Monday, September 22, 2014
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Pre-recession data show rise in black-owned businesses in Phila.

Census data indicate the percentage increases of black-owned businesses in the city and region between 2002 and 2007 were greater than for the nation as a whole.

Pre-recession data show rise in black-owned businesses in Phila.

To put a face on new statistics about the number of black-owned businesses in the Philadelphia area, I called accountant John Milligan.

First of all, I knew he’d be good with numbers. But also, over the last 25 years, he’s built Milligan & Co. L.L.C. from its base in Center City into an accounting and consulting firm with 52 employees in four offices. So he’s lived these numbers, too.

The U.S. Census Bureau earlier this month released data from its 2007 Survey of Business Owners. On the face of it, the headline numbers reflect well for the state of black enterprise here and across the country.

Nationally, there were 1.9 million black-owned businesses in 2007, up about 60 percent from the 1.2 million in 2002. The survey considers a business to be black-owned when 51 percent or more of the equity is owned by people identifying themselves as black or African American.

The city of Philadelphia had an even bigger percentage increase in black-owned businesses during that same period. The number in the city rose from 10,576 in 2002 to 19,834 in 2007, an 88 percent increase. Of the 88,201 firms in the city in 2007, 22.5 percent were black-owned.

Philadelphia ranked seventh among the largest U.S. cities in terms of black-owned businesses. New York City was No. 1 with 154,929 businesses, and runner-up Chicago had 58,631. Houston, Detroit, and Los Angeles finished third, fourth, and fifth; Memphis with 19,895 businesses squeaked past Philadelphia to rank sixth.

When I began to repeat some of these numbers, Milligan stopped me to say that aggregate statistics tell only part of the picture. Most businesses are small, and that’s even more true of black-owned businesses, he said.

And, quite frankly, this Census Bureau data can seem, well, dated. A lot has happened since 2007, which was the end of the boom years as the recession began that December. Even with the economic recovery occurring now, I wouldn’t count on seeing those kinds of increases repeated in the 2012 Survey of Business Owners.

Back to Milligan’s point, though. It’s really not the number of businesses that matters, but their impact. Indeed, 94 percent of the nation’s black-owned businesses are classified by the Census Bureau as “nonemployer firms,” which means they have no paid employees. Nonemployers account for about three-quarters of all businesses.

There were 1,135 black-owned businesses employing 7,746 people in the city in 2007. Would it surprise anyone to hear that the health-care and social-services sector accounted for more firms and employees than any other sector? (That would be 260 firms and 1,286 employees.)

To Milligan, even counting jobs isn’t enough to show impact. After all, different sectors pay very differently.

In the professional, scientific, and technical-services sector — which is how Milligan & Co. is classified — 123 black-owned businesses in the city employed 570 people in 2007. Dividing the annual payroll by the number of employees produces an average salary of about $43,000 for that sector. The sector with the highest annual pay was finance and insurance, at about $57,000; the lowest was in accommodation and food services, at about $10,000.

Now 60, Milligan is reluctant to speculate on whether it’s easier for an African American entrepreneur to start a company now than when he did. He said he started his business out of necessity, having risen as high up the corporate ladder at a Big Eight accounting firm as he could in the early ’80s. And isn’t that the quintessential response taken by entrepreneurs of any color?

There are more organizations to help minority entrepreneurs now than when he started out. That’s good, but it can be confusing to figure out whom to call first. In 2003, Milligan founded the Greater Philadelphia Minority Business Strategic Alliance as a one-stop source, and its website provides many links to local organizations that might provide financing, training, and other services.

As for Milligan’s firm, it rode out the recession pretty well, he said. Recession or not, businesses and nonprofit groups must file tax returns and institutional clients still need audits.

This year, the path is less certain. With half of the firm’s revenue coming from local, state, and federal governments, he is concerned how looming budget cuts will affect his business.

Mike Armstrong Inquirer Columnist
About this blog
Mike Armstrong blogs about Philadelphia corporations and business-related topics. Contact him at 215-854-2980. Reach Mike at marmstrong@phillynews.com.

Mike Armstrong Inquirer Columnist
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