Much has been written about the importance of entrepreneurship -- particularly high-growth entrepreneurship -- in reviving our national economy. Numerous reports show that young entrepreneurial companies are disproportionately responsible for job creation. In fact, a Kauffman study asserts that, between 1980 and 2005, all net new jobs were generated by businesses less than five years old. And a report by the World Economic Forum says that the top one percent of all young firms create 40 percent of new jobs.
If spurring high-growth entrepreneurship will create more American jobs, as I believe it will, shouldn't we be placing additional emphasis on this strategy in the African American and Hispanic populations?
After all, these two groups consistently carry unemployment rates higher than the national average. Historically, the unemployment rate for African Americans has been at least twice that of Caucasians, and the unemployment rate of Hispanics has been significantly higher than that of Caucasians. They also maintain a host of other less-known economic disparities, including lower household income and wages and higher poverty rates, that accelerated job creation could begin to alleviate.
I'd like to call particular attention to the word "we." The challenges that confront our African American and Hispanic citizens have and will continue to create significant consequences for all Americans if we don't pull together as a nation to address this crisis.
Minorities will comprise more than half of our nation's population by 2050, according to the U.S. Census Bureau. Given current double-digit unemployment rates for African Americans and Hispanic Americans, who will account for a majority of that population increase, unemployment among those two ethnicities will surge if left unaddressed. Especially troublesome is the fact that certain age demographics within the African American community -- males between the ages of 18 and 35 -- currently maintain unemployment rates nearing 30 percent. Going forward, having an even larger percentage of Americans unemployed or even underemployed would create havoc within our country's financial systems, state and federal government services, consumer spending, GDP and the list goes on.
There are a host of factors that contribute to the alarming numbers. Among them are disparities in science, technology, engineering and mathematics (STEM) education, lower percentages of African Americans and Hispanic Americans graduating high school and receiving graduate and post-graduate degrees, disparities in prison sentences for non-violent crimes, and subsequent higher percentages of ex-offenders and income and wealth gaps among minority populations. But, among these varied challenges a common thread emerges: a lack of opportunity.
It would take far more than a blog to begin to create a framework for creating opportunity around high-growth entrepreneurship within our largest minority populations. But I do have a few thoughts on how some of the key, diverse players from around the nation can get involved, which I think is the first step:
Technology Based Economic Development (TBED) leaders should make a concerted effort to connect with the best and brightest in the African American and Hispanic communities in business, government, academia and civic leadership. Likewise, our African American and Hispanic leaders must not wait to be contacted, but initiate the engagement with TBED leaders. Great organizations like The Marathon Club, the Initiative For A Competitive Inner-City, and the National Association of Investment Companies, to name a few, are doorways for TBED leaders to connect to a diverse set of leaders.Black and Hispanic MBA associations can get in touch with the TBED activities across the country to ensure that our nation's diverse citizens with advanced degrees are positioned to participate in entrepreneurial ventures.
Minority business leaders can also get involved in the startup community. They can do this by using their business expertise to launch their own high-growth companies, serving as "C-level" executives for existing high-growth firms, or joining the board of directors or advisors of a young company. And inority business founders tend to hire minority workers at higher rates than non minority-founded firms (see Kauffman Foundation's The New Agenda for Minority Business report.)
High net-worth African American and Hispanic citizens can proactively reach out to national investor trade associations like the National Venture Capital Association and the Angel Capital Association to help direct investments from within the African American and Hispanic communities to some of our nation's most promising new businesses and technologies. Investor trade associations can get in touch with high net-worth African American and Hispanic citizens to leverage their networks and drive diverse deal flow.
In sum, creating jobs by developing a more integrated entrepreneurial ecosystem focused on high-growth entrepreneurship is the first and best step toward addressing African American and Hispanic unemployment.