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Businesses owned by minorities, women boomed before recession, census says

To compile statistics for Census 2010, workers hit the streets to encourage Washington residents to report their information.

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Washington Post Staff Writer
Wednesday, July 14, 2010

Emogene Mitchell spent two decades in the cocoon of a multinational research institute, rising to vice president in charge of events planning. Then the economy tanked, and the workload shriveled.

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In the heart of the Great Recession, Mitchell was ready to join the soaring number of minorities and women who are starting their own businesses and are expected to fuel much of the job growth over the next decade.

During a meeting on cost-cutting last year, Mitchell, who is African American, told her bosses they should axe her position and replace her with a contractor -- Mitchell's Meetings and Events, the company she runs out of a home office in Arlington County with her husband, La Mont. Her old firm is now one of her main clients.

In the years preceding the recession, the ranks of minority and female entrepreneurs exploded, according to census statistics released Tuesday. By 2007, minorities owned one in five small U.S. businesses, and women owned almost one in three.

The number of U.S. companies increased 18 percent between 2002 and 2007, from 23 million to 27 million -- and minority-owned businesses showed outsize gains. Black firms rose by 60 percent. There was a 44 percent jump in Hispanic-owned businesses, and a 41 percent increase for Asian-owned firms. Firms run by whites, in contrast, rose just 13 percent, although they still account for 83 percent of all small companies.

The largest numerical increase in the five-year span was in businesses owned by women, up 1.3 million, to a total of 7.8 million. That represented a 20 percent increase.

But even as the statistics were released, they were eclipsed by the recession that started in December 2007, leading economists to wonder whether the downturn will reverse much of the progress.

Some experts say that small businesses have been devastated in the past three years and that their numbers are surely diminished. Carlos Castro, founder of Todos Supermarket in Woodbridge, said he has seen many small Hispanic companies disappear in the past few years, particularly those tied to real estate.

David Hinson, director of the Minority Business Development Agency in the Commerce Department, predicted an increase in bankruptcies and failures of minority-owned firms, especially those run by African Americans.

"Many minority firms have had their access to credit essentially cut off," he said.

But others say that rising unemployment has accelerated the growth, as the laid-off become entrepreneurs.

"Latinos were generally the last ones in to the corporate structure, and oftentimes the last ones in are the first ones out," said Javier Palomarez, president of the United States Hispanic Chamber of Commerce. "I have a theory that some of the growth we're seeing in entrepreneurs indicates Hispanics who were laid off from large corporations."

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