Black-owned businesses took a disproportionate hit amid shutdown

October 20, 2013

The partial government shutdown did not impact all businesses equally. As chief economist for the U. S. Black Chamber of Commerce, my research indicates black-owned businesses were hit harder than most.

Many are located in states that receive substantial federal aid, such as Maryland and Virginia, and they tend to be in industries such as health care, administration, transportation, professional services and retail that are sensitive to any decline in federal spending.

As a result, these companies can experience a double hit. I estimate there are roughly 1.9 million black-owned businesses in the United States, and they generated $131 billion in 2012. That suggests the monetary impact of the shutdown on their businesses to be $10 million per day.

We saw the effects. National parks and federally owned museums closed. Tourism, a major industry in the D.C. area, was, as a result, negatively affected. This impact will be felt for some time, since overseas offices that give visas to foreigners seeking to visit the United States are just now reopening. At least 800,000 federal civilian workers were furloughed. Many chose to save their money instead of spending it at restaurants and other retail outlets in the District during the shutdown, driving down retail sales and further damaging local businesses, including those not directly affected by the shutdown.

This is just the beginning. Perhaps the most damaging impact is the message the shutdown sent to citizens, businesses and investors. It shows that, when partisan political issues are at stake, certain factions will not hesitate to damage the public interest.

Now we see that even if you “pull yourself up by your bootstraps” and manage to create a successful business, the policies of some politicians who claim to be supporters of small businesses can still damage you.

William Michael Cunningham is a University of Chicago-trained economist, a graduate of Howard University and a native Washingtonian. His opinions are not an official statement of the U.S Black Chamber of Commerce.

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