Why should black-owned businesses hire predominately black labor forces?

  • Lorenzo Brown


In the past, black-owned businesses appear to have hired a predominately black labor force. This article questions if incentives exist for them to continue to do so in the future. Various discrimination incentives are discussed and largely dismissed. It is concluded that the qualifications for gaining access to set-aside contracts and subsidies do provide incentives for black-owned businesses to hire a predominately black labor force.


Black Community Black Political Economy Black Worker White Worker Black Employee 
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  1. 1.
    For a review, see Timothy Bates, “Impact of Preferential Procurement Policies on Minority-Owned Businesses,”The Review of Black Political Economy 14, no. 1, Summer 1985, pp. 51–65.CrossRefGoogle Scholar
  2. 2.
    See Bates.Google Scholar
  3. 3.
    U.S. Department of Commerce Minority Business Development Agency,Fiscal Year 1984 Federal Agency Performance for Minority Business Development, February 1985.Google Scholar
  4. 4.
    See, for example, Bates, op. cit, p. 54, and Arthur G. Woolf, “Market Structure and Minority Presence: Black-Owned Firms in Manufacturing,”The Review of Black Political Economy 14, no. 4, Spring 1986, pp. 79–80.Google Scholar
  5. 5.
    See Lorenzo Brown, “A Comparative Analysis of Industrial and Market Structure Among African-American Firms and the U.S. Economy as a Whole,” paper delivered at the American Economic Association Meetings, December 1985. Here some evidence was found that BOBs tend to locate in more competitive sectors of the economy.Google Scholar
  6. 6.
    Gary S. Becker,The Economics of Discrimination, 2nd ed., University of Chicago Press, 1971. Also, see Kenneth J. Arrow, “The Theory of Discrimination,” in Orley Ashenfelter and Albert Rees, eds.,Discrimination in Labor Markets, Princeton University Press, 1973, pp. 3–33.Google Scholar
  7. 7.
    Eugene F. Fama and Michael C. Jensen, “Agency Problems and Residual Claims,”Journal of Law and Economics 26, no. 2, June 1983, p. 330.Google Scholar
  8. 8.
    See Arrow, op cit.Google Scholar
  9. 9.
    See, for example, Hal R. Varian,Microeconomic Analysis, 2nd ed., W.W. Norton, 1984, pp. 56ff.Google Scholar
  10. 10.
    See Bates, op.cit., p. 57.Google Scholar
  11. 11.
    Ibid, p. 60 for a comparison of minority and nonminority profit rates.Google Scholar
  12. 12.
    U.S. Department of Commerce, Bureau of the Census,1982 Survey of Minority-Owned Business Enterprises: Black, August 1985.Google Scholar
  13. 13.
    Bates, op.cit., p. 60.Google Scholar
  14. 14.

Copyright information

© Springer 1986

Authors and Affiliations

  • Lorenzo Brown

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