Zach Komes | The George Washington University (original) (raw)

Drafts by Zach Komes

Increased national attention to racial and economic inequality has created public conversation o... more Increased national attention to racial and economic inequality has created public conversation on approaches for wealth building; but far too often, entrepreneurship is not included in the conversation. Nationally, white-owned businesses without have an average of 508,405peryearinannualrevenue,comparedtoblack−ownedfirmswith508,405 per year in annual revenue, compared to black-owned firms with 508,405peryearinannualrevenue,comparedtoblack−ownedfirmswith58,119, a difference of over 8 times. Creating strategies that increase black firm revenues is critical to expand owner wealth, as well as create jobs and raise income for workers, who are more likely to be people of color. As the nation becomes increasingly diverse, promoting the scalability of non-white firms will also be critical to U.S. competitiveness. This study uses data from the Kauffman Firm Survey (KFS), a panel dataset of startup firms founded in 2004, to understand why white-black revenue gaps exist and policy solutions that can help address it, through the following questions:

(A) Is there a significant difference between white and black firm revenue?;
(B) What variables significantly explain the gap between white-black firm revenue?; and
(C) What variables are most significantly impact a firm’s revenue?

The study finds that there is a significant difference of $150,774 between white and black firms in the dataset, 9% of which can be explained by financial, human, and social capital variables. Sales to government agencies are both the most significant variable reducing the gap between white and black firms, as well as the most significant predictor of firm revenue, once time and firm fixed effects are added. The study recommends the preservation and increased adoption of race-conscious procurement policies by both the public, private, and nonprofit sectors, while also expanding access to financing opportunities and business training to help firms succeed – all of which can play a role in reducing the racial wealth gap and expanding domestic competitiveness.

Increased national attention to racial and economic inequality has created public conversation o... more Increased national attention to racial and economic inequality has created public conversation on approaches for wealth building; but far too often, entrepreneurship is not included in the conversation. Nationally, white-owned businesses without have an average of 508,405peryearinannualrevenue,comparedtoblack−ownedfirmswith508,405 per year in annual revenue, compared to black-owned firms with 508,405peryearinannualrevenue,comparedtoblack−ownedfirmswith58,119, a difference of over 8 times. Creating strategies that increase black firm revenues is critical to expand owner wealth, as well as create jobs and raise income for workers, who are more likely to be people of color. As the nation becomes increasingly diverse, promoting the scalability of non-white firms will also be critical to U.S. competitiveness. This study uses data from the Kauffman Firm Survey (KFS), a panel dataset of startup firms founded in 2004, to understand why white-black revenue gaps exist and policy solutions that can help address it, through the following questions:

(A) Is there a significant difference between white and black firm revenue?;
(B) What variables significantly explain the gap between white-black firm revenue?; and
(C) What variables are most significantly impact a firm’s revenue?

The study finds that there is a significant difference of $150,774 between white and black firms in the dataset, 9% of which can be explained by financial, human, and social capital variables. Sales to government agencies are both the most significant variable reducing the gap between white and black firms, as well as the most significant predictor of firm revenue, once time and firm fixed effects are added. The study recommends the preservation and increased adoption of race-conscious procurement policies by both the public, private, and nonprofit sectors, while also expanding access to financing opportunities and business training to help firms succeed – all of which can play a role in reducing the racial wealth gap and expanding domestic competitiveness.