The shifting landscape for Black-owned businesses: An update to the Black Business Parity Dashboard

Each year, Brookings’ Center for Community Uplift analyzes the changes in Black-owned employer businesses (businesses with at least one employee) in metro areas across the country. Tracking increases and decreases in the number of these Black employers offers a glimpse into the health of the overall economy.

From the first year of data, 2017, to the latest year, 2023, the number of Black-owned employer businesses grew by 62%, finally surpassing 200,000 total firms. In 2023, these businesses generated a cumulative $249 billion in revenue, supplied over 1.8 million jobs, and paid $69.8 billion in salaries. Even so, Black people represented just 3.4% of employer business owners while comprising 14.4% of the U.S. population.

Closing this gap between Black residents’ representation in employer business ownership and their share of the population holds an opportunity for economic growth both at the community and national level. In the Black Business Parity Dashboard, we measure growth in local economic activity if the share of Black employers reached parity with the share of Black residents in a metro area. The Dashboard is a tool for policymakers and community members to see the businesses, jobs, revenue, and wages that could be gained in their city if leaders invested more in the expansion of Black businesses.

This report marks the second annual update to the Black Business Parity Dashboard, featuring our latest analysis of 2023 data from the U.S. Census Bureau’s Annual Business Survey. Since 2022, 60 U.S. metro areas saw the gap between their share of Black employers and their Black population share (their “parity gap”) shrink. For most metro areas, this move toward more equal representation was small (less than 1 percentage point), yet these shifts represent tangible change, including dozens or hundreds of businesses and jobs gained.

What’s more, some of the highest shares of Black employer representation were in Southern cities and towns with relatively larger Black populations. These metro areas provide major opportunities for state and regional economic growth. If the Black employer share in all of the Southern metro areas in our analysis reached parity with their Black population share, it would create over 2 million jobs, $70 billion in additional payroll wages, and over $263 billion in revenue—more than doubling the growth seen nationwide since 2017.

Metro areas have made progress toward parity for Black employers, but for most, there is still a gap

In 2023, there were a few notable changes to metro areas that were performing well in terms of Black employer representation. The first was Idaho Falls, Idaho, which was the only metro area in 2023 where the Black employer share newly reached or surpassed parity with the Black share of the population. In Idaho Falls, 57 Black-owned employer businesses accounted for 1.4% of all employer businesses, while Black residents accounted for 1.2% of the population. In the year prior, McAllen, Texas hit the same milestone, with 116 Black-owned employer businesses making up 1% of all employer firms—equal to the Black share of the population.

Additionally, in 2023, Houston outpaced its neighbor Dallas, knocking it out of sixth place as the metro area with the largest total number of Black employers in the country. Houston gained 902 Black employer businesses from 2022 to 2023, largely spurred by strong overall business growth in the metro area. With this growth, the gap between the Black employer share (5.9%) and the Black population share (19.3%) in Houston shrank by 1 percentage point, and the metro area ranked in the top 25 for Black employer representation.

In 60 other metro areas (54% of the total analyzed), the parity gap shrank in 2023. It shrank the most in Columbia, S.C.; Springfield, Mo.; Burlington, N.C.; Flint, Mich.; Lakeland, Fla.; and Baton Rouge, La. From 2022 to 2023, in all of these metro areas besides Springfield, the number of Black employers increased along with overall business growth, but at higher rates, shrinking the parity gap. In Baton Rouge, for example, the overall number of employer businesses gained was just 49, but the number of Black-owned employer businesses increased by 242—meaning Black employer growth helped avoid an overall loss in employer businesses. On the other hand, in Springfield, the shrinking gap was not due to a surge in Black employers, but rather a steep decline in employer businesses overall. There, the number of employer businesses declined by over 400, while the number of Black employer businesses declined by just over 150.

For most metro areas (71%) included in both annual updates, their parity gap fluctuated by less than or equal to 1 percentage point from 2022 to 2023. For example, in Richmond, Va., the parity gap shrank from a 24-percentage-point difference to a 23-percentage-point difference, after the metro area gained more than 200 Black-owned employer businesses.

While many places saw their parity gap shrink, there were also metro areas where the gap widened. The most extreme change was in Salisbury, Md., where the parity gap widened from a 14-percentage-point difference to a 29-percentage-point difference due to a slight decline in Black employers and a large increase in employers of other races. Other Southern cities—including Fayetteville, N.C.; Gulfport, Miss.; and Albany, Ga.—saw their parity gap widen by more than 4 percentage points, each due to a relatively large decline in the number of Black employers compared to employer business overall. The parity gap in New Orleans grew the most of any Southern metro area, where the overall number of employer businesses declined, and the number of Black employers declined even more rapidly.

Investing in Black-owned businesses in Southern cities such as these could be key to unlocking national growth. The metro areas with the highest shares of Black employers were largely concentrated in Southern states. Some of these metro areas, such as New Orleans, lost Black employers, but many others had relatively large increases, including Tampa, Fla.; Richmond, Va.; Durham, N.C.; and Austin, Texas.

Of the 50 metro areas with the largest shares of Black employer business ownership, 60% are in the South; in the 90 metro areas with the smallest shares of Black employer business ownership, only 18% are in the South. As previously mentioned, if the number of Black employers in all of these Southern metro areas reached parity with their Black population shares, it would create over 2 million jobs, $70 billion in payroll wages, and over $263 billion in revenue.

Closing the parity gap can help metro areas reach their potential

In 2023, economic growth in metro areas across the country powered a national increase in the number of Black-owned employer businesses. But looking locally shows the true impact of these businesses: In places such as Columbia, S.C., and Baton Rouge, La., the growing number of Black employers staved off an overall decline and acted as economic anchors. In other places, such as Minneapolis and Baltimore, Black-owned employer business growth was a large component of a rising tide for all businesses.

Supporting Black business growth and closing the parity gap can help metro areas reach their economic potential, leading to overall growth in revenue and jobs. City leaders looking to grow their local economies should capitalize on the opportunity to increase Black employer representation, and using the latest data from the Black Business Parity Dashboard shows how much a city can gain from doing so.