Philadelphia Business Ownership Mirrors National Trends

Philadelphia Business Density Analysis

Business ownership is a significant factor in economic mobility and wealth creation, but it varies considerably across race, ethnicity, and sex. Recent federal data reveals a sharp rise in business ownership nationwide, though the rates differ among Black, Hispanic, Asian, White, female, and male entrepreneurs in various cities and counties, reflecting local economic conditions.

Business Growth During Pandemic

From 2012 to 2022, the number of businesses rose significantly in comparison areas after decades of marginal change, with most of the increase occurring during the COVID-19 pandemic. Philadelphia’s business density—the number of firms per capita—reached its highest point since 2007: 17 employer firms and 94 nonemployer firms per 1,000 residents in 2022. This represents an increase from 82 total firms in 2012 and 75 in 2007. While Philadelphia’s growth slightly exceeded the median increase elsewhere, it did not change the city’s relatively low ranking compared to other localities.

Business density is defined as the number of firms per 1,000 residents 16 and older, encompassing both employer firms and nonemployer firms (such as individual contractors). The analysis utilizes data from the Annual Business Survey, conducted jointly by the U.S. Census Bureau and the National Science Foundation, released at the county level every five years. For comparison, The Pew Charitable Trusts identified 12 other counties or county equivalents with at least 250,000 residents whose central city represented most of that population.

Black-Owned Businesses

From 2012 to 2022, the number of Black-owned employer firms in Philadelphia grew by 73%, from around 1,150 to 1,990. In 2022, these firms represented 9.2% of all employer businesses, a notable increase from 6.3% a decade earlier. Combined with nonemployer firms, Black-owned businesses made up around 27% of all city firms classifiable by race in 2022. While this increased, it remained below the percentage of Black Philadelphians in the city’s population (41%). Philadelphia’s Black business density—counting both employer and nonemployer firms—rose to 75 per 1,000 Black Philadelphians, but remained below the national level and the levels seen in comparison localities.

Hispanic-Owned Businesses

Hispanic-owned employer firms in Philadelphia rose from around 750 to 1,000, and nonemployer firms from 10,900 to 18,500 between 2012 and 2022. These businesses represented 14% of all Philadelphia businesses by ethnicity, matching the 14% share of the city’s population. The Hispanic community’s business density rose from 84 to 110 firms per 1,000 Hispanic Philadelphians, roughly mirroring the gain in other localities.

Asian-Owned Businesses

The number of Asian-owned employer firms in Philadelphia rose from around 3,460 to 4,640, and nonemployer firms from around 8,070 to 15,500 from 2012 to 2022. These businesses represented 14% of all Philadelphia businesses by race, exceeding the 9% share of Asian Philadelphians in the city’s population. Asian business density rose from 126 to 173 per 1,000 Asian Philadelphians, mirroring the national increase.

White-Owned Businesses

The density of Philadelphia’s White-owned businesses exceeded that of many other places. In 2022, there were around 14,880 White-owned employer firms and 67,500 nonemployer firms, equaling 58% of all Philadelphia businesses by race, exceeding their 46% of the total 16-and-older population. White business density rose from 102 to 150 per 1,000 White Philadelphians, moving Philadelphia above the national average in business density.

Female-Owned Businesses

The number of female-owned businesses in Philadelphia grew slightly faster than their peers elsewhere, but not enough to change their ranking. They numbered around 5,340 employer firms and 53,000 nonemployer firms in 2022, totaling 42% of all businesses by biological sex. Counting both firm types, female-owned business density went from 61 to 86 firms per 1,000 female Philadelphians.

Male-Owned Businesses

Male-owned businesses also grew slightly faster in Philadelphia than elsewhere from 2012 to 2022. They reached nearly 14,440 employer businesses and 64,000 nonemployer firms in 2022. Counting both employers and nonemployers, male-owned business density rose to 133 firms per 1,000 male Philadelphians.

Nonemployer Businesses

Businesses without employees—such as individual entrepreneurs, contractors, and gig workers—drove most of the growth in business ownership for all demographic groups from 2012 to 2022. The pandemic-related surge in nonemployer businesses reflected a decades-long shift away from traditional employment.

Business Revenue by Owner Race and Ethnicity

The revenue generated by businesses varied significantly between groups and localities. In 2022, Philadelphia’s Black-owned employer businesses reported an average of $792,500 in gross revenue, 30% below the median of their peers. Hispanic-owned businesses reported 41% less revenue, while Asian-owned businesses reported 21% less and White-owned businesses 12% less, on average, than their peers elsewhere.

Observations

Differences in business density may reflect differences in industry mix, business taxation, regulations, and commercial zoning environments. The differences in Black, White, Asian, Hispanic, male, and female ownership among localities may be influenced by factors such as educational attainment and median earnings.

Conclusion

From 2012 to 2022, business density rose nationwide and in Philadelphia. Ownership by various demographic groups increased, but gains varied by locality. Nonemployer firms drove most of the increase for all groups. Black-owned businesses grew in Philadelphia, but at a slower pace than elsewhere. The findings raise questions about how a city’s business density reflects its demographic makeup, economic conditions, and level of business ownership.