Why don't more Americans work for Black-owned firms? Implications for increasing well-being

Black Americans hold much less wealth than white Americans and other groups, as noted in benchmark data from the federal government.1 Business ownership plays a key role in income and wealth generation: 69% of those in the top 1% of the income distribution earn money from pass-through businesses, such as partnerships or S-corporations.2 Among the wealthiest 1% and top 0.1%, pass-through business assets account for the largest source of asset value.3 Much of these financial benefits -- as well as higher subjective well-being -- accrue to owners of businesses that employ others, as opposed to owners of sole proprietorships, as recently confirmed by the 2023 Gallup Pathways to Wealth Survey. Efforts to increase the share of Black employers can help narrow racial wealth divides while increasing innovation, income, and opportunities for everyone. Previous Brookings work has looked at the impact of the undervaluation of properties and small businesses in majority Black neighborhoods and its implications for wealth.4 Here, we explore the role of entrepreneurship.