White Men Are Now The Minority Of Business Owners In The United States

White men now make up the minority of business owners in the United States, a shift driven by fast growth in women- and LatinX-owned businesses, and one that has profound implications for the country’s finance and innovation infrastructure.

The 12.5 million white male business owners comprise about 41% of the 30.5 million total owners of small businesses in America. There are about 11.6 million women-owned businesses (about 65% of them are white-woman owned) and 6.5 million businesses are owned by men of color, based on a recent analysis venture capitalist Seth Levine and I conducted with the help of researchers from Stanford University using two sets of U.S. Census Bureau data from 2017, those for employer and non-employer businesses.

“This is a really powerful opportunity for the country to prosper in the future,” said Jerry Porras, Lane Professor of Organizational Behavior and Change, Emeritus and Stanford Graduate School of Business and co-director of the Latino Entrepreneurship Program. The new groups of founders are entrepreneurial and determined, he said. But the “ecosystem is not conducive to supporting their success.”

Researcher Inara S. Tareque, who has worked with Porras, provided data for our analysis. An analyst for the Census Bureau said by email that the bureau might do a similar look at the data in the future.

The number of women-owned businesses has been growing rapidly for decades, as more women entered the workforce. In 2018-2019, women started more than 1,800 businesses a day. In the past five years, women-owned businesses have grown at twice the rate of the overall population, and women of color have been starting businesses at 4.5 times the rate of the overall population, according to American Express State of Women-Owned Business.

LatinX owned businesses have been growing at a rate of two- to-four times the rate of the overall population since 2015, when Porras’s organization began surveying them. He estimates that there are 1 million net new LatinX-owned businesses created every five years.

“A key part of the Latino culture is owning a business. People are entrepreneurial. They make do with what they’ve got. If it means starting a business, they start a business,” Porras said.  “I think another factor is this: If you ask yourself the question, how do you generate wealth in this society, the classical answer is you go to college, you climb the corporate ladder. That doesn’t work for Latinos.”

The demographic shift in the makeup of the entrepreneurial class in the United States has been largely overlooked, because the U.S. Census bureau analysis is centered on employer businesses, where white men are a shrinking proportion of owners but still make up about 60% of all business owners. Narratives about business owners also tend to focus on a tiny minority of companies, fast-growth tech companies.