COVID IMPACT on AFRICAN-

AMERICAN BUSINESSES: HAND

IN-NO HAND OUT

National Press Foundation Briefing

May 26, 2021
Major Clark, III
COVID-19

• Small businesses fell 27 percent from Mid- March to Mid April

Number of Self-Employed Business Owners Before
and After COVID-19

Source: Robert
Fairlie, NBER
Working Paper,
June 2020
Pandemic Impact on Black and Minority Businesses

• African American: 41% drop

• Latinx: 32% drop
• Asian: 26% drop
• Women: 25% drop
COVID-19’s Racial Impact

• African American businesses fell from 1.1 million to 640,000 in

April 2020
• Latinx businesses fell from 2.1 million to 1.4 million
• Asian Businesses lost 230,000 businesses
• White Businesses declined by 17 percent
COVID-19’s Racial Impact
COVID-19 Industry Impact

• Construction declined by 670,000 businesses

• Retail Trade declined by 108,000 businesses
• Restaurants declined by 22 percent
• Leisure and Art declined by 35 percent
• Transportation declined by 22 percent
Business Losses by Industry from COVID-19

Source: Robert Fairlie,

NBER Working Paper,
June 2020
COVID-19 Federal Procurement Dollars to African-
American Businesses

• $23 Billion tagged as COVID dollars in Federal Procurement Data

Center
• African-American businesses were awarded 4 percent overall
• African -American businesses were awarded 0.17 percent of
funds from HHS
• African-American Businesses were awarded 3 percent of funds
from Department of Labor
 History of Black Businesses In Federal Government
Contracting Programs, 1977-Present

• In 1977 less than 10 percent of federal contract dollars were awarded to

Black-owned Businesses.
• Congressman Parren J. Mitchell of the 7th Congressional District of Maryland
added an amendment to the Local Public Works legislation that President
Carter had proposed to boast the economy.
• The amendment became the first in the contemporary history of the United
States. Billions of dollars were made available for qualified Black Businesses.
• The amendment was challenged in court and in the now famous case of
Fullilove v. Klutznick, 448 U.S. 448.
History of Black Business in Federal Government
Contracting Programs, 1977-Present

1980: Congress strengths the SBA 8(a) program for minority

owned businesses.
a. 8 (a) Pilot Program
b. Subcontracting requirements for large prime contractors
Legislation in 1980s to level the playing field
c. Prompt Payment Act
d. Equal Access to Justice
e. Regulatory Flexibility Act
History of Black Business in Federal Government
Contracting Programs, 1977-Present

• Expansion of the SBA 7(a) loan program by creating a secondary

market
• Congress passed the SBIR Act
 In 1996,
Minority firms
received $0.57
for every
dollar they
would be
expected to
receive based
on their
availability
Source: Urban Institute, 1996
Disparity in Government Contracting for Minority- and
Women-Owned Businesses, 1996

Source: Urban
Institute, 1996
Disparity in Government Contracting for Minority-
Owned Businesses by Industry, 1996

Source: Urban
Institute, 1996
DOD Obligations to Minority- and Women-Owned
Businesses, FY 2010-2016

Source: GAO,
2017
Solutions to Prevent Failure of Black and Minority
Businesses Post COVID-19

1. Revise current credit structure

2. Reexamine bank regulations.
3. Revisit Sen. Harry S. Truman’s fears of concentration among
federal contractors.