PUMS (Tables 5.7 and 5.8) to determine the disparity between baseline availability and expected availability in a race- and gender-neutral market area. These figures appear in column (3) of each panel in Table 5.12. The business formation rate in the CLEVMA for M/WBEs in the construction sector is 18.08 percent (see middle panel of Table 5.12, bottom row). According to the regression specification underlying Table 5.10, however, that rate would be 26.79 percent, or 48.2 percent higher, in a race- and gender-neutral market area. Put differently, the disparity ratio of the actual business formation rate to the expected business formation rate for M/WBEs is 67.49. Disparity indices are adverse and statistically significant in construction for Asian/Pacific Islanders, Native Americans, persons reporting two or more races, nonminority females, and M/WBEs as a group. African Americans and Hispanics in the CLEVMA construction sector actually had higher business formation rates than expected. This increased business formation rate, however, has not translated into increased earnings for these business owners, as shown in Table 5.5, where African American business owners earnings lag those of comparable nonminority males by almost 42 percent and Hispanic business owner earnings lag by over 17 percent. Given the large disparities observed for many presumptive groups, goal-setters might consider adjusting baseline estimates of M/WBE availability upward to account for the continuing effects of discrimination. The business formation rate disparities documented in Table 5.12 can be combined with the estimates of current M/WBE availability documented in Table 4.21 and 248 This exercise also addresses the requirements of 49 C.F.R. 26.45 (“Step 2”) for the USDOT DBE Program. NERA Economic Consulting 173
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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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Table 6.21. Models of Interest Rate
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Statistical Disparities in Capital
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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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