This year’s Scorecard is different in that it ranks each state’s outcome measures by differences between white residents and residents of color, and using this data to weigh the states’ overall performance. The change was made “because, as the data illustrates, structural inequality in the United States means that race and ethnicity have an outsized impact on economic well-being.”
California ranked 18 on the prosperity of its residents when compared to the 50 states and the District of Columbia. However, it ranked 24 in racial disparity, meaning California has a wider prosperity gap between white and residents of color despite the state’s overall good performance. In terms of business ownership, 19.9% of the labor force in California owns a microenterprise – higher than the national average at 18.2%.
When accounting for race and gender in business ownership, California also fared better than the national average but the gaps remain unacceptably wide.
- Women nearly have reached parity with men in terms of business ownership, with men being 1.1 times more likely to own a business than women – compared to 1.3 times in the U.S. However, the disparity in business value is much wider, with male-owned businesses worth 2.7 times as much as female-owned businesses.
- In terms of race, 24% of white residents in California own a business compared to only 15.7% of people of color. A more detailed breakdown by race shows that a higher percentage of Native Americans (29.5%) and Asians (24.9%) own a business. However, the data for business value shows that white-owned businesses are worth almost 3 times as much as businesses owned by people of color.
Outcomes need to be looked at in the context of the policies that precede them. Prosperity Now found that California has adopted 17 of the 28 policies they recommend to help families build and protect wealth and prosperity. The state has enacted a refundable EITC that is at least 15% of the federal credit and applies to the self-employed as well as W2 workers.
The California Scorecard offers a snapshot of a state that, despite ranking high in outcomes for its general population, maintains a wide racial and gender disparity in business ownership and has failed to pass legislation that would make it easier for entrepreneurs in need of capital to grow their businesses in a fair lending environment. However, last year’s landmark truth-in-lending bill and Governor Newsom’s proposed budget for 2019-20 give us hope that the government will be proactive in addressing these issues and make us optimistic about the prospects for small businesses in California.