The Equity Factor

Have Black Entrepreneurs Driven the U.S. Crime Drop?

“Black-owned businesses aren’t just employers. They’re also bringing something else.”

Adrienne Bennett, the first African-American woman who is a licensed master plumber, runs a Detroit business. (Credit: New Economy Initiative)

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In many ways, the historic drop in crime that started in the early 1990s helped pave the way for today’s resurgence of cities. I’ve heard from inner-city community development professionals who have been in the field since the 1980s, and they remember a time when they couldn’t give land away to developers. Now, their days are spent on everything from how to plan downtown development with equity in mind to 13-hour-long city planning hearings about how to ensure affordable housing amid an urban real estate boom.

Explanation after explanation for the drop in crime has been proffered.

Freakonomics famously featured the argument that it was the legalization of abortion that prevented the next generation of criminals from being born at all. It wasn’t that.

Mass incarceration began in the 1980s and picked up pace in the 1990s, but it wasn’t that.

Could it have been the mere 1990s economy booming? The emergence of anti-crack sentiment in the hip hop world in the late 1980s and early 1990s? The emergence and spread of broken windows policing?

“There’s been a lot of work done and a lot of explanations have been surfaced, but we really don’t know,” says Karen Parker, a sociologist based at the University of Delaware.

Parker authored an article recently published in Urban Affairs Review that points to one factor that hasn’t yet been studied in depth: the remarkable growth of black entrepreneurship that also started in the early 1990s.

Looking at U.S. cities with populations of 100,000 or more between 1990 and 2000 (there’s about 150 of them), Parker found that the growing presence of black-owned businesses was a significant contributor to the decline in black youth violence during the period of the 1990-2000 crime drop.

Let’s start with the fact that black business ownership grew 48 percent in absolute numbers, from 1990 to 2000, according to the Department of Commerce’s Survey of Business Owners, which is conducted every five years. Black business owners grew from 7.6 to 9.6 percent of all business owners in that same time frame, using the same data set.

Over the same period, violent offenses involving black youth dropped 29 percent, using the FBI’s Uniform Crime Reporting data.

Controlling for poverty rates, the historic loss of industrial jobs in inner-city America, and the increasing concentration of disadvantage among African-Americans in urban areas over that time frame, Parker still found that as black business ownership went up, black youth violence went down.

“It’s not that those other things don’t matter, they do, but black business ownership had an impact on black youth violence over and beyond that. Independent of all of those other things,” Parker says.

Before Parker’s article was published, according to the sociologist, one reviewer argued that black-owned businesses don’t matter, that black-owned businesses are just a proxy for black employment and that’s what really accounts for the historic drop in crime.

“I found that it is the black ownership of businesses that matters. It’s not just employment. Black-owned businesses aren’t just employers. They’re also bringing something else,” Parker says.

That “something else” has been studied before. In the seminal book, Code of the Street, ethnographer Elijah Anderson demonstrates the importance of role models (“old heads,” he calls them) in black communities as guideposts for black youth. It’s why Parker chose black youth violence as a proxy for crime in her study.

“Anderson outlined how structural barriers associated with racial inequality and limited economic opportunities foster a cultural orientation conducive to violence among adolescents,” the article reads.

“The more black-owned businesses are present,” Parker further explains, “the more they may be serving as role models as well as providing access to capital. Over and beyond jobs.”

There are some important limitations to Parker’s work. One is that it’s not predictive.

“It would be great if we could say increasing black business ownership by a certain amount could decrease black youth violence or black crime by a certain amount, but as social scientists we avoid predictions,” Parker says.

Another limitation is in the data itself. While Parker praises the Department of Commerce’s Survey of Business Owners (the most recent being in 2012), which allows researchers to track the extent of black business ownership, she wishes the survey could also ask owners about the racial demographics of their employees.

“What I really want to capture is African-Americans employed in African-American-owned businesses,” says Parker. “Our cities are some of the most diverse places in the world, and our data doesn’t allow us to capture that.”

Of course, just like any of the other explanations for urban crime being at historic lows, Parker knows her explanation could be debunked. She might even debunk it herself, as she’s now working on doing a similar study for the post-2000 era, when there was also a mild uptick in urban crime in 2004.

“There may be scholars who are looking at other aspects of the crime drop and say I’m looking at the economy and the economy doesn’t matter. But the economy does matter, and the economies in urban areas are very racially defined,” she says. “I’m trying to look at the true nature of the crime drop. A lot of that crime drop has been by African-Americans, while the white crime level has been relatively stable. We have to look more at the reality of race in the economy and the crime drop. That’s what this paper does. That’s what I’m doing now.”

The Equity Factor is made possible with the support of the Surdna Foundation.

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Oscar is Next City's senior economic justice correspondent. He previously served as Next City’s editor from 2018-2019, and was a Next City Equitable Cities Fellow from 2015-2016. Since 2011, Oscar has covered community development finance, community banking, impact investing, economic development, housing and more for media outlets such as Shelterforce, B Magazine, Impact Alpha and Fast Company.

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