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Small businesses: a pathway to more equitable economic opportunity

California is home to more than 4.3 million small businesses, which account for 99.9% of all businesses in the state and employ more than 50% of private sector workers. The success of small businesses is critical to our economy and helping Irvine reach its North Star — a California where all low-income workers have the power to advance economically.  

Economic opportunity isn’t distributed equitably, with troubling gaps across racial and gender divides. More than 75% of workers paid low wages in California are people of color, and more than half are women.  

These are the workers who harvest, cook, and serve our food, care for our loved ones, pack and deliver our packages, and much more. The pandemic and treatment of essential workers forced them to reevaluate working for employers that don’t pay well, offer limited growth potential, provide unpredictable schedules with limited flexibility or enough hours, or, in extreme cases, violate their workplace rights.  

Entrepreneurship and small businesses offer workers two pathways to better wages, more flexibility, and economic opportunity. Workers can start businesses of their own, using self-employment as a path to better jobs, and smalls businesses can drive quality job creation by prioritizing equity and employee needs in the workplace.  

Therefore small businesses play a pivotal role in economic mobility, and understanding the challenges and opportunities they face can inform the best ways to support their growth.  

Economic inequity happens geographically too. This includes business and philanthropic investments. UC Riverside found, for example, that foundation giving, per capita, in inland California was approximately 10% of that in coastal communities. Our Priority Communities initiative focuses on cities that receive fewer investments than coastal cities, including grantmaking to support the growth of small businesses and the people who run them. 

We partnered with Next Street, a small business advisory firm, to examine the small business landscape in our Priority Communities (Stockton, Salinas, Fresno, San Bernardino, and Riverside) and to offer recommendations for ensuring small business remains a viable pathway to good jobs for low-wage workers. 

Next Street’s report paints a picture of small businesses at a crossroads: 

  • Small businesses drive economic opportunity, yet many still face long-term impacts of the pandemic, including inflation and a changing labor environment.  
  • With the right support small businesses can lead the way on creating quality jobs and cultivating more equitable workplaces. 
  • California’s small businesses are as diverse as the state, and they need varied and tailored assistance to meet their needs. In particular, women and people of color who own small businesses face systemic barriers, including access to funding and resources to expand, that keep their businesses from reaching their fullest potential. 
  • We need policy reforms to foster entrepreneurship and small business sustainability, and a shared commitment to prioritizing the needs of small business employees to create quality jobs.  

We invite you to read the recommendations to better understand how to invest in solutions, tailor products and services to the diverse needs of small business owners, build partnerships among businesses, and advance priorities at local and state policy levels. And if you’d like to learn more, view this Next Street webinar about the report, featuring Priority Communities grantees AmPac Business Capital and Fresno Metro Black Chamber of Commerce as panelists.  

We appreciate Next Street sharing these important findings and illuminating the voices and experiences of small business owners. When we understand the needs of this important employer sector — and the unique perspectives of inland California — we can work toward solutions that create an economy that truly works for all residents.  

Masthead photo credit: Samanta Helou Hernandez