Separate and uneven paths to business for people of color

When a bank turned down a business loan to George Johnson, he got creative. He came back and told the bank he needed $ 250 to take his wife on vacation – and got approved. Then he invested the money in his company, which became the first black company to be listed on the US Stock Exchange.

Why is this important: The roads to success in the American market economy – in entrepreneurship, corporate leadership, and wealth creation – are often punctuated with obstacles and winding detours for people of color.

George E. Johnson in his office holding some of the products made by Johnson Products Co., Inc. Photo: Bettmann / Getty Contributor

The story of how Johnson started his namesake company illustrates the obstacles black Americans face in starting a business decades after slavery and the Jim Crow laws.

  • Born in a three-room sharecropper’s shack in Mississippi, Johnson dropped out of high school and worked as a home cosmetics salesman.
  • Johnson and his wife Joan used their “vacation loan” and another $ 250 loan from a friend to create a men’s straightener in the 1950s, then promoted their products in owned magazines and newspapers. at Black-0.
  • Eventually, the personal care product company grew dramatically after advertising on “Soul Train,” the American music and dance television program created by Don Cornelius, another black risk-taker.

But the rise of the Johnson company relied on the couple to outsmart a banker and find other black-owned businesses to promote their products, highlighting discrimination in the banking industry and the systemic barriers they had to overcome to access capital and markets.

Despite a jarring racial wealth gap, there are many examples of black, Latino, Asian, and Native American Americans who are successful in business. The systemic barriers these communities and businesses face are less well known.

McDonald’s has become one of the world’s largest generators of black wealth in America, historian Marcia Chatelain wrote in “Franchise: The Golden Arches in Black America”.

  • The chain sought out black franchise owners after 1968, provided jobs in poor areas, and sponsored Black Little League teams and gospel choir events.
  • But the proliferation of fast food restaurants in communities of color has given rise to obesity and diabetes and increased health care costs.
  • Last year, a group of black franchise owners accused McDonald’s of racial discrimination for directing them to underperforming stores. Last Tuesday, a federal judge dismissed a lawsuit brought by the owners.

In cities across the United States, local black business communities were demolished in the name of “urban renewal”.

  • In the Jackson Ward neighborhood of Richmond, Virginia, the turn of the 20th century gave birth to the “cradle of black capitalism”. But laws creating the Jim Crow South and building Interstate-95 across the region destroyed these thriving businesses.
  • On Maxwell Street in Chicago, a thriving Mexican-American business community and hub for the region’s diverse immigrant culture has been largely demolished over the decades to make way for the expanding University of L ‘Illinois to Chicago.
  • In New Orleans and Kansas City, a cohort of mostly white bureaucrats viewed non-white areas, with cheaper land and less solid political opposition, fit for demolition, following a national handbook of “urban renewal” construction.

The bottom line: The United States provides economic opportunity for all Americans through entrepreneurship, career success, and investment. But for non-white Americans, systemic barriers remain a barrier to wealth creation.

  • People of color make up 40% of the country’s total population, yet, the typical white family has eight times the wealth of the typical black family and five times the wealth of the typical Hispanic family, according to the Federal Reserve.

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