Census Measures Business Growth in Indian Country

Rob Capriccioso
3/21/11

WASHINGTON – Despite widespread reports of struggling reservation economies, business has been rapidly increasing in certain parts of Indian country, according to new U.S. Census data that indicates a jump in the number of American Indian- and Alaska Native-owned businesses in the five-year span just before the 2008 American recession.

The data, released March 15, measured a total of 236,967 Native-owned businesses in 2007, which represented an increase of 17.7 percent from 2002. Native businesses businesses generated $34.4 billion in 2007, which was a 28 percent increase from 2002. The numbers for Indian country were on par with the percentage increase in the total number of U.S. businesses, which was 17.9 percent during the same time period.

The Native numbers were released as part of the Survey of Business Owners: American Indian- and Alaska Native-Owned Businesses, which the U.S. Census Bureau conducts every five years. The report details the number of firms, sales and receipts, number of paid employees and annual payroll.

Donald Chapman, Senior Adviser on Native American Affairs with the Department of Commerce, noted that because of the survey’s timeframe, it does not take into account the Obama administration’s efforts to develop Native economies, including its spending under the American Recovery and Reinvestment Act of 2009, which provided up to $3 billion across tribal nations to support economic activity.

In a conference call hosted by the Census Bureau to release the data, Christina Daulton, a staffer with the National Congress of American Indians, noted that the numbers also do not include the negative economic impacts of the 2008 recession on reservations and tribal communities. Plus, Indian country was already widely struggling, she noted, saying, “Eight of the 10 poorest counties in the U.S. are home to Indian reservations.” She added that Indian households were hit particularly hard by the recession, and said that unemployment rates among Native Americans increased at higher rates than the general population.

Another downside to the numbers, Chapman said, is that there is still an entrepreneurial parity gap between Native firms, which represent 0.9 percent of classifiable U.S. firms, and the share of the American Indian and Alaskan Native adult population, which is 1.5 percent of the U.S. adult population. “If American Indian and Alaska Native firms’ gross receipts reflected the 2007 adult American Indian and Alaska Native population share, receipts would have amounted to more than $160 billion—about $126 billion more than the actual figure,” he said.

Chapman also calculated that under the equal share scenario, paid employment numbers would have totaled nearly 829,000—about 4.5 times the actual employment. And the number of Native firms would have been over 383,000 firms—nearly 147,000 additional firms.

In the survey, Native-owned businesses were defined as firms in which American Indians and Alaska Natives own 51 percent or more of the equity, interest or stock of the business. Importantly, the study does not include tribally-owned businesses or businesses owned by Alaska Native Regional or Village Corporations and their subsidiaries, which are defined as government-owned. A national perspective on those numbers is not available, but some Native-focused groups have vowed to collect it. The bureau intends to release additional reports from the survey highlighting other minority- and veteran-owned businesses later this year. Later, separate studies will highlight and compare Native performance with other minority business development, as well as additional characteristics of all businesses and their owners.

The 2007 survey collected data from a sample of more than 2.3 million businesses. Census Bureau officials said that data collected in the sample survey were subject to sampling variability, as well as non-sampling errors. Sources of non-sampling errors include errors of response, non-reporting, and coverage.

Jan Jacobs, a staffer with the Census Bureau's Intergovernmental Affairs Office, said that the agency does not make a special, targeted collection effort for Indian country, although it does use a sampling frame designed to improve the reliability of the American Indian and Alaska Native estimates. Companies in that frame have a higher probability of receiving the survey form.

"We improved the questionnaire design since 2002, and one of the improvements helped us to better identify tribally owned and Alaska Native Regional and Village Corporations," Jacobs said. "We were able to remove from the final estimates more of the tribally owned and Alaska Native Regional and Village Corporations than we were able to in 2002." Those types of businesses are considered out-of-scope of the survey.

The information was presented by geographic area (nation, state, county, city and metro area), industry, and size of business. In terms of states, California led the Indian economic pack with 45,629 Native-owned businesses with, accounting for 19.3 percent of the nation’s Native-owned businesses. Next came Oklahoma, with Native-owned businesses (8.9 percent) and Texas, with 19,057 (8.0 percent).

Of the Native success in Oklahoma, Charles Deason, a Keetoowah Cherokee citizen who co-owns Redmen Office Supply in Tahlequah with partner Chuck Bread, told the Muscogee Phoenix newspaper that he’s excited to be part of the growth, and he’s glad to let everyone know it because he believes positive examples can build Indian confidence. “I think it’s exciting for Native Americans to be getting any kind of notoriety,” he told the newspaper. “For many years, Native Americans have not pursued business opportunities, but I think education and the push of getting more and more kids into college and graduated gives Native American kids a little better chance in the business world.”

In his own case, Deason said he found economic resources of NCAI, the National Indian Education Association, the National Indian Gaming Association, and the American Indian Chamber of Commerce of Oklahoma to be useful for networking and providing business expertise. He also recommended business seminars sponsored by the Cherokee Nation and other tribes.

Among counties, Los Angeles, California, had the largest number of Native-owned businesses with 14,195, accounting for 6.0 percent of all the nation's Native-owned businesses. Among metropolitan areas, Los Angeles-Long Beach-Santa Ana, Calif., had the largest number of Native-owned businesses with 17,634 (7.4 percent), followed by New York-Northern New Jersey-Long Island, N.Y.-N.J.-Pa., with 13,188 (5.6 percent).

Thomas L. Mesenbourg, Census Bureau deputy director, said the research, which is unique in nature, is important for Indians because “it can ensure they have access to the same entrepreneurial opportunities as other groups.” He noted that the data is the only source of population-wide, regularly collected information on businesses owned privately by individual American Indians and Alaska Natives.

Other highlights of the report, as listed by the Census Bureau:

  • Of the 236,967 Native-owned businesses in 2007, 23,704 had paid employees, a decrease of 3.2 percent from 2002. These businesses employed 184,416 people, a decrease of 3.6 percent from 2002. Their payrolls totaled $5.9 billion, an increase of 15.4 percent. Receipts from these employer businesses totaled $27.5 billion, an increase of 25.1 percent.
  • In 2007, 213,263 Native-owned businesses had no paid employees, an increase of 20.6 percent from 2002. These non-employer businesses generated $6.9 billion in receipts, an increase of 40.7 percent from 2002.
  • The number of Native-owned businesses with receipts of $1 million or more increased 26.7 percent from 3,631 in 2002 to 4,599 in 2007.
  • The number of Native-owned businesses with 100 employees or more decreased by 9.0 percent from 178 to 162.
  • In 2007, 30.5 percent of Native-owned businesses operated in construction; and repair, maintenance, personal, and laundry services.
  • In 2007, construction, retail trade and wholesale trade accounted for 52.9 percent of Native-owned business receipts.

Chapman, a citizen of the Mohegan Nation, also noted that Native firms with receipts of $1 million or more tended to generate a much larger percentage of all revenues and paid employment than firms with receipts under $1 million. Firms with receipts of $1 million or more represented 2 percent of all Native firms, but generated 67 percent of all Native firms’ gross receipts and 63 percent of all their paid employment.

There were 4,599 Native firms which generated gross receipts of $1 million or more in 2007. These firms generated combined gross receipts of $23 billion and employed 116,759 workers. Average gross receipts of American Indian and Alaskan Native firms generating sales of $1 million or more grew by 5 percent from $4.7 million per firm in 2002 to $5.0 million in 2007.

In order to improve the overall situation, Chapman said that more effort nationwide should be dedicated to growing and expanding American Indian and Alaska Native firms in size and scale.

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