According to the US Census Bureau, 9.4% of businesses were black-owned, as of 2012. According to the same report, 78% of businesses were white-owned in 2012.
This is not a sample in the statistical sense. This is a self-selected subset. Any bias in the groups in question towards answering or not answering this question is not assessed by the study, and the assumption that the sample is representative of the population is entirely unfounded.
For the purpose of PPP we need to narrow down to the businesses that have paid employees. Over 95% of black owned businesses do not according to the 2012 SBO Census.
Edit: More data -
"Data from the Small Business Administration indicates that just over 19 million businesses, or 70.9 percent of all U.S. businesses, are white-owned. Blacks own about 2.6 million businesses or 9.5 percent of all U.S. businesses, and Latinos own 3.3 million businesses or 12.2 percent of all American businesses. But the sales and employment numbers tell a more depressing story. The 19 million white-owned businesses have 88 percent of the overall sales, and control 86.5 percent of U.S. employment, while black businesses have a mere 1.3 percent of total American sales, and 1.7 percent of the nation’s employees."
Seems like the loan rate roughly matches the % of employees by group.
That said for me it didn’t seem worth it, as I wouldn’t get unemployment during that time - and if I somehow screwed up it would mean I’d need to repay it. No chance of that on unemployment.
I, the author, was not seeking to show intent to discrimate. I as only showing the policy effectively did discriminate. In order to show intent I would need the statistics you mentioned but to show the effect the stats you mentioned are entirely irrelvant
I added my comment not to imply intentional discrimination, but as a slightly better 'base-rate' than the statistic you offered, which was African-Americans as a proportion of Americans.
I personally think it is most likely that more of the money went to larger corporations than intended.
Well, it depends on your definition of effective discrimination; you could also argue that what matters most is how many employees of PPP-recipient companies were AA. Going another step, one might argue that what matters is the employment impact of PPP on different races.
I am not sure which of these metrics is most important, but I think comparing PPP recipient ownership to the general population is rather blunt, especially if it is the only metric offered.
the US Treasury controls the IRS, funds the US govenrment and is in charge of all money printing in the US. Every man (and woman) is equal before the law/govt. Hence it makes sense to analyze how the activity of the US Treasury benefits one group over another.
I think the most useful comparison would be to judge it against expenses, since not all businesses would need the same amount of loans. The closest related statistic I could find is that all minority-owned businesses generate around 3% of revenue. The loans seem to have been given out fairly evenly as intended, but the small impact of black businesses on the economy seems like a much more significant disparity.
So that raises its own set of interesting questions that hits at the core of the issues that the article discusses: why is it the case that 9.4% of businesses are black-owned yet only generate 3% of revenue? Are there issues with, say, obtaining a loan? Do they face challenges to growth that white-owned businesses do not? When fixated on the statistics, it's easy to forget the human questions around the disparity.
Absolutely, and that 3% is for all minority-owned businesses, not just black-owned. One large part of the problem is likely that the higher revenue industries are dominated by big businesses that shut out small businesses. Here’s an industry breakdown showing a very small representation in industries like information.
> The full list of Paycheck Protection Program recipients released by the Small Business Administration on Monday shows that of the 14 percent of businesses that chose to identify race in their loan application, Black-owned businesses received 1.9 percent of loans while White-owned businesses received 83 percent.
So the actual percentage of black-owned businesses receiving PPP loans is somewhere from 0.26% - 86.26%, depending on how you think the data is biased.
it is a self-selected sample - which is a sample. Ofcourse it introduces seld self-selection bias. However a vast majority of studies on race in the US rely on self reported data (for thical and legal reasons) and include some element of self selection bias. The end.
What percentage of loans were applied for by black-owned businesses? Comparing it to population seems like a statistic that is intentionally misleading, I would guess that a lot more businesses are owned by white people than by black people (which is its own issue). I believe only around 10% of businesses are even owned by a black person, so it doesn't surprise me to see that they have a smaller piece of the PPP loan pie...
if the article was claiming to show "intent" to discriminate then it would have been misleading. I wrote the article and I never claimed to show intent. I was just showing what as effectively happening and for that the diffeerences in ownership of eligible companies by race is irrelevant.
If you're going to put together an inflammatory article the least you could do is dive a little deeper and answer the 'Why' question. Why did black-owned businesses receive less than 2% of PPP Loans?
> Racial discrimination in banking is outlawed on paper, but it continues in practice — often in subtle forms. In 2018, for instance, the National Community Reinvestment Coalition, a nonprofit organization that works with banks to increase the flow of private capital into poor and underserved communities, sent “mystery shoppers” to 32 different banks in Los Angeles. It found that potential borrowers with identical financial profiles were treated differently by bankers based on their race. Black and Latino borrowers were asked for more detailed financial documents and were given less information about many banks’ available products than white borrowers.
Discrimination in lending exists, but at least with PPP loans, there was no in-person consultation. For many businesses it was just an online application.
It probably does hold true though that white businesspeople may have better relationships with their bankers, resulting in faster loan processing.
You have no basis for linking those two instances. You have no basis to claim there was any intent of any discrimination in the loan program. You have no basis to claim there even was discrimination in the loan program. All those assumptions need evidence, and you just asserted that conclusion.
This is very similar reasoning to alien conspiracy theorists, who look at something in the night sky and assert "It can't be A, it can't be B, it can't be C, therefore it must be Aliens"
The author was also dishonest. They purposely framed their blog post in a way that would you lead you to this.
You can't do that because there could be alternative explanations in this specific case (like in every case), even in a world where, as you claim, certain minorities are discriminated against by banks and loans[1]. In such a world you need even more evidence because your biases are pushing in a specific direction and so it takes more work to be objective.
You do nobody any good by claiming racism where there is none. In fact you do damage, the same way that hate crime hoaxes and false sexual assault allegations do damage to real hate crime and sexual assault victims.
It's the responsible thing to do.
And I'm not saying we shouldn't look for an explanation. The null-hypothesis is that these loans are allocated proportionally, so a deviation does require an explanation, which will probably be interesting, most likely multi-variate, and may include a component of discrimination. The nature of that discrimination may be different than what you assumed - so how are you supposed to fix it, if you were too lazy to actually dig to find the actual problem.
Why is that controversial?
[1] Truth be told, I actually see debt in a negative light. I haven't seen a lot of small business survive when starting with a bank loan - it's like you're setting yourself to fail because not only do you have business expenses, and not only did you way overestimate the sales you were going to do (a common trait of entrepreneurs), but also you have loan payments that drain your revenues. And those loans are usually personally guaranteed, so if your business tanks, you are still responsible for them. I wish debt was harder to come by across the board.
> You do nobody any good by claiming racism where there is none.
There is racist discrimination in banking. This can be demonstrated. The burden of proof is on you to demonstrate that the PPP program is somehow magically immune to that discrimination.
>The burden of proof is on you to demonstrate that the PPP program is somehow magically immune to that discrimination.
Come on. You can't do to that. That's not how it works. The burden of proof is always on a positive claim. General negative claims are intrinsically unprovable. This is because for one, you've begged the question, and there is no level of evidence that you would accept or even list what you would accept as evidence that your conclusion is wrong.
More importantly, it is impossible to list every factor and modality of this discrimination (and you have to do that to prove a universal negative claim that there is no racial discrimination), because there is an infinite number of possibilities of this manifestation (i.e. what is the nature of this racist discrimination you're claiming?).
Here are some potential modalities for this 'racist discrimination'.
1) The program was designed with the intent to discriminate against certain minorities (and not others).
2) The program was not designed with the intent to discriminate, but certain factors had as a side-effect discriminating against certain minorities (and not others).
3) The program was not designed with the intent to discriminate and does not intrinsically discriminate, but the executors of this program intentionally discriminated against certain minorities (but not others)
4) The program was not designed with the intent to discriminate and does not intrinsically discriminate, and the executors of this program did not intentionally discriminated against certain minorities (but not others), but certain factors had a side-effect of discrimination.
5) The program and execution was not intrinsically discriminatory, but other structural factors led to discrimination. Factors such as the claim that minorities are discriminated in banking, or certain minorities being turned away from entrepreneurship by lack of role-models, or ... etc.
I can go on ... but each one is different and independent of the next and even within each one you have countless of potential mechanism. For example, if the claim is the program was intentionally designed to be discriminatory, you have unpack that and provide the mechanism for that. Is it Congress that did that? Is the White House? Which statue was discriminatory, etc.. And there are countless other potential avenues for discrimination. Each kind of discrimination calls for different approach to a solution. You're not honest when you shift the burden of proof like you did.
Ceejayoz come on. That's not a positive claim. You literally have a 'NOT' statement in there. You can't distort language to fit your narrative like this.
And you can see the intrinsic impossibility of the burden you're placing to disprove this claim. Besides the fact that you posited no mechanism by which this racist discrimination takes place, what if the racist discrimination in the banking system did affect the PPP program, but was only a minor factor. That is, racist discrimination only explained 5% (or 10% or 30%) of the discrepancy and other factors dominated (racist or otherwise). Is that a possibility? It sure is.
That's why you need to do the legwork. This is especially true when you're talking about politically and culturally sensitive matters. The left typically makes a similar point around social studies research. Certain kind of research results may be used by racists, so you have to take extra care to qualify and frame the results. I agree with both. This is too important to be sloppy with.
I cannot stress this enough, you are hurting your case, because some individuals will believe you, they will do a deeper dive, and they may become disillusioned if they see you lied to them. Trust is so easily broken.
I wrote the article - I don't think it is inflamatory. It is irrelevant if 0% of business owners are Black. The US Treasury (which controls the IRS, money printing and funds the government) should not abuse its power to favor a certain segment of the population. The government should not bail out private companies.
I feel like the "don't bail out private companies" narrative applies when doing so prevents creative destruction.
When the government straight up bans most companies from doing business, with little warning, and for a prolonged and unpredictable amount of time, I think some level of nuance should be applied.
In other news, larger corporations are more white-owned, and had the resources to wrangle the PPP loans.
This is a case of small businesses not having the resources to acquire the loans in the first place. Mixing in race obfuscates and distracts from the real issue here. It should have been easier for small businesses and harder for larger ones to balance the scales.
Businesses are only concerned with ethics if it improves their bottom line. 'Free' money in uncertain times is an opportunity any business will seize if it has the means to obtain it.
We are 15 days into SIP at this point. I do not need PPP/EIDL, but as a prior SBO, I followed this topic with interest. The quality of info was high and SB's had days and sometimes weeks notice on navigating the process.
I read that CVT went on to make $300k a day on YT (somedays) by providing daily updates on stimulus, PPP, EIDL, etc, so the incentive was there to get the word out.
If race is a factor, you'll find it was being discussed in their circles with the same delivery as Brian on YT. If not.. They should have picked a better accountant.
I acknowledge there are other issues but I wanted to shed light on an issue (racial issues) I care about. Even if larger corporations are more white-owned it is worth noting the US Treasury is transferring wealth to White people
I appreciate you sharing the article, and shedding further light on these important issues.
I personally don't see 'other' issues in this case, as this article describes a symptom and not a cause. The focus on race is at best a distraction from class, which is the real predictor on the ability to wrangle benefits from the government.
> US Treasury is transferring wealth to White people
I don't really interact with social media - why is white capitalized here? I'm not being facetious, just curious.
And wouldn't the explanation here be that the vast majority of wealth is in pension / passive funds, which primarily invest in large corporations, which are the most capable to wrangle benefits? Racist policies in the past and current discrimination limit the aggregate capital of this group, and therefore they're under-represented as presented here.
Obviously surveys are important but I worry that stating a conclusion allows leeway in choosing a hypothesis that fits personal bias and not reality.
- This article describes how the government PPP policy effectively discriminates against Black People - that is a problem in my view - once again there could be other problems.
- The article is not attempting to establish an "intent" to discrminate so it is irrelevant if Black people are underrespresented as owners of eligible companies. The article is only showing the policy does effectively discrminiate (whether as an intended or unintended consequence).
In my opinion, it does not matter if 0.1% of companies are Black-owned. In my article, I am not looking to establish intent. I am just showing what is effectively happening and for that the percentage you asked about is irrelevant.
Blacks own about 2.6 million businesses or 9.5 percent of all U.S. businesses
The 19 million white-owned businesses have 88 percent of the overall sales, and control 86.5 percent of U.S. employment, while black businesses have a mere 1.3 percent of total American sales, and 1.7 percent of the nation’s employees.
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The article doesn't clarify if by percent they mean number of loan applications approved or % of loan funding allocated.
If it the former, then black businesses have received far fewer loans than their representative amount. If it is by revenue, then it is actually inline with the ir representation in population.
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> Monday shows that of the 14 percent of businesses that chose to identify race in their loan application, Black-owned businesses received 1.9 percent of loans while White-owned businesses received 83 percent.
Might be interesting to see if this trend held when black owners did not identify themselves.
The percentages you mentioned would be relevant if I, the author, was look to show intent to discriminate but I was not. I am just showing the effect of the program and for that the percentages you mentioned are entirely irrelevant.
The sample size (14%) was large enough statistically. Might also be interesting to see if this trend was larger when white owners did not identify themselves.
Rejection rate might give a clue to intent - but even then not really cause it would be hard to tell whether the difference in rejection is justified by other non-racial factors. I wrote the article to show the effect of the policy not the intent of the implementation and for that the metrics I used were appropriate
I am the author of article. looking at difference in ownership of companies more broadly would be useful to establish intent to discriminate but that is NOT what the article claims to show. I simply show what is effectively happening and for that the stats on ownership of eliegible companies by race are irrelevant.
In my article, I am not looking to establish intent. I am just showing what is effectively happening and therefore to make my point it does not matter at all where fewer companies are Black-owned
https://www.census.gov/newsroom/press-releases/2015/cb15-209...