Here in America, we love people who can take a dollar and spin it into a successful, sometimes world-changing business. In the Bay Area, especially, entrepreneurs are like heroes and celebrities. We laud them for their vision, creativity, and willingness to take risks. And the entrepreneurial ideas we like best are those driven by a passion to solve societal problems. In the process of building a business, the entrepreneur creates intergenerational wealth for their family, community, and society at large.
In the best-case scenario, wealth created through entrepreneurship could offer one possible avenue to closing the racial wealth gap—the disparity in median household wealth between the different races. The challenge is that you need wealth to create wealth, and in the U.S., most wealth is created through homeownership, assets, and family inheritance. At The Greenlining Institute, we recognize that communities of color have historically been systematically deprived of the ability to accrue wealth as a result of decades of structural racism and exclusionary policies and practices such as slavery, Jim Crow laws, and redlining.
My generation is left with a woefully inequitable economy and a widening racial wealth gap. Today, for every dollar of wealth that a white family has, the median Asian family has 63 cents, the median Latinx family has 7 cents and the median African American family has less than a nickel. At this rate, it would take an average Latinx family 84 years and an average African American family 228 years to catch up to the amount of wealth an average white family has.
We must employ every strategy available to us to close the racial wealth gap. Supporting entrepreneurship offers one possible solution. Research shows entrepreneurship can create intergenerational wealth-building opportunities for businesspeople of color. Data from the Panel Survey on Income Dynamics found that African American entrepreneurs not only have higher levels of wealth, but also higher levels of upward wealth mobility -- the upward or downward movement of Americans from one wealth level to another -- compared to African American workers employed by another individual or entity such as a corporation, nonprofit organization, or government.