UA’s State Data Center Reports on New Census Data that Looks at Alabama’s Black-Owned Businesses

TUSCALOOSA, Ala. –Revenues generated by the Alabama’s 28,666 black-owned businesses generated an estimated $1.65 billion in revenues, according to a new report, Survey of Business Owners: Black-Owned Firms: 2002, released this week by the U.S. Census Bureau.

Of those, 92 percent (26,452) had no paid employees.

“That is consistent with the national average,” said Annette Watters, manager of the State Data Center at The University of Alabama. The center is part of the Culverhouse College of Commerce’s Center for Business and Economic Research. “Overwhelmingly, across the nation, black-owned businesses are single-person or family businesses with no paid employees,” Watters said.

According to Watters, other significant findings in the report include:

• Sixty percent of businesses owned by black entrepreneurs in Alabama are service businesses. The most common kinds of service businesses include maintenance and repair, personal services (hair, nails), funeral homes, reupholstery, etc. Twenty-five percent (7,270) of all Alabama black-owned businesses were service businesses in this general, catchall category.
• Another 15 percent (4,233) of Alabama black-owned businesses are in administrative services. This category includes business services (typing, photocopying, pagers, beepers, answering services), collection agencies, credit bureaus, repossession services, travel agencies, security agencies, janitorial, landscaping or carpet cleaning services.
• Health care and social assistance services make up 13 percent (3,865) of Alabama black-owned businesses.

These include offices of doctors, dentists, and other health care practitioners, home health care services, nursing and residential care for the ill and the elderly.

• Slightly less common among black-owned businesses, at 7 percent (1,956) of the total, are professional, technical or scientific services. These include lawyers, CPAs, bookkeepers, architects, engineers, draftsmen, surveyors, graphic designers and computer systems designers, among other kinds of professionals offering their scientific and technical skills as a business enterprise.
• Ten percent of black-owned businesses in the state are retail firms. Another 9 percent are part of the construction industry. Industry groups that are not very well represented by black business owners are mining, manufacturing, wholesale trade, insurance and information (internet service providers, publishing, broadcasting).

The recently released report also gives some insight into black-owned businesses in Alabama towns and metro areas that have at least 100 black-owned businesses. Although Birmingham is the metro area with the largest African-American population, Watters said, Montgomery metro has more black-owned businesses (3,958).

“Birmingham metro, however, leads the state for the number of black-owned businesses that have employees (312, compared to Montgomery metro’s 227 that have paid employees),” Watters said. “Huntsville metro, however, ranks first in sales and receipts of black-owned businesses. Huntsville metro area’s black-owned professional, scientific and technical services businesses had an impressive $146,560,000 in revenues in 2002.”

According to Watters, the number of black-owned businesses and the economic impact they have in an area are not always the same. Some cities have more black-owned businesses, but those businesses are in a size category or an industry group such that their economic impact is not as large as it would be in other cities with a fewer number of black-owned businesses, but whose businesses have more employees and more sales.

“Daphne and Auburn are cities that many would not suspect of having a high ranking among black-owned businesses, but those towns have black-owned firms that contribute many millions of dollars in sales and receipts every year to their local economies. Prichard and Dothan have more black-owned firms than Auburn, but the sales revenues from black-owned firms in Auburn are higher than in either Prichard or Dothan,” Watters said.

There are 40 counties and 37 cities in Alabama that have at least 100 or more black-owned businesses. For reasons of confidentiality, the Census Bureau did not report data for cities or counties with fewer than 100.

According to Watters, the Census Bureau issues a report about black-owned businesses every five years. “The previous report, for the year 1997, is not strictly comparable to this one, making comparisons across time difficult,” Watters noted. “One problem is that the federal government changed the industry classification system. Since the categories are not always comparable from 1997 to 2002, it is sometimes hard to know which kinds of businesses have increased their numbers of black owners.”

Watters said another problem is defining a black-owned business. “A business can be owned by more than one person and those people can be of different races. Also, for federal government purposes, a single person can also be more than one race now. So, the way of counting black-owned businesses is a little different in 2002 than it was in 1997.”

The State Data Center is part of the Culverhouse College of Commerce and Business Administration’s Center for Business and Economic Research. The Center was created in 1930, and since that time has engaged in research programs to promote economic development in the state while continuously expanding and refining its base of socioeconomic information.