A number of recent studies, from the Kauffman Foundation and others, have been making the sensible case that not all entrepreneurs are alike. Certain kinds of entrepreneurs, termed “gazelles,” high-growth companies, or innovation-driven enterprises, are the real drivers of economic prosperity and should be the core focus of local economic development initiatives.
I can’t quibble with these basic arguments, but I also fear that we may throw the baby out with the bathwater. In our zeal to embrace gazelle businesses, we may forget that entrepreneurship can also serve as a lifeline for low income residents, who use their business to build wealth, support their families, and build a better life. That’s why a new study from New York’s Center for an Urban Future, “Launching Low Income Entrepreneurs,” is so timely.
The study assesses New York City’s current “golden age of entrepreneurship,” and finds that it’s not very golden for many of the city’s low-income residents, particularly native-born minority residents. The detailed analysis assesses neighborhoods across the city and finds very close correlations between income levels, self-employment and place of birth. In wealthier Manhattan neighborhoods, native born levels of self employment quite high. In outer boroughs, where incomes are lower and more native-born minority citizens reside, foreign born residents have much higher rates of self-employment. In some poorer neighborhoods, self-employment among foreign born residents is 2-3 times higher than among native-born residents.
The report suggests that a number of barriers are slowing rates of self-employment in New York. At the most basic level, many native-born New Yorkers are not aware that entrepreneurship is a career option. They see few entrepreneurial models in their daily lives, and have little exposure at school or at home. They may have limited financial literacy, along with limited access to capital. A host of other social safety net problems also enters the mix.
The report suggests that concerted efforts be made to introduce entrepreneurship training into local schools and other social service and job training programs. The importance of youth entrepreneurship education has been known for years, yet New York City has actually been moving in the wrong direction on this front. To give one example, the Network for Teaching Entrepreneurship, a New York based global leader in youth entrepreneurship, serves significantly fewer schools and kids than it did five years ago. The study concludes with a host of sensible recommendations for how New York, and other communities, can broaden their base of local entrepreneurs. While entrepreneurship is not for everybody, it can and should be an option for low income residents with the interest, dreams, and passion to own their own businesses.