A Contextual Analysis of Black Self-Employment in Large Metropolitan Areas, 1970–1980

This study analyzes self-employment of black workers in large metropolitan areas in 1970 and 1980 as an outcome affected by human capital, gender, and family structure and by local area demographic, ecological, and labor market characteristics. Data are from the Public Use Samples, census volumes, and other sources. Diferences between the 1970 and 1980 results suggest that major transformations occurred in the environment of black self-employment during the study period. Logistic regression analysis indicates that in 1970 black self-employment was dependent upon niches created and maintained by racial disadvantage, but by 1980 black self-employment was encouraged by niches supported by a sizable and relatively high-status black community. Also, in 1980 the odds of black self-employment were inversely related to the proportion of blacks employed in government agencies, suggesting that the attraction of publicsector jobs may have discouraged black entrepreneurship. Entrepreneurship has been cited as an important factor in the ability of certain ethnic groups to avoid discrimination in the mainstream economy, notably the pre-World War II Asian immigrants in California (Light 1972) and, more recently, Cuban refugees in Florida (Portes & Jensen 1989) and the Chinese in New York City (Zhou & Logan 1989). Hence, the low rate of self-employment among black Americans has been a concern of both social scientists and policymakers. Only 2.4% of black workers in the U.S. were self-employed in 1980, compared to 6.8% of all workers (U.S. Bureau of the Census 1983a). This article examines self-employment among blacks in 1970 and 1980.1 Sociological interest in this topic has risen from the debate over whether ? The University of North Carolina Press Social Forces, December 1991, 70(2):409-429 * This research was supported in part by an NICHHD training grant (5 T32 HD07168-10) awarded to the Carolina Population Center, University of North Carolina at Chapel HilL Thanks are due to John D. Kasarda and Jimy M. Sanders for helpful comments on the manuscript, to John J. Beggs and Glenn D. Deanefor aid in preparing the data, and to Moon-Gi Suh for research assistance. Valuable suggestions by Howard Aldrich, Arne Kalleberg, Francois Nielsen, and Peter Uhlenberg are also gratefully acknowledged. Direct correspondence to the author, Department of Sociology, University of South Carolina, Columbia, SC 29208. This content downloaded from 157.55.39.231 on Wed, 05 Oct 2016 04:16:35 UTC All use subject to http://about.jstor.org/terms 410 / Social Forces 70:2, December 1991 individualistic business ventures by blacks can improve their welfare as a group. In this debate, many black and white elites have argued that political as well as economic benefits would flow from black entrepreneurial activity. For example, believing that business enterprise would foster black economic progress and improve the social standing of blacks in the eyes of whites, Booker T. Washington founded the National Negro Business League in 1900 to encourage racial solidarity in business relations and promote the notion that blacks should buy their goods and services from other blacks (Butler & Wilson 1988). Similarly, black ministers and community leaders in the 1930s espoused the 'double-duty dollar" theory, arguing that, by patronizing black-owned shops, blacks as a group would benefit through a circulation effect, whereby black business success would lead to employment gains in black establishments (Light 1972:118-19). But some have criticized Washington's capitalistic "gospel of wealth" philosophy of black advancement as a separatist movement that placed insufficient emphasis on the importance of civil rights, and it eventually gave way to the philosophy of integration championed by W.E.B. Du Bois and the NAACP (Butler & Wilson 1988). During the late 1960s and early 1970s the debate was revived. Proponents of black capitalism argued that entrepreneurial activity by blacks would economically benefit group members by increasing black employment and revitalizing declining communities. However, critics claimed that because of restricted access to capital, limited managerial experience, and concentration in declining industries, the vast majority of black entrepreneurs would be confined to small, failure-prone establishments that would have little potential for improving black economic well-being (Brimmer & Terrell 1971). Critics further charged that black capitalist exploitation would channel any benefits of entrepreneurship to an elite outside the ghetto (Ofari 1970). But other observers maintain that, in focusing on the small scale of black entrepreneurship, the critics of black capitalism have overlooked salient indirect and noneconomic benefits of business ownership. Villemez and Beggs (1984) suggest that increases in the share of city businesses owned by blacks enhance black political power and social status, which, in turn, facilitate economic progress by reducing white prejudice and hostility. Historically, entrepreneurship has occupied a prominent place within urban black communities, despite the insecure property rights and civil rights of black residents. Nevertheless, as Butler and Wilson (1988) indicate, many treatments of the black experience in America neglect this fact. In antebellum cities of the North and South, a black petit bourgeoisie composed of "free men of color" served whites in such occupations as local moving and hauling, barbering and hair preparation, and restaurant and hotel keeping. Many blacks were also selfemployed in skilled trades and the arts. Through various business ventures, free blacks accumulated a surprisingly large amount of wealth: an estimated $50 million prior to the Civil War (Harris 1936). In the early twentieth century, the massive black migrations to cities were accompanied by more rigorous de jure and de facto segregation (Sowell 1981). Separated from its white consumer market, the "old" black entrepreneurial elite eventually faded away and was supplanted by a black business class dependent on "protected markets" that the segregation of black consumers generated This content downloaded from 157.55.39.231 on Wed, 05 Oct 2016 04:16:35 UTC All use subject to http://about.jstor.org/terms Black Self-Employment / 411 TABLE 1: Percentage Distribution of Black and Nonblack Self-Employment by Industry, 1970-1980a