Employment Opportunities for Blacks in the Black Ghetto: The Role of White-Owned Businesses

Black-white relations in economic institutions are important determinants of the life chances of blacks. Black leaders and civil rights groups argue that white ownership of businesses in black communities retards the economic and political achievement of blacks. This paper explores the empirical basis fur such arguments using a panel study of small businesses in Boston, Chicago, and Washington, D. C. The following propositions are supported: (1) white-owned businesses are much larger than black businesses and dominate the labor market of the ghetto, (2) white owners are more likely than black owners to hire "outsiders," and (3) white owners hire white employees in greater proportions than the racial composition of the ghetto population would imply. Ghetto economic development is often seen as a solution to the problems of the black community, but this research points out several important limitations of a development strategy.