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In this such a data about launching low income entrepreneurs.
www.nycfuture.org APRIL 2013
LAUNCHING LOW-INCOME
ENTREPRENEURS
With middle-income jobs in decline, entrepreneurship offers an increasingly
promising pathway out of poverty; but few low-income New Yorkers are currently
taking this route to economic self-sufficiency
This report was written by Kahliah Laney, with Jonathan
Bowles and Tom Hilliard, and edited by David Giles
and Gail Robinson. Additional research by Felix Attard,
Adam Eckstein, Cynthia Keyser, Brandie Moreno, Ezra
Moser, Linda Tan, Ada Welch, and Kara Freedman. De-
sign by Ahmad Dowla.
This report was made possible by generous support
from the Ewing Marion Kauffman Foundation.
General operating support for has been provided by
the Bernard F. and Alva B. Gimbel Foundation.
The Center for an Urban Future is a NYC-based policy
institute dedicated to highlighting the critical opportu-
nities and challenges facing New York and other cities,
and providing fresh ideas and workable solutions to
policymakers. The Center’s primary focus is on grow-
ing and diversifying the local economy, expanding
economic opportunity and targeting problems facing
low-income and working-class neighborhoods. The
Center does this through publishing fact-based re-
search reports that are accessible to a wide audience
and holding high-pro?le policy forums. For more infor-
mation or to sign up for our monthly e-mail bulletin, visit
www.nycfuture.org.
Executive Director: Jonathan Bowles
Research Director: David Giles
Operations Manager: Ahmad Dowla
Research Associate: Kahliah Laney
Research/Communications Associate: Adam Forman
Research Associate: Christian González-Rivera
Senior Fellow: Tom Hilliard
City Futures Board of Directors: Gifford Miller (Chair),
Margaret Anadu, Gerrard Bushell, Michael Connor, Rus-
sell Dubner, Gretchen Dykstra, Blake Foote, Lisa Go-
mez, Jalak Jobanputra, David Lebenstein, Eric S. Lee,
Monisha Nariani, Andrew Reicher, John Siegal, Stephen
Sigmund, Thomas Vecchione and Robert Zimmerman.
Cover ?ickr/Delkarm
CONTENTS
INTRODUCTION 3
AN ALTERNATIVE ROUTE TO ECONOMIC SUCCESS 10
Entrepreneurship offers a vehicle to both economic self-
suf?ciency and neighborhood development, but many New
Yorkers don’t see it as an option
UNDERGROUND ENTREPRENEURS 12
If cultivated, the ‘side-hustles’ common in many low-income
neighborhoods could blossom into mainstream businesses
BARRIERS TO ENTREPRENEURSHIP 13
For low-income New Yorkers born in this country owning their
own business may be a foreign concept
OPENING DOORS 20
Although few service providers focus on low-income
entrepreneurship, several promising organizations—and
models—do exist
TEACHING ENTREPRENEURSHIP 22
Few schools provide instruction in these skills but some
promising models exist for how it can be done
A NEW LAUNCH PAD FOR LOW INCOME ENTREPRENEURS 26
NYCHA is home to an unmatched concentration of low
income New Yorkers, but few residents are turning to
entrepreneurship
GETTING TECHNICAL 28
New York City has a number of small business assistance
programs, but most of them aren’t reaching low-income
residents
THE WORKFORCE SYSTEM 30
The city’s centers could provide a huge help to low-income
entrepreneurs
RECOMMENDATIONS 31
ENDNOTES 35
LAUNCHING LOW-INCOME ENTREPRENEURS
NEW YORK CITY IS NOW IN THE MIDST OF A NEW GOLDEN AGE OF
entrepreneurship. In recent years, mid-career investment bankers, lawyers and
media professionals have bounced back from layoffs by striking out on their
own, opening everything from food trucks and restaurants to digital marketing
agencies. Twenty-something college grads facing the worst job market in
decades have turned to entrepreneurship in droves, establishing Internet
startups, design firms and countless other new ventures. And immigrants from
Washington Heights to Sheepshead Bay have continued to open food carts,
franchises and other businesses at a rapid clip.
One would think that recent economic conditions—not only an extremely
high jobless rate, but a changing economy offering few middle-income jobs for
individuals without a bachelor’s degree—would also prompt a significant uptick
in the number of native-born New Yorkers from low-income backgrounds
who see entrepreneurship as a pathway out of poverty. However, this does not
appear to be the case.
Interviews we conducted for this report with small business experts,
microfinance groups, entrepreneurs and community leaders suggest that low-
income New Yorkers who were born in the United States are starting businesses
at a fairly low rate. Our analysis of self-employment rates in neighborhoods
across the five boroughs confirms this. Each of the 10 ZIP codes in the city
with the lowest rates of self-employment have median incomes below $33,000,
and in all but one the share of the population that is native-born exceeds the
city average. In contrast, neighborhoods with similarly low median incomes
where most residents are foreign-born have higher-than-average rates of
entrepreneurship. Meanwhile, native-born New Yorkers who live in affluent
neighborhoods have among the highest rates of self-employment in the city.
Given how much capital it takes to start a business, and how much risk is
involved, it is hardly surprising that many asset-poor New Yorkers have shied
away from entrepreneurship. However, at a time when so many newly created
jobs offer low wages and limited opportunity for economic mobility, it is time
for policymakers, economic development officials and workforce development
professionals to embrace entrepreneurship as one route for low-income New
Yorkers to achieve economic self-sufficiency.
This report concludes that it is eminently possible to expand the number
of low-income entrepreneurs in New York. As this report documents, while
relatively few low-income minorities are starting formal businesses, there is
no lack of entrepreneurial spirit or creativity among the native-born poor—
and many earn money from “side-hustles.” Ample evidence suggests that a
more strategic focus on promoting, teaching and supporting entrepreneurship
in New York and other cities could have a big impact.
This report provides the most comprehensive
examination of low-income entrepreneurship in
New York. Funded by the Ewing Marion Kauff-
man Foundation, the report documents current
self-employment rates among low-income people
(both native-born and foreign-born), details the
obstacles that keep larger numbers of native-born
individuals from starting businesses and assesses
how entrepreneurship among low-income indi-
viduals is currently encouraged and supported
in New York. The study also features a snapshot
of programs in other cities and states that effec-
tively promote and support low-income entre-
preneurship. The report is based on an extensive
data analysis and interviews with more than 75
entrepreneurs, small business and microfinance
experts, community development leaders, work-
force development practitioners, economic de-
velopment officials and educators—both in New
York City and around the nation.
Entrepreneurship has been a proven ticket to
financial empowerment and economic mobility for
countless immigrants—a fact that the Center doc-
umented in our 2007 report, “A World of Opportu-
nity.” In that study, we showed that massive num-
bers of immigrants in New York, Boston, Houston
and Los Angeles have turned to entrepreneurship
and in doing so have transformed neighborhoods
as well as their own economic fortunes. Some of
these entrepreneurs have been wildly successful,
generating numerous jobs for their communities
and significant financial rewards for themselves.
Many others simply make enough to live on. Most
turned to entrepreneurship in the first place be-
cause they saw it as the quickest and most logical
path for them to provide for their families.
But while so many immigrants—including
newcomers who are both poor and poorly edu-
cated—have turned to entrepreneurship, many
fewer native-born poor people have done so.
Citywide, the native-born self-employment
rate is 8.6 percent, which is considerably lower
than the foreign-born self-employment rate of
10.9 percent.
1
But even this modest rate is in-
flated because it includes affluent native-born
entrepreneurs, particularly in Manhattan and
Brooklyn. For example, in Manhattan, roughly
97,000 native-born residents—or 13.3 percent
of the working-age native born population—are
self-employed, compared to only 124,000 (or just
6.7percent) in the other four boroughs combined.
2
In the Bronx, Queens and Staten Island, the
native-born self-employment rate is roughly half
that of the foreign-born self-employment rate. In
the Bronx, where working-age residents tend to
be poorer and less educated than people in the
rest of the city and nation, only 17,000 native-
born residents (4.4 percent of the total) have
started their own incorporated or unincorporat-
ed businesses, compared to 33,000 foreign-born
residents (10.2 percent). In Queens, where nearly
48 percent of residents are foreign-born, 35,700
or 6.3 percent of native-born residents are busi-
ness owners while nearly 90,000 or 11.5 percent
of immigrants are. In Staten Island, 6.7 percent
of native-born residents are self-employed, com-
pared to 10.5 percent of immigrants.
3
Similar trends are apparent within individ-
ual low-income neighborhoods. For instance, in
the Highbridge/South Concourse section of the
Bronx, the native-born self-employment rate (3.8
percent) is less than a third the foreign born self-
employment rate (12.9 percent). Meanwhile, the
native-born self-employment rate is less than
half the foreign-born self-employment rate in
several other disadvantaged communities, such
as Central Harlem (7.3 percent native-born vs.
16.8 percent foreign-born), Jamaica (3.6 percent
vs. 9.2 percent), Morissania/Belmont (4.1 percent
vs. 11.5 percent) and Ozone Park/Woodhaven (4.9
percent vs. 13.4 percent).
4
Overall, there is a remarkably strong correla-
tion between self-employment, median income
and place of birth at the neighborhood level.
This was apparent when we examined self-em-
ployment rates in the city’s 55 Census-defined
neighborhoods. We divided the 55 neighborhoods
into three groups—a bottom third, representing
the 18 neighborhoods with the lowest rates of
self-employment; a middle third featuring the 18
neighborhoods with the next highest rates of self-
employment; and a top third of the 19 neighbor-
hoods with the highest self-employment rates in
the city.
Center for an Urban Future Launching Low-Income Entrepreneurs
4
The bottom third—18 neighborhoods with
self-employment rates between 3.9 percent and
7.4 percent—are both poorer than the rest of the
city and have a disproportionate share of native-
born residents.
5
Averaged together, the 18 neigh-
borhoods with the lowest self-employment rates
have a median income of $25,150, a foreign-born
share of 32.2 percent and a 6.1 percent self-em-
ployment rate. For example, Brownsville/Ocean
Hill has a 4.5 percent self-employment rate, a
median annual income of $19,900 and a 72 per-
cent native-born population. The Soundview/
Parkchester area of the Bronx has a 5.6 percent
self-employment rate, a median annual income of
$22,700 and a population that is 70 percent native
born. Additionally, East New York, Co-op City, the
Rockaways, Morrisania, Bed-Stuy, East Harlem,
Mott Haven and Staten Island’s North Shore all
have higher than average proportions of native-
born residents, low median incomes and among
the lowest self-employment rates in the city.
In comparison, the middle third—18 neigh-
borhoods with self-employment rates between
7.4 percent and 9.8 percent—actually had lower
median annual incomes than the bottom third
($23,718, on average) but much higher levels of
foreign-born residents. In all but two of these 18
neighborhoods, the share of the population that
is foreign-born exceeds the citywide average
(36.8 percent). For instance, in Jackson Heights,
where 63 percent of residents are foreign-born,
the median annual income is $22,900, but the
self-employment rate is 9.6 percent. In Univer-
sity Heights/Fordham (40 percent foreign-born),
the median income is just $14,811 but the self-
employment rate is 9.3 percent. Other neighbor-
hoods with median incomes below $25,000 but
fairly high rates of self-employment include Elm-
hurst/Corona (9.3 percent), Sunset Park (9.1 per-
cent) and Bensonhurst (9.0 percent).
The native-born residents who are turning to
entrepreneurship in greater numbers have more
financial resources. Greenwich Village, the Upper
West Side, the Upper East Side and Turtle Bay all
have some of the highest self-employment rates
in the city and are also among New York’s wealth-
iest neighborhoods, with median annual incomes
of between $59,600 and $70,700. Brooklyn’s Park
Slope, Carroll Gardens and Brooklyn Heights—
with self-employment rates of 12.3 percent and
higher—all have lower median annual incomes
than the top neighborhoods in Manhattan, but
they are still higher than average, and residents
have much higher levels of educational attain-
ment. (Overall, the 19 neighborhoods with high-
est self-employment rates have an average me-
dian income of $38,583, a foreign-born share of
32.5 percent and a self-employment rate of 12.6
percent.)
Our research uncovered additional data sug-
gesting that low-income, native-born residents
in New York are not pursuing entrepreneurship
in large numbers. For instance, we examined the
number of establishments per capita for the 50
ZIP codes in the city with the lowest median in-
comes—all of which have median individual in-
comes under $25,000.
6
The ZIP codes with a larger
Sources: 2007-2011 American Community Survey
13.3%
6.7%
12.3%
10.6%
Manhattan Other 4 Boroughs
Self-Employment Rates by
Nativity, Manhattan vs.
Other Boroughs
Native-born Foreign-born
Center for an Urban Future Launching Low-Income Entrepreneurs
5
share of native-born residents than the city aver-
age have 1.2 establishments per capita, whereas
the ZIP codes with a smaller percentage of na-
tive born residents than the city average have 1.9
establishments per capita. For example, there are
just 0.7 establishments per capita in Bed Stuy’s
11221 ZIP code, where the median income is
$20,667 and 73.4 percent of the population is na-
tive-born. However, in Bensonhurst’s 11204 ZIP
code, which has a similar income level ($21,281)
but a smaller share of native-born residents (54
percent), there are 2.4 establishments per capita.
7
Additionally, public housing developments
across the five boroughs—where nine out of ten
residents are black or Latino, and the median
household income is $20,700—appear to have the
lowest rates of business formation in the city. In
2012, there were approximately 218,000 working-
age residents living in New York City Housing Au-
thority (NYCHA) buildings, but only 286, or 0.13
percent, reported owning their own business.
“Entrepreneurship among low-income, na-
tive-born minorities is quite low,” observes An-
dre Taylor, founder of the Taylor Insight Group,
a New York-based consultancy that encourages
entrepreneurship among minorities. “While there
have been statistics suggesting occasional surges
in entrepreneurial activity among African-Amer-
icans, my experience among the minority popula-
tion in general is a resistance to launching a busi-
ness.”
8
Citywide, native-born Whites make up 39 per-
cent of all self-employed workers (59 percent of
whom have at least some college education), com-
pared to just 5.6 percent for African Americans, 5
percent for native-born Hispanics and 1 percent
for native-born Asians. In the Bronx, Brooklyn
and Queens, foreign-born residents make up the
majority of the self-employed, but among the na-
tive-born in those boroughs, whites predominate:
In Brooklyn, 36 percent of the self-employed are
native-born White, compared to 7 percent African
American and 5 percent native-born Hispanic. In
4.4%
8.3%
13.3%
6.3%
6.7%
8.6%
10.2%
9.7%
12.3%
11.5%
10.5%
10.9%
Bronx Brooklyn Manhattan Queens Staten Island NYC
Self-Employment Rates by Borough, Native-born vs. Foreign-born
Native Born Foreign Born
Sources: 2007-2011 American Community Survey
Center for an Urban Future Launching Low-Income Entrepreneurs
6
Queens, where foreign-born residents make up
the vast majority of business owners, 22 percent
are native-born White, compared to just 5 percent
African American and 3 percent Hispanic.
The different rates of entrepreneurial activ-
ity by nativity and race are not unique to New
York. A 2013 report by the Kauffman Foundation
found that 490 out of every 100,000 immigrants
in the U.S. start a business each month (an en-
trepreneurial activity rate of 0.49 percent), nearly
double the rate of native-born Americans (which
have an entrepreneurial activity rate of 0.26 per-
cent).
9
Additionally, the African American rate of
business creation is just 0.21 percent, lower than
the rates for whites (0.29), Asians (0.31 percent)
and Latinos (0.40 percent).
10
But while the rate of business formation
among low-income minorities is low, many of
those we interviewed believe there now exists a
tremendous opportunity to change this. “There is
a huge potential to increase the number of low-
income non-immigrant entrepreneurs,” says Don-
na Kelley, an associate professor of entrepreneur-
ship at Babson College.
“There is an opportunity to do something in
the Harlems and the Bed-Stuys and those other
communities where you have folks who can be
turned on and given the skills and tools to be en-
trepreneurs,” adds Sheena Wright, president and
CEO of United Way of New York City and former
head of the Abyssinian Development Corpora-
tion. “There are real opportunities and resources
that can be used to really move the needle on en-
trepreneurship for low-income people.”
With fundamental changes to the economy
punishing those without post-secondary cre-
dentials, Kelley, Wright and others believe more
low-income individuals could begin to view en-
trepreneurship as an attractive option. After all,
the manufacturing businesses that once offered
decent-paying jobs and an opportunity for mo-
bility for people with limited skills have largely
moved overseas, and a significant share of the
new jobs created in recent years offer extremely
low wages, no benefits and little opportunity for
upward mobility. In this economic environment,
those who previously shunned the idea of starting
a business in favor of the safer route of getting a
job might view entrepreneurship in a whole new
light.
There is also growing evidence that public and
private sector initiatives in New York and else-
where to promote and support entrepreneurship
among low-income people can have an impact—
from the annual Lemonade Day that gives young
people the confidence that they can be a success-
ful entrepreneur to programs that promote and
teach entrepreneurship to kids in public schools
or community colleges.
Perhaps most importantly, many residents
of disadvantaged communities are already dem-
onstrating significant entrepreneurial potential.
Much of this is under the radar of policymakers
and the media, but hundreds if not thousands of
low-income residents in New York are earning
income from informal “side-hustles,” from cut-
ting hair in their apartment to day care. “There
Sources: Bureau of Labor Statistics 2010
1%
5%
6%
39%
49%
Native-born
Asian
Native-born
Hispanic
Native-born
Black
Native-born
White
Foreign-born
Share of NYC’s Self-Employed
by Nativity and Ethnicity
Center for an Urban Future Launching Low-Income Entrepreneurs
7
is a tremendous opportunity here, because there’s
just such a huge amount of entrepreneurial tal-
ent, energy and desire,” says Magnus Greaves, a
serial entrepreneur who co-founded 100 Urban
Entrepreneurs, which supports young entrepre-
neurs from economically disadvantaged commu-
nities.
Increasing the number of low-income, native-
born entrepreneurs in New York, however, may
not be possible without first addressing the ob-
stacles that prevent many from even considering
entrepreneurship and make it difficult for those
who do start businesses to get off the ground. For
instance, people living in poverty often have lim-
ited exposure to entrepreneurial role models and
mentors, a problem since entrepreneurs often get
the confidence to start a business after seeing
family, friends and members of their communi-
ty succeed with their own ventures. Low-income
individuals are also more likely to have limited
financial literacy skills, not to mention paltry sav-
ings, poor credit histories and limited access to
friends and family who can help finance a new
business. And some are deterred from starting a
business because earning even meager income
from such a venture might cause them to lose gov-
ernment benefits, such as Medicaid, food stamps
or housing subsidies.
Meanwhile, even as New York economic de-
velopment officials have smartly ramped up sup-
port for entrepreneurs in recent years, there has
been little focus on encouraging more low-income
people to consider entrepreneurship. Although a
number of centers offer workshops and one-on-
one technical assistance for small business own-
ers and would-be entrepreneurs, several low-in-
come communities across the five boroughs lack
these resources. “We have a lot of entrepreneurial
assistance in New York City, but we have to do a
better job at connecting them to urban entrepre-
neurs and being sure we have right mechanism of
engagement in place,” says Bishop Mitchell Taylor,
founder and CEO of the East River Development
Alliance, a community organization headquar-
tered in Queensbridge Houses, the largest public
housing community in the nation.
Meanwhile, the workforce development cen-
ters that help jobless New Yorkers find work gen-
erally steer clear of recommending entrepreneur-
ship, and the already small number of programs
that teach entrepreneurship in the city’s public
schools have been cut back in recent years.
New York certainly isn’t the only city that
could be doing more. Marc Morial, the president
and CEO of the National Urban League and an
entrepreneur himself, says that policymakers
around the country have largely failed to make
expanding low-income entrepreneurship an eco-
nomic and educational priority. “We haven’t cre-
ated the kind of ecosystem which begins in high
school or junior high through community college
to nurture and support this idea.”
New York could be a leader in this area. As
we detail in this report, there are many achiev-
able steps that city economic development lead-
ers, community-based organizations, workforce
development providers and education officials
could take to expand the pool of low-income en-
trepreneurs. Doing so could make a world of dif-
ference for low-income New Yorkers, spark eco-
nomic growth in many distressed neighborhoods
and bolster the city’s overall economy.
EDUCATION AND ENTREPRENEURSHIP
In New York City, 59 percent of individuals who are self-employed have at least some college
education, compared to 53 percent nationally and 55 percent in New York State.
11
Self-employment is highest among people with a bachelor’s degree in every borough except for the
Bronx, where the largest percentage of self-employed workers has no more than a high school diploma
(though they are self-employed at a fairly low rate of 8.6 percent). In Manhattan, 29 percent of self-
employed workers have bachelor’s degrees, a greater portion than for any other level of educational
attainment. This is also the case citywide—those holding bachelor’s degrees make up the largest group
of self-employed at 32.6 percent.
Nationally, entrepreneurial activity rates are highest among those with the lowest levels of
educational attainment. According to the Kauffman Foundation, the rate of business creation is 0.52
for individuals with less than a high school degree, compared to 0.28 for college graduates.
Bottom Third: Neighborhoods
with Lowest Self Employment
Rates
Neighborhood
% self
em-
ployed
Median
income
for per-
sons 15+
years
(2010)
% of
popu-
lation
that is
for-
eign-
born
East New York/Starrett
City
3.9% $20,572 33.6%
Brownsville/Ocean Hill 4.0% $19,939 27.9%
Throgs Neck/Co-op City 4.3% $31,441 18.9%
Williamsbridge/
Baychester
4.8% $27,524 38.4%
East Harlem 4.8% $19,153 25.4%
Soundview/Parkchester 5.6% $22,698 29.8%
East Flatbush 5.8% $26,705 53.0%
North Shore 6.2% $30,513 24.6%
Jamaica 6.5% $25,958 40.0%
Mott Haven/Hunts Point 6.8% $13,022 28.7%
Queens Village 6.9% $33,032 42.0%
Rockaways 7.0% $25,240 27.2%
Flatlands/Canarsie 7.1% $32,873 41.0%
Pelham Parkway 7.1% $27,086 35.0%
Morrisania/Belmont 7.2% $13,741 28.1%
South Shore 7.2% $41,180 14.3%
Coney Island 7.3% $20,582 51.3%
Bedford Stuyvesant 7.4% $21,441 20.1%
Average 6.1% $25,150 32.2%
Middle Third: Neighborhoods
with Middle Range of Self-
Employment Rates
Neighborhood
% self
em-
ployed
Median
income
for per-
sons 15+
years
(2010)
% of
popu-
lation
that is
for-
eign-
born
Bushwick 7.4% $18,432 37.2%
Washington Heights/
Inwood
7.8% $19,201 49.4%
South Crown Heights 7.9% $24,036 45.4%
South Ozone Park/
Howard Beach
7.9% $27,083 46.5%
North Crown Heights/
Prospect Heights
8.1% $27,357 30.9%
Kingsbridge Heights/
Mosholu
8.1% $18,319 40.5%
Middle Village/
Ridgewood
8.2% $28,592 37.4%
Highbridge/South
Concourse
8.8% $16,001 39.4%
Riverdale/Kingsbridge 8.9% $31,599 32.0%
Bensonhurst 9.0% $21,870 52.9%
Sunset Park 9.1% $21,286 46.8%
Elmhurst/Corona 9.3% $22,384 66.9%
University Heights/
Fordham
9.3% $14,811 40.4%
Sunnyside/Woodside 9.4% $28,700 58.5%
Bay Ridge 9.4% $30,048 37.1%
Jackson Heights 9.6% $22,916 63.4%
Astoria 9.7% $28,479 43.7%
Flatbush 9.8% $25,817 45.8%
Average 8.8% $23,718 45.2%
Top Third:
Neighborhoods with Highest
Self-Employment Rates
Neighborhood
% self
em-
ployed
Median
income
for per-
sons 15+
years
(2010)
% of
popu-
lation
that is
for-
eign-
born
Sheepshead Bay/
Gravesend
10.0% $26,925 45.7%
Central Harlem 10.1% $23,621 22.1%
Mid-Island 10.1% $34,466 25.4%
Ozone Park/Woodhaven 10.1% $27,531 49.9%
Hillcrest/Fresh Meadows 10.8% $30,236 46.4%
Rego Park/Forest Hills 10.9% $39,867 51.3%
Morningside Heights/
Hamilton Heights
10.9% $22,389 34.7%
Williamsburg/
Greenpoint
11.4% $24,655 24.9%
Flushing/Whitestone 11.7% $27,695 54.7%
Borough Park 11.9% $21,329 34.3%
Lower East Side/
Chinatown
12.1% $24,839 35.6%
Brooklyn Heights/Fort
Greene
12.3% $40,540 18.9%
Stuyvesant Town/Turtle-
Bay
13.4% $63,499 23.5%
Bayside/Little Neck 13.5% $36,422 41.3%
Upper East Side 13.7% $70,675 21.4%
Chelsea/Clinton/
Midtown
14.8% $51,129 25.8%
Park Slope/Carroll
Gardens
16.1% $47,011 17.2%
Greenwich Village/
Financial District
17.9% $60,680 23.1%
Upper West Side 18.3% $59,584 21.2%
Average 12.6% $38,583 32.5%
Self-Employment Rates in New York City’s 55 Census-De?ned Neighborhoods
Neighborhoods with the lowest self-employment rates are predominantly low-income and native-born, while
those in the middle range are still low-income but with much higher percentages of foreign-born residents
Source: 2007-2011 American Community Survey
Entrepreneurship should never be the primary
route to economic empowerment for low-income
individuals. After all, starting a business is inher-
ently risky, and the failure rate is high even for
the affluent and well-educated. However, there
are compelling economic reasons why more low-
income New Yorkers should turn to entrepre-
neurship in the years ahead.
For decades, New York’s economy offered
clear pathways to the middle class for individuals
without a college degree. The city had hundreds
of thousands of jobs in the manufacturing, con-
struction and clerical fields that provided decent
wages and career ladder opportunities, even for
those with relatively little education. While some
of these pathways still exist, today’s economy is
producing fewer and fewer middle-income jobs
that are accessible to those without post-second-
ary career training. The result is that an alarming
number of New Yorkers who don’t have college
degrees are unemployed or stuck in low-wage,
dead-end jobs.
In this new economic environment, entrepre-
neurship offers a viable alternative path to eco-
nomic self-sufficiency and upward mobility.
“We’re no longer in a day when you work for
one company for 40 to 50 years and get a gold
watch at the end of the day,” says dt ogilvie, dean
of the E. Philip Saunders College of Business at
the Rochester Institute of Technology and former
director of the Center for Urban Entrepreneur-
ship and Economic Development at Rutgers Busi-
ness School. “In the old days, if your family came
up from the South and you got a job working in
the [manufacturing] plant, then you were able to
obtain a middle-class lifestyle. That’s more diffi-
cult today because they don’t have that obvious
path. For a lot of people, they’re never going to be
able to have that path, so they’re going to have to
create their own path. And entrepreneurship is a
way to do it.”
In 1950, manufacturing and trade comprised
over 50 percent of the city’s jobs and paid a high-
er hourly wage than the finance sector.
12
Now, the
manufacturing sector accounts for less than 2
percent of the city’s jobs.
13
According to a 2012 report by the National
Employment Law Project, since the first quarter
of 2001, employment has grown by 8.7 percent
in lower-wage occupations and by 6.6 percent in
higher-wage occupations. However, jobs in mid-
wage occupations have declined by 7.3 percent
during this time. The report also found that three-
fifths of all jobs lost during the recession paid
middle-income wages, whereas about three-fifths
of new jobs created during the recovery pay low
wages.
14
“When we look at where there are a large
number of jobs that are growing, many of those
are low-wage,” says Stephanie Luce, a professor
of labor studies at CUNY. “Unfortunately many of
them are not career-track jobs. If you’re a cashier
or retail sales person, what we find is that there is
just very little upward mobility.”
Of the 20 occupations in New York City that
are expected to grow at the fastest rate over the
next decade, 16 pay less than the national me-
dian household income of $49,445, and four pay
under the federal poverty threshold for a family
of four.
15
The two occupations with the highest
projected growth rates in New York City—home
health aide and personal care aide—offer annual
median wages of $20,000 and $19,000 respective-
ly.
16
Meanwhile, the vast majority of higher paying
jobs that are projected to increase over the next
decade require post-secondary training.
These economic trends have led to high un-
employment rates and low earnings for individu-
als with low levels of education. Indeed, the em-
AN ALTERNATIVE ROUTE TO ECONOMIC SUCCESS
Entrepreneurship offers a vehicle to both economic self-suf?ciency and neighborhood
development, but many New Yorkers don’t see it as an option
Center for an Urban Future Launching Low-Income Entrepreneurs
10
ployment participation rate (the percentage of
adults who either have jobs or who are seeking
work) for New York City residents is only about
50 percent. In 2010, during the peak of the Great
Recession, the unemployment rate for those with
less than a high school degree was 14.9 percent
and 10.3 percent for individuals with only a high
school diploma or GED, compared to 5.4 percent
for individuals with a bachelor’s degree.
Black and Latino men, in particular, experi-
ence unemployment rates that are consistently
higher than those for Whites and other ethnic
groups. In fact, unemployment for black and La-
tino males more than doubled during the course
of the recession, when the city lost over 170,000
jobs.
New Yorkers with limited educations are not
only less likely to have jobs than more highly
educated residents these days; they also earn a
lot less. According to Census data, a high school
graduate in New York City between the ages of 25
and 29 earns an average of about $17,000 a year.
One year of college without a degree bumps the
average income up to $22,000.
In recent years, the number of low-paying jobs
in the city has been on the rise. In 2012, a whop-
ping 35 percent of adult New Yorkers worked
in low-wage jobs, up from 31 percent in 2007.
17
Alarmingly, 47 percent of residents in the Bronx
and 40 percent in Brooklyn worked in low-wage
jobs.
18
Even though starting a business isn’t a vi-
able option for many low-skilled workers, creat-
ing new paths into the middle class is extremely
important in this economy, says Thomas Boston,
an economist at the Georgia Institute of Technol-
ogy who specializes in entrepreneurship. “Even
when the economy turns around and begins to
grow again,” says Boston, “it’s not going to create
the kinds of jobs that were available in the past.”
“The low-wage worker is always going to be
on the chopping block first,” agrees Catherine
Barnett, executive director of Project Enterprise.
“So just out of necessity people are going to be—
OFF THE STREETS AND INTO A BUSINESS
Re-Connect is a small-scale entrepreneurship initiative based in Bedford-Stuyvesant run by Father Jim
O’Shea, a Catholic priest from the Monserrate church. The initiative helps young men between the
ages of 17 and 24 develop a taste for on-the-books entrepreneurship in an effort to get them off the
streets and into a legitimate trade. Many participants have little education and have recently served
time in prison.
Re-Connect organizes a stand that the young men both staff and supply which sells fruits,
vegetables, and baked goods. Currently eight men sell these goods at farmers markets and church
markets in Bedford-Stuyvesant. A local church provides the kitchen space for the production of baked
goods. In addition to the entrepreneurial side of the operation, Re-Connect provides the men with nine
hours a week of GED classes, allowing them to pursue their education while earning a modest income.
Father O’Shea is looking to start a catering business with the food that the men currently sell and hopes
to rent industrial kitchen space to expand.
Unlike some programs that help low-income young men throughout the city, at Re-Connect there
is no time limit on a participant’s involvement. After a young man leaves the program he is encouraged
to return as a mentor to the younger participants.
Many of the eight young men that are involved in the project were drug dealers before they
started working with Father O’Shea. While he does not condone selling drugs, Father O’Shea says the
experience has equipped most of these young men with astute business acumen. “They all understand
money and they know what it means to work.” Father O’Shea says. The excitement of entrepreneurship
also may appeal to these young men, already prone to risk taking, especially in contrast with the low-
skilled jobs that are otherwise available to people with no marketable credentials or skills.
Re-Connect is just one of many programs that, if brought to scale, could provide opportunities for
young people from poor and working-class neighborhoods to improve their economic prospects and
participate in the city’s formal economy. “There’s no end to the amount of guys that qualify for this,”
says Father O’Shea.
Many of the city’s poorest neighborhoods have
a dearth of locally-owned businesses, but this
doesn’t mean there aren’t entrepreneurial peo-
ple. Far from it. Indeed, thousands of low-income,
native-born residents across the five boroughs
are already engaged in entrepreneurial activi-
ties; they just take place outside normal economic
channels.
All over the city, there are barbers cutting
hair in their living rooms, people baking cakes for
neighborhood birthdays, teens deejaying parties,
moms operating informal child care centers, men
washing windows of local businesses, kids selling
M&M’s on the subway, amateur photographers
taking head shots for aspiring models and tech-
savvy high school students building Websites for
friends. On Harlem’s 125th Street between Lex-
ington and St. Nicholas Avenues, we found at least
a half dozen people doing business informally, in-
cluding a man who sells seafood cooked on-site
and another who sells CDs out of his van.
“It’s all over,” says Catherine Barnett, execu-
tive director of Project Enterprise, speaking of
the number of low-income New Yorkers who earn
income by operating “side-hustles” like these.
“It’s very prevalent, particularly in this econom-
ic environment. People are always looking for a
side-hustle because people need to patch income.
That’s the reality. That’s not going away anytime
soon.”
For many low-income native-born house-
holds, the informal economy provides invaluable
supplementary income and presents a dynamic
vehicle for harnessing and promoting entrepre-
neurship. “You have a side-hustle, you are an en-
trepreneur,” says Magnus Greaves, co-founder of
100 Urban Entrepreneurs. “It might not look like
a traditional business, but that’s a business. The
problem is that not enough of them are turned
into formal businesses.”
Regina Smith, executive director of the Har-
lem Business Alliance, says local government
should try to capitalize on the enterprise of low-
income, native-born people. “We have nothing but
talent and people who can operate businesses and
do it well,” she says. “The impediment [is] transi-
tioning them from the underground economy to a
legitimate business.”
There’s also a number of illegal side hustles,
from the numbers joint to “the local street phar-
macist,” that are run by entrepreneurial-minded
people. “There’s a lot of creativity; we have to
put people in situations where they can unleash
that creativity,” says dt ogilvie from the Roches-
ter Institute of Technology. “Right now, the choice
is limited for the kids to ‘should I go on welfare,
should I get into a life of crime to support my-
self and my family or maybe do side hustles on
the side.’ But if we can give them another choice
where they can get remunerated for their work by
having their own business, then they’re going to
be better off.”
UNDERGROUND ENTREPRENEURS
If cultivated, the ‘side-hustles’ common in many low-income neighborhoods could blossom into
mainstream businesses
“We have nothing but
talent and people who can
operate businesses and do
it well ... The impediment
[is] transitioning them from
the underground economy
to a legitimate business.”
Center for an Urban Future Launching Low-Income Entrepreneurs
12
There are a number of reasons why relatively
few low-income, native-born New Yorkers start
businesses. Not surprisingly, access to capital is
a major challenge. After all, launching a business
requires a significant amount of financing, and
many low-income people have little of their own
savings, limited connections to friends and fam-
ily with wealth and, in many cases, poor credit
histories. But our research finds that other more
fundamental problems have kept many people in
disadvantaged communities from even consider-
ing entrepreneurship. The following are some of
the challenges.
Limited Exposure to Role Models
On a stretch of Liberty Avenue in Richmond
Hill, immigrant-owned businesses abound. From
Asian-owned corner markets, to Guyanese re-
tail clothing or “fashion” stores, to the Hispanic-
owned nail salon, the operators of these small
businesses, more often than not, look like their
patrons. But in many low-income communities
with a large native-born population, there are not
only few native-owned businesses, but few busi-
nesses at all. Even the handful of fast food fran-
chises are owned by people from outside of the
community, many of them immigrants.
This lack of role models is a major reason
why the native-born go into entrepreneurship at
a lower rate. Andre Taylor explained how seeing
local business owners and entrepreneurs, includ-
ing his father, opened up the realm of possibili-
ties for him. “Seeing it happen reinforced that it
was an option,” says Taylor who grew up in Crown
Heights in the 1960s and ’70s.
Taylor recalls seeing the respect his father
garnered in the community as he sold furniture
door to door. He says seeing people like him who
were well respected and financially self-suffi-
cient—and then connecting the dots between
their status and business ownership—made him
believe that he too could be an owner. Exposure
to examples of ownership in your own immediate
reality is imperative to fostering entrepreneur-
ship—you have to see it to believe it.
Regina Smith with the Harlem Business Alli-
ance agrees. She says, in reference to the black
native-born community in particular: “Our youth
don’t necessarily see enough examples outside
of entertainment and sports. Unfortunately, other
than barbershops and beauty salons and some
restaurants, we don’t own too many retail estab-
lishments, and we don’t operate as many busi-
nesses as we used to.”
Instead of seeing people who look like them
owning and operating small businesses, they see
them working for someone else. This sends a sub-
conscious message to those born in the U.S. that
ownership is not for them. “If your family back-
ground isn’t entrepreneurship, becoming a first-
generation entrepreneur is a heavier lift. It’s a
much bigger leap and the whole culture around
being an entrepreneur is not familiar to you,” says
Nancy Carin, executive director of the Business
Outreach Center Network.
On the other hand, seeing people within one’s
own culture and ethnic or racial group owning
businesses can inspire others to become entre-
preneurs. Timothy Stearns, executive director and
founder of the Lyles Center for Innovation and
Entrepreneurship in Fresno, CA, emphasizes the
importance of role models. “They can see some-
one that looks a lot like them and they discover
that they can do what they’d hoped to do,” he says.
Failing to Promote Entrepreneurship as a Ca-
reer Option
Without much exposure to entrepreneurs in
their own family or neighborhood, low-income
individuals may need encouragement from other
BARRIERS TO ENTREPRENEURSHIP
For low-income New Yorkers born in this country owning their own business may be a foreign
concept
Center for an Urban Future Launching Low-Income Entrepreneurs
13
Establishments per Capita in NYC’s 50 Poorest ZIP Codes
Low-income ZIP codes with high foreign born populations have signi?cantly more local businesses.
ZIP Codes with Fewest Establishments per Capita
ZIP Code Neighborhood
Number of
Establishments
Population
Establishments
/ capita (%)
Population that
is foreign-born
(%)
Median Indi-
vidual Income
11692 Arverne 90 18,540 0.5% 25.72% $21,176
11233 Stuyvesant Heights 364 67,053 0.5% 24.20% $24,008
11239 Starett City 76 13,393 0.6% 30.06% $16,328
10456 Morrisania 581 86,547 0.7% 32.03% $13,351
11221 Bushwick / Bedford-Stuyvesant 566 78,895 0.7% 26.56% $20,667
10039 Central Harlem, North 183 24,527 0.7% 19.53% $19,210
10472 Soundview 506 66,358 0.8% 37.73% $17,621
11208 Cypress Hills 745 94,469 0.8% 35.46% $21,082
10453 Morris Heights 630 78,309 0.8% 39.08% $14,769
11691 Far Rockaway 490 60,035 0.8% 32.62% $19,940
Zip Codes with Most Establishments per Capita
ZIP Code Neighborhood
Number of
Establishments
Population
Establishments
/ capita (%)
Population that
is foreign-born
(%)
Median Indi-
vidual Income
11355 Flushing / Murray Hill 1,832 85,871 2.1% 70.41% $21,999
11220 Sunset Park 2,175 99,598 2.2% 53.03% $18,721
11204 Parkville / Bensonhurst 1,902 78,134 2.4% 44.05% $21,281
11223 Gravesend / Homecrest 1,948 78,731 2.5% 45.40% $22,269
11219 Borough Park 2,581 92,221 2.8% 39.84% $18,870
11211 Williamsburg 2,766 90,117 3.1% 20.68% $22,408
10002 Chinatown / Lower East Side 2,872 81,410 3.5% 44.57% $20,103
11232 Industry City / Sunset Park 1,174 28,265 4.2% 45.51% $20,973
11354 Flushing / Murray Hill 2,704 54,878 4.9% 61.90% $23,920
10474 Hunts Point 663 12,281 5.4% 26.57% $13,928
Sources: 2010 Census. Census County Business Patterns 2010.
sources if they are to see business ownership as a
viable career option. “It’s a matter of helping peo-
ple see the potential that entrepreneurship can
be a career,” says dt olgilvie.
However, our research finds that there are
very few efforts in New York City to promote en-
trepreneurship as a career path for individuals in
disadvantaged communities.
New York City has a wealth of government of-
fices and nonprofit intermediaries that support
existing small business owners as well as indi-
viduals who wish to start their own businesses.
These range from city-sponsored Small Business
Solutions Centers and federally-funded Small
Business Development Centers to chambers of
commerce and microfinance groups like Accion,
the Business Outreach Center and Project Enter-
prise. But these entities primarily serve individu-
als who already own a business or are inclined to
start one. There is little effort to encourage other
people to consider entrepreneurship.
The city’s school system offers relatively few
programs that teach entrepreneurship—and the
number of such programs has declined in recent
years. The city’s workforce development system,
which is often the first stop for unemployed New
Yorkers who are seeking new opportunities, does
virtually nothing to promote entrepreneurship
as one option for economic self-sufficiency. And
while city economic development officials have
smartly embraced entrepreneurship in recent
years, little attention has gone into initiatives that
would increase the overall pool of low-income
entrepreneurs.
“More people should be exposed to [entre-
preneurship],” says Steve Mariotti, founder of the
Network for Teaching Entrepreneurship (NFTE).
“To me it’s about self-actualization. Somebody
can’t be self-actualized if they don’t know the al-
ternatives.”
“People need to understand that it’s OK to be-
come an entrepreneur just in order to make the
$50,000 salary that you couldn’t make elsewhere,”
adds Magnus Greaves. “Becoming an entrepre-
neur and starting your own business doesn’t mean
you have to go all-in and become a multi-million-
aire. We need to encourage people and let them
know that it’s OK to start with different types of
goals. We’re not all trying to be Mark Zuckerberg.”
The Importance of Mentors
In the absence of entrepreneurial parents and
childhoods spent working in the family business,
potential entrepreneurs need exposure to men-
tors with their own businesses. Knowing how to
implement a business plan and manage a busi-
ness day-to-day can’t just be taught at a work-
shop, or even a nine-week course, because no one
can anticipate all the hiccups and challenges in
advance. Even more importantly, a classroom is
In the Bronx, native-born
individuals account for
67%
of the overall
population
34%
of the borough’s
self-employed
“[T]hose individuals
who are successful
at starting a business
generally have had
someone in their
immediate family or an
associate who was also
an entrepreneur. ”
Center for an Urban Future Launching Low-Income Entrepreneurs
15
not always an appropriate setting in which to pick
up the skills of running a business. Based on their
hands-on experience, mentors can provide direc-
tion in the context of real-world problems.
“Role models are really important,” says Thom-
as Boston. “My research has found that individu-
als who start businesses, particularly those indi-
viduals who are successful at starting a business
generally have had someone in their immediate
family or an associate who was also an entrepre-
neur. And that desire to become an entrepreneur
was nurtured within that environment.”
Beyond solving business problems, mentors
teach budding entrepreneurs a wide variety of
soft skills, ranging from how to network and ap-
proach potential clients to how to behave at din-
ner. “If you’re trying to work as a business per-
son, trying to negotiate with someone and build
a relationship, you want to make sure you know
the proper way of going about doing that, how to
present yourself to people, how to work a crowd,
selling and negotiating—all of these elements are
important,” says Timothy Stearns at the Lyle Cen-
ter.
However, like role models, mentors are few
and far between in many low-income, native-
born communities in New York.
Basic Financial Literacy
Financial issues like developing a savings
plan, paying off debt and balancing a checkbook
have a major impact on one’s ability to raise capi-
tal and make smart decisions about running a
business. Unfortunately, too many low-income
residents were never taught about basic financial
literacy. Many didn’t learn it from their parents,
and it simply wasn’t taught elsewhere.
Catalina Castano, former director of the
Brooklyn Small Business Development Center,
says this is the biggest problem among her clients.
“Financial management among the low-income is
a huge problem—personal financial management.
They came to us with credit issues that affect their
ability to get loans to grow their business, so we
tried to refer them to places where they can get a
strong financial education on the personal side.”
When Diane Williams was a little girl, she re-
members her father sitting at the kitchen table,
balancing the family’s finances and filing away
bills. She says the family called him The God-
father because everyone came to him for loans,
and, in her words, if you didn’t pay him back, “He
wasn’t loaning you nothing else.”
Williams’ exposure to managing the family’s
finances, however, is exceptional. “Non-immi-
grants don’t have the family and financial lead-
ership,” she says. “We were never taught how to
… manage money, and a lot of times it was living
paycheck to paycheck. Those that were on social
services never had the opportunity to do anything
but that, and it became generational.”
Despite her own exposure to managing fi-
nances, Williams says that it remains one of her
biggest challenges as an entrepreneur. “At the end
of the day it’s hard to do your balance sheet and
separate your business expenses from your per-
sonal expenses,” she says.
Williams is hardly alone in this. “A lot of peo-
ple don’t understand the difference between their
business’ money and their personal money,” says
Ed Rogoff, a professor at Baruch College. “We’ve
run programs here for people who fit this de-
scription. So they need a level of financial literacy
first and then they need some business knowl-
edge,” he says. “Take somebody who has never
had a checking account, you start talking about
starting a business it immediately sails into areas
they’re not familiar with.”
Access to Capital
In another lifetime, Sheena Wright, presi-
dent and CEO of United Way of New York City
and former head of the Abyssinian Development
Central Harlem
Foreign-born
Self-employment
16.8%
Native-born
Self-employment
7.3%
Center for an Urban Future Launching Low-Income Entrepreneurs
16
Corporation, practiced law at a technology com-
pany. She says she had a black friend and a white
friend who were both trying to raise funding at
around the same time. When her white friend and
his partners passed the hat around to their fam-
ily and friends, they raised over $500,000. When
her black friend, who had come from a more mod-
est family but went on to graduate from Harvard,
passed the hat around to his family he wasn’t able
to raise much of anything. “He got a lot of con-
gratulations and IOUs and ‘Can you lend me some
money?’ but he could never get the money that he
needed to [get] that beta product out to market,”
Wright says.
Like many immigrant entrepreneurs, Wright’s
white friend was able to call upon family and
friends to give him that initial boost. While her
black friend had the networks and financial
management and literacy skills to put together a
business plan, he lacked the ability to put some
of his own skin in the game. The absence of gen-
erational wealth within his immediate circles was
the difference between failure and success. This
inability to access needed capital represents an-
other hurdle for the low-income, native-born.
“You can have all of the skill and even have
some of the networks to get to that second level,
but if you don’t have the angel investment—that
friends and family round [of financing]—it can
just stop you forever,” says Wright. “There are
lots of low-income people that are going to great
schools and want to be entrepreneurs but don’t
have family and friends that can invest in entre-
preneurial pursuits.”
A 2006 study on barriers to entrepreneurship
details how liquidity constraints, such as limits
to the amount a person can borrow, significantly
limited creation and growth of businesses.
19
Busi-
ness counselors and loan officers that we spoke
with for this report consistently cited this as one
of the biggest hurdles their clients face in trying
to start a business.
While access to capital is an issue for all en-
trepreneurs and small business owners, it’s par-
ticularly acute for the very low-income.
Most entrepreneurs start a business using
their own resources or their family’s resources, he
says, including home equity lines or credit cards.
“They might bootstrap, meaning they take reve-
nue earned from their jobs to put into their com-
panies to get them going,” says Thomas Boston.
But, he adds, very low-income individuals may
have poor credit reports and may not have credit
cards, home equity to draw upon or a network of
relatives to loan them money to get started. This
makes it very difficult to launch a new venture.
Starting a business takes an estimated 4.4
times the median net worth of the average afri-
can-american household ($5,677) and four times
the median net worth of the average Latino house-
hold ($6,325), compared to just 22 percent of the
median net worth of the average White household
($113,149).
20
Meanwhile, the microfinance organizations
that do offer small loans for lower-income start-
ups tend to focus their lending on immigrants.
For instance, an estimated 75 percent of the small
business loans in New York made by Accion, one
of the country’s largest microfinance organiza-
tions, goes to immigrants. And some potential
entrepreneurs with very low incomes may not be
able to get help even from non-profit micro-lend-
ers because the prospective business owner does
not have the collateral necessary to acquire a loan
and may face a host of other issues including bad
credit and high personal debt.
A Hole in the Safety Net
Starting a business involves taking a big risk,
but many low-income, native-born New Yorkers
are risk averse. One reason is that they have a lot
to lose. While many immigrants don’t have access
to public benefits, from welfare and public hous-
ing subsidies to Medicaid, native-born poor peo-
Highbridge/South Concourse
Foreign-born
Self-employment
12.9%
Native-born
Self-employment
3.8%
Center for an Urban Future Launching Low-Income Entrepreneurs
17
ple often depend on these safety net programs.
Because of the way these systems function, recip-
ients can risk losing their benefits if they attempt
self-employment.
“New immigrant communities don’t benefit
from social safety nets to the extent that low-in-
come, non-immigrants might,” says Brian Gurski,
a Queens-based business advisor and former di-
rector of the LaGuardia Community College Small
Business Development Center.
Several people interviewed for this report
told us that the possibility of losing public ben-
efits was a major deterrent to low-income people
starting formal businesses. Low-income people
who are receiving public assistance “have a big
concern with making more money than their ben-
efits allow,” says Elisa Balabram, director of the
Women’s Business Center in Brooklyn. According
to Balabram, it’s not just Temporary Assistance
for Needy Families (TANF) benefits, but Section
8 housing vouchers, Medicaid, food stamps and
many others.
This was also a finding of a 2003 study by
FIELD, a center at the Aspen Institute that focus-
es on microenterprise. It found that while many
benefits recipients were interested in entrepre-
neurship and primed to be self-employed part or
full time, program stipulations and regulations
often hindered them from pursuing self-employ-
ment for fear of losing their benefits.
The FIELD report also found that what count-
ed as “work” and “employment” in the TANF pro-
gram often conspired against recipients looking
to self-employment, even though incorporating
a path to self-employment and business creation
has been successful in the few states that allow
it. The FIELD study found that after two years in
a TANF-sponsored self-employment program, 37
percent of participants were still self-employed,
while 43 percent went on to find jobs with other
companies. After two years, household income
among participants increased by 87 percent on
average.
Lack of Confidence
Historic bias has led some low-income peo-
ple born in the U.S. to so mistrust the system that
they are reluctant to try to go out on their own. “I
think there is a burnout among American citizens
who go, ‘you know what, the system [is] against
us, it’s not going to happen.’ Whereas that immi-
grant comes in and says, ‘you know what, back
home, they didn’t have running water, here they
do. This place is great, and I can make it happen,’
So there’s an optimism that they come with,” says
George Acevedo, coordinator of the Entrepre-
neurial Assistance Program.
This kind of confidence, trust and optimism
exuded by so many immigrants is a crucial part
of the entrepreneurial mindset that many low-
income, U.S.-born lack. The immigrant entrepre-
neur has already taken a big risk just by leaving
his or her country of origin to seek out better op-
portunities in the U.S. Compared with that, tak-
ing a chance on a new business venture may not
seem nearly as daunting. But for a low-income,
native-born person, even a very low-wage service
job with little potential for growth is more reliable
than taking a chance on a business venture.
The Entrepreneurial Ecosystem
Trish Truitt, special projects manager for the
National Association for Community College En-
trepreneurship has repurposed a well-known
proverb: ‘It takes a village to raise an entrepre-
neur.’ “The biggest thing for entrepreneurs with
no capital is they need community and they need
infrastructure,” says Truitt.
The four components that most interview sub-
jects for this report identified as key to entrepre-
neurial success are networks, mentors, capital and
knowledge. Together, these factors create a kind
of entrepreneurial ecosystem, a structure and
framework that provides support and a clear path
to follow. Aside from city- and school-sponsored
business incubators, however, few places pro-
Ozone Park/Woodhaven
Foreign-born
Self-employment
13.4%
Native-born
Self-employment
4.9%
Center for an Urban Future Launching Low-Income Entrepreneurs
18
vide access to a holistic entrepreneurial support
system. Instead, most entrepreneurial training is
done in a piecemeal fashion with a smattering of
services focusing on everything from improving
financial literacy to help writing a business plan.
Here again, immigrant entrepreneurs may
have an advantage. The natural insularity of im-
migrant communities acts as an ecosystem, which
entrepreneurs can tap into at any point in the pro-
cess of starting and running a business. They may
find informal mentors in their community who
have opened a similar business, or be able to get
capital from pooled community dollars through
arrangements like Susus. These close community
bonds are virtually non-existent in predominant-
ly native-born communities. “Immigrants have a
better support system whether it’s getting financ-
ing, mentoring, working in teams—it’s the com-
munity supporting you,” said Judi Stearn Orlando,
executive director of Astella Community Devel-
opment Corporation in Coney Island.
The immigrant business ecosystem organical-
ly promotes and incubates small entrepreneur-
ial endeavors. “Networks are vital and the classic
[example] is the Korean market—they lend mon-
ey through an informal system, they live upstairs
above the market with the family, the whole fam-
ily contributes downstairs working in the market
and the whole community buys their groceries
there. Most people don’t have that kind of imme-
diate access,” says Timothy Stearns, executive di-
rector of the Lyles Center. “They all utilized each
other’s networks to expand and grow and that’s
where their success came from.”
Lacking a similar close-knit community, non-
immigrants in disadvantaged communities who
decide to venture into entrepreneurship operate
in somewhat of a vacuum. They have to identify a
market, build their own networks and seek sup-
port. Derrick Guest, a local native-born minority
entrepreneur who runs a video production busi-
ness, says that being better integrated into some
kind of network would help him get more expo-
sure to potential clients. “There may be compa-
nies out there that are willing to purchase some
of the services that all of us provide, but how are
we going to get to them because, first of all, they
don’t know about us. People buy from people that
they trust and that they have a relationship with,”
says Guest.
“Immigrants have a better support system
whether it’s getting ?nancing, mentoring,
working in teams—it’s the community
supporting you.”
Jamaica
Foreign-born
Self-employment
9.2%
Native-born
Self-employment
3.6%
Center for an Urban Future Launching Low-Income Entrepreneurs
19
Promoting entrepreneurship among low-income
Americans has not been widely embraced as a way
to alleviate poverty or grow the economy. But that
is beginning to change. As more traditional routes
into the middle class continue to disappear—and
as the benefits of having small businesses in a
community becomes harder to ignore—a number
of promising entrepreneurial programs and ini-
tiatives have sprung up in New York and several
other cities across the country.
Although these programs are diverse and can
involve a number of different facets, they typical-
ly take one of three broad approaches: Some seek
to change the culture in low-income native-born
communities by doing outreach and introducing
individuals, especially young people, to entrepre-
neurial models and mentors. Others mimic some
of the naturally occurring services in immigrant
communities by offering low-interest loans cou-
pled with technical advice. Still others change the
terms of ownership by giving low-income people
the chance to become co-owners in a worker co-
operative, where they not only come to own a
business but gradually learn the skills necessary
to manage it.
The first category includes programs like Op-
eration Hope, which was founded in Los Angeles
in the early 1990s by John Hope Bryant, an Afri-
can American entrepreneur. Among other things,
Operation Hope challenges disaffected inner city
youths to come up with a concrete business plan
they can pitch to mentors from their community.
Participants get some basic training and, depend-
ing on their grade level, a minimal amount of
funding (between $50 and $500), but the program
is not supposed to feel like school, says Bryant.
“I’m convinced that these kids all have unorga-
nized economic energy,” he says, “unorganized,
unfunneled, unchanneled economic energy. I’m
convinced that once you ignite these natural hus-
tlers in a positive way you can change their cul-
ture.”
Operation Hope also works to recruit and train
volunteers to mentor young people in not only en-
trepreneurial matters but also basic financial lit-
eracy, including how to open a bank account and
how to save and invest for the future. In 2007, the
organization opened its Financial Dignity Center
in Harlem that serves as a community platform
for many of these activities.
Both Money Think and Lemonade Day take a
broadly similar approach, if on a slightly smaller
scale. Founded in 2009 at the University of Chi-
cago, Money Think recruits and trains college stu-
dents to serve as financial mentors to young peo-
ple in low-income minority neighborhoods, while
Lemonade Day gives children the opportunity to
build a functioning business—a lemonade stand—
if only for a day. Lemonade Day, which debuted
in Houston in 2007, has grown to include over
150,000 kids in 36 different cities, with New York
City participating for the first time in 2012. After
registering, participants get a $20 loan and a kit
that instructs them on how to set up the business,
including how to market their wares and distrib-
ute profits to employees.
The People Fund, founded in Austin, Texas
in 1994, falls in our second category by provid-
ing low-income entrepreneurs with technical as-
sistance and start-up capital. The organization
operates as a one-stop shop targeting low- and
moderate-income communities; in addition to of-
fering loans, it blankets participants with services
and resources, including technical assistance and
mentoring. Approximately 85 percent of clients
are low- to moderate-income, he says, and 20 per-
cent operate brand-new businesses.
Seattle’s Washington Community Alliance
for Self-Help (CASH) also provides clients with
loans, technical assistance and networking op-
OPENING DOORS
Although few service providers focus on low-income entrepreneurship, several promising
organizations—and models—do exist
Center for an Urban Future Launching Low-Income Entrepreneurs
20
portunities. Through a peer-lending group, the
organization offers microloans to start-ups of be-
tween $500 and $5,000, and larger loans to more
established businesses of up to $35,000. The vast
majority of CASH’s clients are minorities and over
half are women.
A New York-based non-profit called 100 Ur-
ban Entrepreneurs provides many of these same
services but in a more competitive context. Draw-
ing on the approach of venture capitalists and
angel investors, the organization seeks promising
business ideas among low-income minorities in
inner city communities and offers their found-
ers a $10,000 start-up grant while linking them
to a network of contacts. It also enrolls them in
a 12-month basic training course. Fifty percent
of the current grant recipients make between
$10,000 and $40,000 annually, and 41 percent are
between the ages of 21 and 25. The organization
also looks for businesses that will impact the sur-
rounding neighborhoods.
Our last category features several promi-
nent worker cooperatives located in two cities.
In Cleveland, the Evergreen Cooperative Corpo-
ration was founded in 2008 with the goal of es-
tablishing 10 for-profit cooperatives in the city’s
poorest neighborhoods. Based on a corporation in
Spain called Mondragan (which now has over 120
worker-owned companies with a combined $20
billion in combined annual revenues), Evergreen
has already ushered into existence a worker-
owned laundry, an urban farming company and
an energy company. In New York, Si Se Puede,
a worker cooperative in Brooklyn’s Sunset Park
neighborhood, specializes in both residential and
commercial cleaning services, while another co-
operative in the Bronx, called Cooperative Home
Care Associates, focuses on home health care.
Worker cooperatives are businesses that are
owned and controlled by the people who work for
them. They represent an excellent opportunity for
low-income entrepreneurs. As members of a co-
operative, low-income workers not only share in
company profits, but also have an equal say in all
business decisions and in many cases take turns
in most of the company’s managerial positions.
Members typically pay for their ownership stake
gradually through their wages. Since all workers
must “buy in” to the company to be an owner, the
level of risk and the capital needed from any one
person is greatly reduced. For individuals with
less access to capital, this can considerably ease
the barriers to starting entrepreneurial ventures.
Additionally all worker-owners must be
trained in management, finance and business re-
lated activities. Third party non-profit “develop-
ers” have stepped in to provide training to entre-
preneurs looking to establish these businesses
and in doing so provide a framework that helps
individuals navigate the complexities of starting a
business. According to Melissa Hoover, executive
director of the U.S. Federation of Worker Cooper-
atives, the cooperative model is far from new. She
says that a number of worker cooperatives were
founded in the 1970s when a wave of primarily
White and college-educated individuals tried to
create a more utopian society by forming com-
panies that equitably shared profits. Their inten-
tions were to form businesses based on a system
of “collective ownership” that would place both
the risk and the potential rewards of a business in
the hands of the workers. But these days, instead
of being used as a way out of the mainstream
for idealistic college-educated Whites, coopera-
tives have become a way into the mainstream for
low-income African Americans, Latinos and im-
migrants. With over 1,000 members, the Bronx-
based Cooperative Home Care Associates is the
“granddaddy” of large-scale co-ops, but Ever-
green is also extremely ambitious and, despite
being three years old, is already showing results.
Nationwide, the movement is still in its in-
fancy. According to the National Cooperative
Business Association (NCBA), there are only 223
worker co-ops out of an estimated 29,000 coop-
eratives of all types. These worker cooperatives
support a total of only about 3,000 to 4,000 em-
ployees nationally, with an average of 11 workers
per business. They are concentrated in the New
York and San Francisco metropolitan areas with
13 worker co-ops in the state of New York and 56
in the state of California. Twenty state states cur-
rently have no worker cooperatives at all.
Center for an Urban Future Launching Low-Income Entrepreneurs
21
TEACHING ENTREPRENEURSHIP
Few schools provide instruction in these skills but some promising models exist
for how it can be done
For most of this country’s history, teaching entre-
preneurial skills hasn’t been a focus. In fact, for
many years it was widely believed that entrepre-
neurship couldn’t be taught at all. But as more
people realize how important entrepreneurship
is becoming for economic mobility and how few
opportunities most people have to pick up entre-
preneurial skills, the idea has started to gain trac-
tion.
In the absence of family members and other
models and mentors engaged in entrepreneurship,
schools offer one of the few avenues for students
immersed in a culture of poverty to be exposed
to a culture of business creation and stewardship.
There a number of promising models and strate-
gies for incorporating entrepreneurial instruction
into curricula at the primary, secondary and post-
secondary level—as well as after-school programs
for students and programs geared toward people
who are no longer in school. Worthwhile as these
efforts are, they face serious constraints and chal-
lenges.
Kindergarten to High School
Teaching entrepreneurship in K-12 schools
provides an opportunity to expose low-income
minority and native-born students to fundamen-
tal concepts of money, ownership and wealth cre-
ation that they most likely will not get outside of
the classroom. For these kids, the fabric of home
and community life, and in turn, their relation-
ship to money and how to make it, differs starkly
from that of more privileged students.
Several prominent national programs with a
foothold in New York City seek to introduce K-12
students to different facets of starting and run-
ning a business. The most established and well-
known of these are Junior Achievement (JA),
Virtual Enterprise and the Network for Teaching
Entrepreneurship (NFTE).
In terms of the sheer number of students
reached every year, JA is by far the largest of
these programs, though the instruction it pro-
vides is comparatively shallow, amounting to just
one full day per year per student. The JA curricu-
lum, which has programs for students from kin-
dergarten to 12th grade emphasizes experiential
learning. On field trips and between classes dur-
ing the school day or after school, students are
introduced to basic concepts and practices like
personal budgeting and creating business plans,
as well as to real-world businesses and business
owners. In the 2010-2011 school year, over 67,000
students in New York City and Long Island at-
tended JA programs.
Virtual Enterprise and NFTE provide deep-
er entrepreneurial instruction than JA, but they
serve a fraction of the students—and at least in
the case of NFTE, the number of participating
schools has been cut dramatically in recent years.
Virtual Enterprise, an elective course offering
for 11th and 12th graders, served approximately
1,200 students at 40 different schools in New York
City during the 2011-12 school year. Classes run a
simulated business using an online platform with
each student taking on different responsibilities
throughout the semester. Teachers receive a short
training course, though much of the learning hap-
pens online as the students produce business
documents and manage transactions with other
participating schools.
NFTE’s entrepreneurship programs are di-
verse—pitched to students from the 6th through
12th grades—and comparatively intensive.
21
Stu-
dents visit wholesale markets to purchase goods
for resale, develop business plans and, at the end
of school year, enter business plan competitions.
Center for an Urban Future Launching Low-Income Entrepreneurs
22
The teachers who manage the program receive
four days of intense training at NFTE University
and have to take 16 hours of ongoing professional
training to maintain certification. Participating
students receive 65 hours of instruction over the
course of the school year, making it perhaps the
most in-depth K-12 entrepreneurial program in
the city, and probably the country.
Unfortunately, NFTE reaches significantly
fewer kids in New York than it did five years
ago. In 2007, NFTE was in 100 of the city’s public
schools, but in the 2012-13 school year it is down
to just 25 city schools.
22
Although the organization
was founded in the five boroughs and remains
headquartered downtown, four other cities have
more public schools with NFTE programs than
New York—Los Angeles (32 schools), Chicago (32
schools), Dallas (26 schools) and South Florida
(26 schools). Overall, NFTE serves approximately
2,800 students in New York (1,300 at the middle
school level and 1,500 in high school).
23
Although JA and Virtual Enterprise both try
to introduce students to real-world entrepre-
neurs, NFTE’s network of volunteer mentors from
the business community is unique. In fact, NFTE
founder Steve Mariotti credits much of the orga-
nization’s success to its mentorship component,
which in the New York region alone includes over
700 individual volunteers. “The entrepreneur is
the artist of the business community,” says Mari-
otti, “so it’s hard to expose kids to [entrepreneur-
ship] without having someone who’s actually
done the artwork come in, talk and work with the
kids on their business plans.”
All three of these programs—as well as sev-
eral newer programs like Operation Hope, Project
Restaurant, Lemonade Day and MoneyThink—
have to contend with similar challenges and
constraints: In the absence of a more integrated
approach that treats financial and business con-
cepts as a part of the official school curriculum,
they have to find a way to reach students who
already face extensive demands. Making matters
worse, with the ongoing implementation of the
common core curriculum—and the increased fo-
cus on testing in math and English—many if not
most schools in New York City have dramatically
cut down on extracurricular activities. A lot of
schools, says Robert Piercey at NFTE, can’t justify
putting kids in an entrepreneurial class or focus-
ing class time on entrepreneurial lessons, when
so many need remedial work just to pass the Re-
gents exams.
And yet low-income students in underprivi-
leged communities are often the most alienated
by this emphasis on testing. “If you talk to [at-risk
students and dropouts],” says Mariotti, “they’ll say
that they were bored or that the program wasn’t
relevant to what they were interested in. And if
you talk to them further, they all say they’re inter-
ested in how to make money, how to make a living,
because they don’t have any money.”
JA’s low touch/high volume approach works
around the constraints posed by testing by of-
fering programs that can fit more easily into stu-
dents’ existing schedules during the day or after
school. Virtual Enterprise and NFTE’s in-depth
courses require a more focused commitment on
the part of the participating schools. Virtual En-
terprise works a bit like a capstone course for
high school students who are thinking about their
next steps and even helps arrange post-high
school internships for participating students at
major companies. NFTE focuses on integrating
an entrepreneurial component into a student’s
Source: NFTE
100
25
2007 2012
Number of NYC Schools
with NFTE Programs
Center for an Urban Future Launching Low-Income Entrepreneurs
23
regular curriculum, but requires even more of a
commitment than Virtual Enterprise on the part
of the individual school. To be successful, admin-
istrative buy-in is essential.
Community Colleges
If primary and secondary schools are where
the seeds of entrepreneurship are planted, then
community college is the place where those seeds
should be able to sprout and bloom.
Unlike most four-year colleges, community
colleges are not just degree-granting institutions
but community hubs serving a wide variety of lo-
cal needs. In addition to offering an affordable
route to a four-year degree and training for those
looking for professional development, community
colleges host technical assistance offices for lo-
cal businesses and provide space for a whole host
of information sessions and courses for residents
who either already own businesses or plan to start
one. The schools offer a wide spectrum of profes-
sional certificate programs in which lots of entre-
preneurial training happens in bits and pieces. As
a part of a licensing program for interior design,
for example, a student may have to take a course
on business and financial issues, such as sourcing
materials, billing clients, filing taxes and the like.
So far, however, very little has been done ei-
ther in New York or elsewhere in the nation to
link all of these resources together to make entre-
preneurship a viable option for any but the most
driven students, particularly if they are enrolled
in a degree program rather than a non-credit
course. The National Association for Community
College Entrepreneurship is at the helm of inte-
grating entrepreneurial learning into community
colleges. The association lists 278 NAACE mem-
bers around the nation, but just two of the city’s
seven community colleges are members— Bronx
Community College and Kingsborough Commu-
nity College.
Upstate, Daniel Larson, president of Cayuga
Community College near Syracuse, has created
SUNY Engine, a consortium of community college
campuses in the State University of New York
(SUNY) system that helps elevate entrepreneur-
ship as a goal for community colleges. With an eye
toward creating a more sustained and systematic
array of entrepreneurship offerings, the consor-
tium has begun to exchange information on best
practices and to document what’s already hap-
pening in terms of entrepreneurial learning at
participating schools.
“I think this idea of entrepreneurship has an
opportunity to sit very well within the context of
the mission of community colleges, particularly
in terms of workforce development” says Jamie
Lester, a member of the Council for the Study of
Community Colleges. As Lester notes, by work-
ing with municipal agencies and deepening their
own sector-based training programs and relation-
ships with employers, community colleges have
been repositioning themselves as workforce de-
velopment providers rather than just affordable
pathways to a four-year degree. They train nurs-
es, home health aides, computer technicians and
dozens of others to take jobs directly after receiv-
ing their associates or program certification. But,
as yet, there has been no systematic effort to roll
in entrepreneurial training or even to offer the
kind of add-on training given by organizations
like NFTE in high schools. Lester says much more
could be done to integrate financial literacy and
business training in many of the existing credit
courses, and nearly all community colleges need
to create more linkages between the degree pro-
grams and the business resources and courses of-
fered to non-credit students.
“I think this idea of
entrepreneurship has
an opportunity to sit
very well within the
context of the mission
of community colleges”
Center for an Urban Future Launching Low-Income Entrepreneurs
24
“We have math courses and English courses
and social sciences—these are your require-
ments—but we don’t think about [them] in an
interdisciplinary way,” says Lester. Focusing on
entrepreneurship could provide students with a
process for integrating these subjects, she says,
and as is the case in high schools, make them
much more relevant and practical to a lot of stu-
dents.
As a way of engendering more of an entre-
preneurial ecosystem on campus, community col-
leges could also embrace incubators for fledgling
start-ups and link them meaningfully to pro-
gramming offered to degree-seeking students. La
Guardia Community College in Long Island City
has housed an incubator for young design busi-
nesses since 2002, but like so many of CUNY’s
other entrepreneurial offerings very little effort
has been made to link that initiative to any of La
Guardia’s credit programs or any of its other non-
credit offerings.
For those campuses without the space or re-
sources for a brick-and-mortar incubator, so-
called virtual incubators may be an option. The
American Association of Community Colleges
(AACC), the National Association for Community
College Entrepreneurship (NACCE), the National
Business Incubation Association (NBIA) and the
U.S. Small Business Administration have recently
partnered to build a toolkit for virtual incubation.
This includes information on how to establish vir-
tual incubators, who the “clients” are, what servic-
es they need, how those services can be delivered
and who the key players are at 11 of the nation’s
most successful campuses with virtual incubators.
However, while most people interviewed
agreed that community colleges are uniquely po-
sitioned to bolster entrepreneurial learning, they
also agreed that there is a capacity issue, since
community colleges already address so many oth-
er community needs. Lester, for one, thinks the
community college system has become overex-
tended. “What’s the tipping point? At what point
can’t they fulfill what we’re asking them to do?
And to fill it well.”
AN ECONOMIC SPARK FOR LOW-INCOME
COMMUNITIES
Expanding the number of low-income entrepreneurs isn’t just a way to empower self-employed
people. Their successes could also redound to the bene?t of under-resourced neighborhoods as new
businesses set up shop locally and hire from the community.
According to Thomas Boston, the Georgia Tech economist, low-income entrepreneurs, particularly
minority entrepreneurs, are more likely than not to set up shop in their neighborhoods and hire from
their communities. “Minority entrepreneurs are very committed to developing their communities,”
Boston says. “They also generally tend to hire from lower income segments of the community than non-
minority businesses and that then adds to the income in the community that allows more successful
retail establishments and professional establishments, medical practices and grocery stores and others
to grow. It’s all linked together in a giant chain.”
This has certainly proved to be the case in many immigrant-dominated neighborhoods in New
York, including Washington Heights, Richmond Hill, Jackson Heights, Brighton Beach, Sunset Park
and Flushing. In the 1970s and ’80s, many of these neighborhoods were plagued by high-levels of
unemployment and crime; their main commercial corridors were dotted with empty storefronts and
subpar buildings. But as more and more immigrant establishments, ranging from restaurants and
grocery stores to dentists and doctors, moved in throughout the late 1990s and the 2000s these
neighborhoods revived and are now among the most vibrant in the city.
Center for an Urban Future Launching Low-Income Entrepreneurs
25
A NEW LAUNCH PAD FOR LOW INCOME
ENTREPRENEURS
NYCHA is home to an unmatched concentration of low income New Yorkers, but few residents are
turning to entrepreneurship
While public schools and community colleges may
be the ideal setting to plant the seeds of entrepre-
neurship, the city’s massive public housing prop-
erties provide another powerful opportunity. No
other place has a greater concentration of poor
and unemployed New Yorkers, many of whom
could greatly benefit from self-employment.
The New York City Housing Author-
ity (NYCHA) provides subsidized housing for
397,522 residents in public housing units and an
additional 235,655 residents through the Section
8 voucher program, which gives low-income resi-
dents rent subsidies that can be used in private-
ly-owned buildings.
24
These are some of the most
disadvantaged residents in the city. Only 97,031
(44.5 percent) of the 218,108 NYCHA residents
between the ages of 18 and 62 report any income
from employment, and NYCHA-assisted house-
holds have a median income of $20,700.
At the moment, a strikingly low percentage of
NYCHA residents own formal businesses. Of the
218,108 working-age NYCHA residents, only 286,
or 0.13 percent, reported owning their own busi-
ness.
25
With some support, however, it should be
possible to expand the number of entrepreneurs
living in NYCHA buildings.
The low rate of business formation is under-
standable given the huge financial challenges
facing public housing residents. Thomas Boston,
who has conducted extensive research on fami-
lies living in public housing, says that these in-
dividuals find themselves “further outside the
business network” and have far less access to
capital or the knowledge that middle- and upper-
income households have when starting a busi-
ness. Furthermore, many public housing families
are struggling on a daily basis to make ends meet,
limiting their ability to choose how to earn money.
“They don’t have the luxury of devoting X number
of hours to starting a business that they’re not go-
ing to receive any revenue from for, say, a year or
two,” says Boston.
Yet, Boston contends that this demographic is
“very, very interested in [entrepreneurship],” and
has a “strong desire” to start their own business
and be self-employed. The problem, he says, is
that “that desire seldom translates into reality.”
Nancy Carin, executive director of the Busi-
ness Outreach Center Network, says that NYCHA
residents may feel wary of entrepreneurship as
a method of economic advancement: “If someone
is reporting themselves as very low-income, and
they live in a housing authority building and they
start a business, it’s a risk. It’s not just a disincen-
Other
55.51%
Employed
44.36%
Self-employed
0.13%
Employment and Self-Employment
Among Working-Age
NYCHA Residents
Sources: NYCHA
Center for an Urban Future Launching Low-Income Entrepreneurs
26
tive because the risk is that they will lose a lot
of [welfare] benefits, and it’s hard to get [those
benefits] back if [the business doesn’t] work out.”
Although NYCHA residents are not currently
starting formal businesses at a typical rate, there
are some considerable advantages that NYCHA
residents have over other New York City residents
in starting their own business. These include the
naturally occurring networks and social capital
that many NYCHA housing developments provide
because of the large numbers of residents living
close together. “You have hundreds of thousands
of people living there, you have a stable living, a
great way to start and a natural population to sell
to. It seems like a great opportunity,” says Joan
Bartolomeo, president of the Brooklyn Economic
Development Corporation (BEDC).
Approximately 56 percent of low-income New
Yorkers pass through NYCHA’s doors as resi-
dents, Section 8 voucher holders or as households
on the wait-list. This gives the agency unique
access to their economic status and contact in-
formation, which is extremely valuable to local
organizations that are trying to promote entre-
preneurship. NYCHA already operates 135 com-
munity centers in their housing developments,
which make excellent resources for reaching cli-
ents, tapping into social networks and giving out
information about entrepreneurship initiatives.
26
Furthermore, NYCHA occupies a seat on the pub-
lic-private Workforce Investment Board, which
oversees New York City’s broader workforce de-
velopment programs.
Importantly, NYCHA already has a vehicle to
promote and support entrepreneurship among
its residents. In 2009, NYCHA created an Office
of Resident Economic Empowerment & Sustain-
ability (REES), which develops and implements
programs with a focus on employment, financial
literacy and occupational training. In 2010 near-
ly 1,000 NYCHA residents found employment
through this office.
Understandably, most of the REES initiatives
focus on getting residents into jobs—not promot-
ing self-employment and entrepreneurship. But
there is a clear opportunity to develop new entre-
preneurship initiatives in the months ahead.
A NEW START(UP) AFTER PRISON
Adrienne Smalls served two years in New York’s Westchester County Jail from 1989 to 1991. She spent
much of the following ?ve years shuttling from New York City to upstate to visit her son, who was jailed
on a drug offense. This experience provided her with a business idea: she could sell toiletries and
other small essentials to the family members of incarcerated individuals who frequently made the same
journey upstate on her bus to visit their loved ones. Roughly 20 years later, her micro-entrepreneurial
endeavor, Prisonhelp, still sells goods to visitors making the trip upstate and has expanded to provide
counseling services for formerly incarcerated persons who are transitioning to life on the outside.
It’s no surprise that a number of formerly incarcerated individuals turn to entrepreneurship. Many
of those who served time in prison are enterprising and open to taking risks. Perhaps most importantly,
the formerly incarcerated typically encounter serious barriers to securing full time gainful employment
upon release, and often view self-employment as the least arduous path to economic self-suf?ciency.
But there is a clear opportunity to expand the number of formerly incarcerated individuals in New
York who pursue self-employment or business formation. Doing so would not only give the formerly
incarcerated a chance for a fresh start, but also potentially reduce rates of recidivism among returning
prisoners, an important goal given the staggering number of New Yorkers serving time.
In 2008, approximately 650,000 people in the United States were projected to return from state or
federal prison, and another 9 million were to cycle in and out of local jails.
27
There are several programs throughout the nation that promote and support entrepreneurship
among the formerly incarcerated. One of the most well-known is the Prison Entrepreneurial Program,
an initiative based in Texas that provides entrepreneurial skills training to soon-to-be-released inmates.
A mere 5 percent of participants in this program end up behind bars again, compared to 24 percent
of all inmates in the Texas Department of Criminal Justice.
28
Last year, the organization got every
single graduate a job within 90 days of release—70 percent of whom successfully found one within 30
days—with an average wage of $10 an hour. Over the past eight years, more than 100 business have
been started by their 700 graduates in an array of industries, including landscaping, commercial print
businesses, manufacturing, automotive services and contracting.
New York City arguably has more places where
small business owners and aspiring entrepre-
neurs can go to get counseling and technical as-
sistance than any other American city. Some of
these programs are run by microfinance organi-
zations and chambers of commerce, and others by
government agencies, such as the city’s Business
Solutions Centers and the federally funded Small
Business Development Centers.
However, few of the entrepreneurial assis-
tance programs across the five boroughs are con-
centrated in the city’s poorest neighborhoods,
particularly those with a disproportionate share
of native-born residents. “You have pockets of
certain neighborhoods where [these programs
are] concentrated and then other areas where it’s
a wasteland,” says Catherine Barnett, executive
director of Project Enterprise.
“What I’m finding is a lack of technical as-
sistance as the biggest barrier to people meeting
their dreams,” adds Bishop Mitchell Taylor of the
East River Development Alliance. “If I was to put
a sign in my window saying, If you are interested
in opening a business come down and sit down
with a biz solutions specialist, his schedule will
be booked.”
It’s certainly understandable that public agen-
cies and non-profit organizations choose to set up
small business assistance centers where there
are fairly high rates of entrepreneurship. They
are simply following demand. Moreover, many
of these organizations are funded based on the
number of clients they serve, a system that en-
courages them to steer clear of neighborhoods
with low rates of business formation, even though
there may be significant potential to increase lev-
els of entrepreneurship.
Barnett believes that more must be done
to attract service providers to the communities
that need them the most. “You’re funded a finite
amount based on the number of people that you
work with,” she says. “Certainly you won’t close
your doors to [potential entrepreneurs in low-in-
come neighborhoods] but you might spend more
time trying to recruit or market toward more high-
potential folks. There needs to be more funding
allocated to organizations to do this kind of work
[and] incentives for them to have sites in some
neighborhoods where there’s more of a need and
a lack of services.”
While many neighborhoods lack entrepre-
neurship assistance programs altogether, a relat-
ed problem is that many potential entrepreneurs
GETTING TECHNICAL
New York City has a number of small business assistance programs, but most of them aren’t
reaching low-income residents
GOVERNMENT-SPONSORED SMALL
BUSINESS ASSISTANCE CENTERS IN NYC
ata Sources: NYC DCP, DOITT, NJDEP, NYS CSCIC
Prepared by the Pratt Center for Community Development, 11/2012
0 5 2.5
Miles
New
Jersey
Long
Island
0 5 2 5
Mi es
.
l
Staten
Island
Bronx
Queens
Brooklyn
M
a
n
h
a
t
t
a
n
NYC Business Solution Centers
Small Business Development Centers
Entrepreneurial Assistance Program Centers
Center for an Urban Future Launching Low-Income Entrepreneurs
28
in low-income communities aren’t aware of the
resources that do exist. Most of the entrepre-
neurship assistance organizations interviewed
for this report rely heavily on word of mouth,
email blasts, referrals and fliers to market their
services. The limited outreach—primarily a func-
tion of small operating budgets with hardly any
dedicated funding for marketing—means limited
reach. Both service providers and clients say that
even though aspiring entrepreneurs have become
more active in seeking out resources, it’s difficult
to get initially connected and figure out what or-
ganizations are out there and what resources they
offer.
“Technical assistance can be the lion’s share of
what someone needs to get started, but technical
assistance is not something that’s readily avail-
able, or they don’t know it’s available,” says Bishop
Taylor. “Although there is a Small Business Solu-
tions center, a lot of people don’t take advantage
of it because they don’t know it’s for them. They
think big business solutions even though it says
small.”
“I definitely think that if technical assistance
was effectively marketed to people interested in
opening a business,” Taylor says, “it would defi-
nitely be a sea change for urban entrepreneurs.”
A NEW LIFT
To its credit, the Bloomberg administration has greatly expanded its support for entrepreneurs over
the past ?ve years. The city’s Economic Development Corporation has been at the center of these
efforts, rolling out more than a dozen initiatives to support local start-ups—from new incubators to
seed funds. Perhaps understandably, however, the bulk of these new programs have bene?ted college
educated entrepreneurs in ?elds such as technology, fashion and media. Immigrant entrepreneurs have
also been aided by a handful of initiatives, including a competition to fund organizations that develop
innovative programs to support immigrant-run businesses.
Thus far, few of NYCEDC’s programs have focused on supporting low-income, native-born
entrepreneurs. But this may be changing. Earlier this year NYCEDC announced plans to build a new
incubator space and technical assistance program in the Norwood/Bedford Park neighborhood of the
South Bronx that will speci?cally target low-income entrepreneurs.
The goal of NYCEDC’s LIFT Entrepreneurship Program is “to increase entrepreneurship and
business development amongst low-income and unemployed residents of underserved communities.”
Beyond providing of?ce space, the LIFT initiative will offer promising business owners one-to-one
technical assistance in how to set up an incorporated business, create a business plan and market
products. It will also link members to mentors in the neighborhood who can help them think through
a wide variety of broader, more strategic issues. NYCEDC anticipates that the program will help 30
Bronx-based, low-income, minority entrepreneurs.
Smartly, NYCEDC has already worked with several anchor institutions in the area, including
Monte?ore Medical Center, the Bronx Botanical Garden, The Bronx Zoo and Fordham University, to
research promising opportunities for new local businesses, whether it’s setting up a ?ower shop on
Jerome Avenue near the hospital or linking into the supply chain of one of the anchor institutions
themselves. Joshua Winter, a senior vice president at NYCEDC, says that Evergreen’s contract with
the Cleveland clinic to provide laundry services was an explicit model for the program and that all four
Bronx institutions have cooperated with NYCEDC to ?nd similar sorts of opportunities in their own
supply chains.
Center for an Urban Future Launching Low-Income Entrepreneurs
29
Perhaps the most underutilized asset for aspir-
ing entrepreneurs is New York City’s workforce
development system, which operates one-stop
centers in all five boroughs called “Workforce1
Career Centers.” Unemployed adults enter Work-
force1 Career Centers by the thousands seeking
help getting a job, while small-business owners
look for help managing or expanding a business.
Workforce1 centers provide an important re-
source for unemployed adults in New York City. In
the early days of the Bloomberg administration,
the Department of Small Business Services over-
hauled much of the city’s workforce development
infrastructure in order to create an employer-
focused system of recruiting, training and place-
ment. Workforce1 Career Centers opened in every
borough and over time built up a large repertoire
of services and clients. According to SBS data, the
Workforce1 Centers collectively served more than
149,000 jobseekers in 2010 and placed roughly
31,000 in employment.
In theory, an unemployed adult could go to a
Workforce1 Center and receive support in both
finding a job and starting a business. In practice,
however, the job seeking and entrepreneurship
service lines remain entirely separate, squander-
ing their potential synergy.
Because each Workforce1 Center houses a
Business Solutions Center, some of the thousands
of adults who enter seeking employment could
also be encouraged to take advantage of services
like FastTrac NewVenture, a series of seminars
for aspiring entrepreneurs happening literally
across the hall in many cases. But workforce de-
velopment staff are expected to focus strictly on
connecting job seekers with existing employment
opportunities. In fact, the SBS policy guide, which
defines the terms of the agency’s performance-
based contracts, explicitly states that “self-em-
ployment can never be entered as a placement.”
29
Not only do contractors who run Workforce1 Cen-
ters lose money if they fail to meet stringent job
placement standards; they can also lose their con-
tracts—and some have.
Many organizations with Workforce1 Cen-
ter contracts struggle with their dual mission to
serve unemployed adults and small businesses.
“The unfortunate issue is that if someone gets
self-employed, it’s not an outcome and we don’t
get paid,” says one workforce development prac-
titioner, noting that having Business Solutions
Centers in the same building leads some job ap-
plicants to look into entrepreneurship anyway,
but it is not an area of focus for intake personnel
or counselors.
The same is true for SBS’s website. Users can
click on “Help for Jobseekers” to access online job
listings and seminar schedules, but the page does
not encourage jobseekers to visit a Business Solu-
tions Center to explore entrepreneurial opportu-
nities, or even link to outside agencies or organi-
zations that could provide such assistance.
“There are lots of people who would like to
consider starting their own business,” says an-
other workforce development expert, “but it’s not
sufficiently brought to their attention.”
Community-based organizations that special-
ize in workforce development represent another
opportunity to support entrepreneurism. These
groups understand the needs of the low-income
adults in their communities better than anyone
else. Almost 200 groups that provide work readi-
ness and training services collaborate closely
with Workforce1 Centers, but they do not general-
ly tackle subjects like entrepreneurism and self-
employment, either on their own or in the work
they do for the Workforce1 Centers.
“I have personally struggled with the entrepre-
neurship question in this job,” says Jeanie Tung,
director of training at Henry Street Settlement
THE WORKFORCE SYSTEM
The city’s centers could provide a huge help to low-income entrepreneurs
Center for an Urban Future Launching Low-Income Entrepreneurs
30
on Manhattan’s Lower East Side. “To be honest,
our first mission is just to connect people to em-
ployment. When people have their own ideas and
want to start their own businesses there aren’t a
lot of resources.”
Creating more synergy between the city’s
workforce development and small business ser-
vice centers could benefit clients on both sides.
Even those clients who are really driven to start
their own business may benefit from being placed
in a job in the short term, as developing a busi-
ness plan, seeking licenses and lining up financ-
ing all take time. Others may simply be unready
to climb the steep hill to starting a business and
would benefit from getting a job with an employer
instead.
To create this synergy, the city should consid-
er establishing a rigorous system to count self-
employment as the equivalent of a job placement.
At Business Solutions Centers, a formal process
already exists to register a business and docu-
ment income generated through that business.
Integrating self-employment outcomes into the
workforce system, she says, would spur additional
activity to promote entrepreneurism without low-
ering the standards of performance-based con-
tracts.
RECOMMENDATIONS
Expand NYC’s Entrepreneurship Initiatives to
Target Low Income, Native-born New Yorkers
The city’s Economic Development Corpora-
tion (NYCEDC) has impressively ramped up its
support for entrepreneurs in the past four years,
with a range of new initiatives—from creating new
incubators to establishing seed funds. While the
Bloomberg administration deserves ample credit
for embracing the city’s entrepreneurial economy,
much of its focus has been on college-educated
entrepreneurs, particularly in fields such as tech,
fashion and food, or immigrant entrepreneurs.
It’s now time for NYCEDC and the Department of
Small Business Services (SBS)—perhaps work-
ing in tandem with the New York City Housing
Authority, the Center for Economic Opportunity,
the Office of Financial Empowerment and the
Department of Education—to develop a series of
programs designed to expand the number of low-
income, native-born entrepreneurs in the city and
help more of the people who do start a business
grow to the next level.
Encourage More Low-Income People to Turn to
Entrepreneurship
Any new entrepreneurial initiative that targets
low-income individuals should go beyond simply
supporting existing business owners or assisting
those who are already inclined to start a business.
While those things make sense, a significant focus
should be on promoting and encouraging entre-
preneurship, and expanding the overall pool of
low-income native-born New Yorkers who pur-
sue business ownership. Currently, too few low-
income people from disadvantaged communities
ever consider entrepreneurship as a pathway to
economic self-sufficiency (and thus never set foot
in a publicly or privately run center that offers
counseling for existing businesses and prospec-
tive entrepreneurs). City policymakers should set
a goal of increasing the number of low-income,
Center for an Urban Future Launching Low-Income Entrepreneurs
31
native-born entrepreneurs by 10 to 20 percent
over the next four years.
Incorporate Entrepreneurship into Workforce
Development Programs
At a time when the city’s unemployment rate
hovers over 9 percent and there is a dearth of
middle-income jobs for individuals without a col-
lege degree, city policymakers should encourage
at least some unemployed or underemployed New
Yorkers to consider entrepreneurship as a career
option. The city’s workforce development system
presents a golden opportunity to do just that, since
tens of thousands of New Yorkers pass through
the city-run Workforce1 centers and countless
others seek help from private workforce prepa-
ration programs. Currently, however, New Yorkers
who show up at these offices looking for help in
finding a job or developing the skills they need
for a career rarely ever hear about self-employ-
ment or entrepreneurship as an option. Indeed,
current procedures and funding guidelines dis-
courage workforce development staff from doing
anything but placing someone in an existing job.
The city’s Office of Human Capital Development
(OHCD) and Department of Small Business Ser-
vices (SBS), which oversees the city’s Workforce1
Centers, should require all job centers—includ-
ing the Workforce1 Centers, to feature materials
on self-employment and starting a business. SBS
should also alter its policy guide to enable indi-
viduals pursuing self-employment to count as a
“placement”.
Expand Teaching Entrepreneurship Programs
In low-income communities with few entre-
preneurial role models and mentors, exposing
school kids to the world of business ownership
is enormously important. Unlike immigrants and
more affluent residents, the vast majority of kids
in low-income, native-born communities don’t
have family members or friends who have started
their own businesses. As a result, most won’t even
think to consider entrepreneurship as a possible
career path. While school-based entrepreneur-
ship programs, such as NFTE and JA, exist in
New York, they have been cut back dramatically
in recent years and even at their height reached
only a tiny fraction of the city’s 1.1 million stu-
dents. Because in-school programs like these are
the only way many low-income students will ever
learn basic business and financial skills, they are
a promising way to increase the number of busi-
nesses in low-income neighborhoods. But they
are also a good way of capturing the imaginations
of students who are failing in school. With the
implementation of the common core curriculum
and its emphasis on critical thinking, new oppor-
tunities exist to use entrepreneurship as a focus
in project-based learning assignments. In fact, in-
class assignments could easily play off of existing
programs and resources, many of which are out-
lined in this report. But officials inside the NYC
DOE need to make entrepreneurial learning a
priority and make sure principals and teachers all
understand what resources are available and how
they might integrate them in their classrooms.
Develop Startup Competitions For Low-Income
Entrepreneurs
Few weeks go by in New York without the
city playing host to a startup competition, a pitch
event or a demo day—all of which showcase lo-
cal entrepreneurs and, in many cases, give them
a chance to promote their company and get ad-
vice from investors and business experts. Unfor-
tunately, few of these events bring low-income
entrepreneurs into the mix. The city’s Economic
Development Corporation should fund a series
of startup competitions around the five bor-
oughs that specifically target low-income entre-
preneurs—not focusing on tech entrepreneurs,
but everything from neighborhood based retail
to services. NYCEDC might include a competi-
tion at one or more of the city’s community col-
leges and another for entrepreneurial-minded
residents of a NYCHA complex. This seems ripe
for partnering with private sector sponsors—such
as a bank—that could fund the award money. But
while a monetary prize would be a nice incentive,
simply getting a number of low-income residents
to participate in a business plan competition—
and building their confidence—would be a huge
win by itself.
Center for an Urban Future Launching Low-Income Entrepreneurs
32
Help Individuals Turn Side Hustles into Formal
Businesses
One of the most encouraging findings of our
report is that loads of low-income, native-born
New Yorkers operate “side hustles” as a way to
generate income. City economic development of-
ficials should develop a plan to work with these
entrepreneurial individuals, and provide the sup-
port to help some of these side hustles grow into
formal businesses. This might include everything
from helping the individuals establish savings ac-
counts to teaching them how to write a business
plan and providing access to microloans.
Eliminate Disincentives to Self-Employment for
Recipients of Government Benefits
Some low-income people shy away from en-
trepreneurship out of fear that they will make just
enough money to cause them to lose longstanding
government benefits. Policymakers should elimi-
nate this kind of disincentive for those receiving
different types of public assistance. Officials at
the federal, state and city level should restruc-
ture existing policies so that those who receive
payments from TANF (Temporary Assistance
for Needy Families) or subsidized housing from
NYCHA don’t immediately lose their benefits if
they start a successful business.
Philanthropic Foundations, CBOs and City
Agencies Should Support the Formation of More
Worker Cooperatives
Worker Cooperatives can be an effective way
to deliver many of the benefits of business own-
ership—including on-the-job training in basic
management and financial skills—while mitigat-
ing many of the risks. But worker cooperatives
tend to have a hard time finding sufficient capital
and technical assistance when starting out. Many
banks, attorneys and other service providers
aren’t familiar with their unique organizational
needs, and the founding members need extensive
support in laying the legal and organizational
ground work for future profit-sharing and mem-
ber training. Philanthropic foundations in the city
should work with CBOs to provide start-up funds
for cooperatives in low-income neighborhoods,
and NYCEDC and SBS should provide targeted
technical support. In fact, the city could create an
incubator for worker cooperatives and provide
not only much-needed space for founding mem-
bers but a wide variety of services around busi-
ness and organizational development.
Create Opportunities for Successful Business
Owners to Mentor Start-Ups.
Mentors play an enormously important role in
not only educating potential new entrepreneurs,
but in raising the profile of entrepreneurship
in the first place. Mentors are common in many
immigrant communities with high rates of self-
employment, but they are lacking in many native-
born, low-income neighborhoods in New York.
One reason for that is the dearth of opportuni-
ties for established business owners to connect
with new, would-be entrepreneurs in their com-
munity. Any effort to raise business incorporation
rates in low-income communities across the city
has to tackle this problem and create opportuni-
ties for existing business owners to share their
knowledge and know-how with others. These
could include networking events held by local
development corporations or public programs at
neighborhood library branches. With the help of
the city or philanthropic foundations, community
based organizations could also take the lead in
pairing established business owners with young,
high potential entrepreneurs in low-income
neighborhoods.
Expand Technical Assistance Programming in
Low-Income Neighborhoods
If efforts to encourage more low-income New
Yorkers to pursue entrepreneurship are success-
ful, many of the emerging entrepreneurs will
need business counseling and technical assis-
tance on everything from writing business plans
to accessing capital. But many of the city’s low-
income neighborhoods currently lack these re-
sources. Policymakers and philanthropic leaders
should make a commitment to expanding techni-
cal assistance programs in low-income neighbor-
hoods. There are at least a few options for this.
First, existing government programs, like the SBS
Center for an Urban Future Launching Low-Income Entrepreneurs
33
Business Solutions centers, could partner with
community based organizations or libraries, and
offer regular workshops on starting or growing
a business. They might even consider sending a
business counselor into the community for one
full day each week. Another option is to provide
incentives that would allow microfinance orga-
nizations—the entities that are arguably best
positioned to work with and support very small
businesses run by low-income residents with
limited collateral—to open offices into low-in-
come neighborhoods that currently have rela-
tively limited demand for their services. Finally,
government agencies and philanthropic funders
ought to consider providing new funding for mi-
crofinance organizations to better market their
services, particularly to residents of low-income
neighborhoods who may not currently be famil-
iar with these opportunities.
Establish Entrepreneurship Initiatives for
NYCHA Residents
With so many NYCHA residents disconnect-
ed from the world of work, the time may be ripe
to create new programs aimed at expanding the
number of public housing residents in New York
who turn to entrepreneurship as a pathway out
of poverty. There is a clear opportunity to make
progress here. As it is, only 0.13 percent of adult
New Yorkers living in NYCHA properties report
owning their own business. NYCHA leaders and
city economic development officials should set a
goal of increasing these numbers, and work with
community leaders to develop a new initiative
that encourages and supports entrepreneurship.
This could include bringing in successful minor-
ity business owners as speakers and mentors,
new technical assistance programs, subsidized
business spaces and competitions that award
cash prizes—or discounted real estate—for the
best business plans. This would be an ideal ini-
tiative for NYCHA’s Office of Resident Economic
Empowerment & Sustainability.
Expand and Improve Financial Education for
School Kids
Too many low-income children grow up with
only limited knowledge about the value of man-
aging their money and little awareness that they
could one day run a business. The city’s public
school system should expand efforts to teach fi-
nancial education and bring in successful busi-
ness owners from the community to speak about
their experiences. This might even include rais-
ing awareness about successful minority busi-
ness owners during Black History month. As one
African American small business expert told us,
“We are decades out, and people are still only
learning about Rosa Parks, Malcolm X and Mar-
tin Luther King [in Black History month]. We’re
not learning about the inventors or the business-
men that are out there. You can tell them all about
Magic Johnson, and don’t focus just on his career
scoring averages, but about how he is an amazing
businessman. Teaching that in school is impor-
tant and sets a mindset that ‘I can have a busi-
ness of my own.’”
Reform New York State’s Occupational Licens-
ing Laws
The state’s onerous occupational licensing
laws may serve as an obstacle for some low-in-
come entrepreneurs, many of whom simply don’t
have the time or resources to complete the re-
quirements. For instance, according to a 2012 re-
port by the Institute for Justice, New York State
requires those seeking a barber’s license to com-
plete 884 hours of education and training, more
than all but one state (the average is 416), in ad-
ditional three exams and $60 in fees. If these re-
quirements were eased, it might prompt some of
the low-income New Yorkers who cut hair as a
“side-hustle” to set up formal businesses. Addi-
tionally, cosmetologists and massage therapists in
New York need 233 days of education and expe-
rience to get a license, while child care workers
require a year of training, more than every other
state except for New Jersey. State officials should
immediately undertake a review of its occupa-
tional licensing laws and restructure the training
requirements so they are more in line with other
states.
Center for an Urban Future Launching Low-Income Entrepreneurs
34
1. Infoshare, Census Public Use Microdata Sample
(PUMS) (2007-2011 American Community Sur-
vey): Bureau of the Census, U.S Department of
Commerce. For counties, boroughs and the 55
Census defined neighborhoods in the city, the self-
employment rate was taken by calculating self-
employed workers as a percentage of all working
age adults in the labor force.
2. Ibid.
3. Ibid.
4. Ibid.
5. Ibid. Please see page 9 for a table of self-em-
ployment rates for the city’s 55 Census-defined
neighborhoods.
6. 2010 Census, Census County Business Patterns
and American Fact Finder.
7. Ibid.
8. Email Correspondence with Debra-Ellen Glick-
stein, former director of community programs and
development, NYCHA Office of Resident Economic
Empowerment & Sustainability, May 29, 2012.
9. Robert W. Fairlie, Kauffman Index of Entrepre-
neurial Activity 1996-2012, The Ewing Marion
Kauffman Foundation, April 2013.
10. Ibid.
11. 2002 American Community Survey Estimates, New
York City, NY, prepared by the U.S. Census Bureau,
2002, available from Infoshare. .
12. Bureau of Labor Statistics, “100 Years of Consumer
Spending: Data for the Nation, New York City and
Boston”, August 3, 2006http://www.bls.gov/opub/
uscs/
13. This calculation is based on New York State De-
partment of Labor Current Employment by Indus-
try Data as of June 2012. Manufacturing made up
1.9 percent of the total non-farm jobs in the city.
14. National Employment Law Project, “The Low-
Wage Recovery and Growing Inequality,” August
2012.
15. United States Department of Labor, Bureau of
Labor Statistics, Occupational Outlook Handbook,
2012-2013 Editionhttp://www.bls.gov/ooh/
16. United States Department of Labor, Bureau of
Labor Statistics, Occupational Outlook Handbook,
2012-2013 Editionhttp://www.bls.gov/ooh/
17. Data from U.S. Population Reference Bureau cited
in “Low Wage Jobs, 2012,” Center for an Urban
Future, April 2013.
18. Ibid.
19. Barth, James R., Yago, Glen, and Zeidman, Betsy.
“Barriers to Entrepreneurship in Emerging Do-
mestic Markets.April 2006. Available at: http://
www.iowabiotech.com/econ_dev_reports/Milken_
Barriers_Entrepreneurship.pdf
20. Kochhar, Rakesh, Fry, Richard, Taylor, Paul.
“Wealth Gaps Rise to Record Highs Between
Whites, Blacks, Hispanics”, July 2011http://www.
pewsocialtrends.org/2011/07/26/wealth-gaps-rise-
to-record-highs-between-whites-blacks-hispan-
ics/
21. Nationally NFTE offers curricula for students in
the 1st through 12th grades; in New York City,
however, they are only offered to students at grade
6 through 12.
22. NFTE.
23. Ibid.
24. New York City Housing Authority, Annual Report,
2010http://www.nyc.gov/html/nycha/downloads/
pdf/annual-report-2010.pdf
25. Debra-Ellen Glickstein.
26. Community Service Society” How NYCHA Can
Connect Residents to Opportunity Even in Hard
Times”, October 2011.
27.http://www.jjay.cuny.edu/VenturingBeyondthe-
Gates.pdf
28. Phone interview with Bert Smith, CEO of Prison
Entrepreneur Program, Wednesday February 15th
2012
29. Worksource1 Placement & Promotion Policy, New
York City Department of Small Business Services,
2011.
ENDNOTES
Center for an Urban Future Launching Low-Income Entrepreneurs
35
Center for an Urban Future
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In this such a data about launching low income entrepreneurs.
www.nycfuture.org APRIL 2013
LAUNCHING LOW-INCOME
ENTREPRENEURS
With middle-income jobs in decline, entrepreneurship offers an increasingly
promising pathway out of poverty; but few low-income New Yorkers are currently
taking this route to economic self-sufficiency
This report was written by Kahliah Laney, with Jonathan
Bowles and Tom Hilliard, and edited by David Giles
and Gail Robinson. Additional research by Felix Attard,
Adam Eckstein, Cynthia Keyser, Brandie Moreno, Ezra
Moser, Linda Tan, Ada Welch, and Kara Freedman. De-
sign by Ahmad Dowla.
This report was made possible by generous support
from the Ewing Marion Kauffman Foundation.
General operating support for has been provided by
the Bernard F. and Alva B. Gimbel Foundation.
The Center for an Urban Future is a NYC-based policy
institute dedicated to highlighting the critical opportu-
nities and challenges facing New York and other cities,
and providing fresh ideas and workable solutions to
policymakers. The Center’s primary focus is on grow-
ing and diversifying the local economy, expanding
economic opportunity and targeting problems facing
low-income and working-class neighborhoods. The
Center does this through publishing fact-based re-
search reports that are accessible to a wide audience
and holding high-pro?le policy forums. For more infor-
mation or to sign up for our monthly e-mail bulletin, visit
www.nycfuture.org.
Executive Director: Jonathan Bowles
Research Director: David Giles
Operations Manager: Ahmad Dowla
Research Associate: Kahliah Laney
Research/Communications Associate: Adam Forman
Research Associate: Christian González-Rivera
Senior Fellow: Tom Hilliard
City Futures Board of Directors: Gifford Miller (Chair),
Margaret Anadu, Gerrard Bushell, Michael Connor, Rus-
sell Dubner, Gretchen Dykstra, Blake Foote, Lisa Go-
mez, Jalak Jobanputra, David Lebenstein, Eric S. Lee,
Monisha Nariani, Andrew Reicher, John Siegal, Stephen
Sigmund, Thomas Vecchione and Robert Zimmerman.
Cover ?ickr/Delkarm
CONTENTS
INTRODUCTION 3
AN ALTERNATIVE ROUTE TO ECONOMIC SUCCESS 10
Entrepreneurship offers a vehicle to both economic self-
suf?ciency and neighborhood development, but many New
Yorkers don’t see it as an option
UNDERGROUND ENTREPRENEURS 12
If cultivated, the ‘side-hustles’ common in many low-income
neighborhoods could blossom into mainstream businesses
BARRIERS TO ENTREPRENEURSHIP 13
For low-income New Yorkers born in this country owning their
own business may be a foreign concept
OPENING DOORS 20
Although few service providers focus on low-income
entrepreneurship, several promising organizations—and
models—do exist
TEACHING ENTREPRENEURSHIP 22
Few schools provide instruction in these skills but some
promising models exist for how it can be done
A NEW LAUNCH PAD FOR LOW INCOME ENTREPRENEURS 26
NYCHA is home to an unmatched concentration of low
income New Yorkers, but few residents are turning to
entrepreneurship
GETTING TECHNICAL 28
New York City has a number of small business assistance
programs, but most of them aren’t reaching low-income
residents
THE WORKFORCE SYSTEM 30
The city’s centers could provide a huge help to low-income
entrepreneurs
RECOMMENDATIONS 31
ENDNOTES 35
LAUNCHING LOW-INCOME ENTREPRENEURS
NEW YORK CITY IS NOW IN THE MIDST OF A NEW GOLDEN AGE OF
entrepreneurship. In recent years, mid-career investment bankers, lawyers and
media professionals have bounced back from layoffs by striking out on their
own, opening everything from food trucks and restaurants to digital marketing
agencies. Twenty-something college grads facing the worst job market in
decades have turned to entrepreneurship in droves, establishing Internet
startups, design firms and countless other new ventures. And immigrants from
Washington Heights to Sheepshead Bay have continued to open food carts,
franchises and other businesses at a rapid clip.
One would think that recent economic conditions—not only an extremely
high jobless rate, but a changing economy offering few middle-income jobs for
individuals without a bachelor’s degree—would also prompt a significant uptick
in the number of native-born New Yorkers from low-income backgrounds
who see entrepreneurship as a pathway out of poverty. However, this does not
appear to be the case.
Interviews we conducted for this report with small business experts,
microfinance groups, entrepreneurs and community leaders suggest that low-
income New Yorkers who were born in the United States are starting businesses
at a fairly low rate. Our analysis of self-employment rates in neighborhoods
across the five boroughs confirms this. Each of the 10 ZIP codes in the city
with the lowest rates of self-employment have median incomes below $33,000,
and in all but one the share of the population that is native-born exceeds the
city average. In contrast, neighborhoods with similarly low median incomes
where most residents are foreign-born have higher-than-average rates of
entrepreneurship. Meanwhile, native-born New Yorkers who live in affluent
neighborhoods have among the highest rates of self-employment in the city.
Given how much capital it takes to start a business, and how much risk is
involved, it is hardly surprising that many asset-poor New Yorkers have shied
away from entrepreneurship. However, at a time when so many newly created
jobs offer low wages and limited opportunity for economic mobility, it is time
for policymakers, economic development officials and workforce development
professionals to embrace entrepreneurship as one route for low-income New
Yorkers to achieve economic self-sufficiency.
This report concludes that it is eminently possible to expand the number
of low-income entrepreneurs in New York. As this report documents, while
relatively few low-income minorities are starting formal businesses, there is
no lack of entrepreneurial spirit or creativity among the native-born poor—
and many earn money from “side-hustles.” Ample evidence suggests that a
more strategic focus on promoting, teaching and supporting entrepreneurship
in New York and other cities could have a big impact.
This report provides the most comprehensive
examination of low-income entrepreneurship in
New York. Funded by the Ewing Marion Kauff-
man Foundation, the report documents current
self-employment rates among low-income people
(both native-born and foreign-born), details the
obstacles that keep larger numbers of native-born
individuals from starting businesses and assesses
how entrepreneurship among low-income indi-
viduals is currently encouraged and supported
in New York. The study also features a snapshot
of programs in other cities and states that effec-
tively promote and support low-income entre-
preneurship. The report is based on an extensive
data analysis and interviews with more than 75
entrepreneurs, small business and microfinance
experts, community development leaders, work-
force development practitioners, economic de-
velopment officials and educators—both in New
York City and around the nation.
Entrepreneurship has been a proven ticket to
financial empowerment and economic mobility for
countless immigrants—a fact that the Center doc-
umented in our 2007 report, “A World of Opportu-
nity.” In that study, we showed that massive num-
bers of immigrants in New York, Boston, Houston
and Los Angeles have turned to entrepreneurship
and in doing so have transformed neighborhoods
as well as their own economic fortunes. Some of
these entrepreneurs have been wildly successful,
generating numerous jobs for their communities
and significant financial rewards for themselves.
Many others simply make enough to live on. Most
turned to entrepreneurship in the first place be-
cause they saw it as the quickest and most logical
path for them to provide for their families.
But while so many immigrants—including
newcomers who are both poor and poorly edu-
cated—have turned to entrepreneurship, many
fewer native-born poor people have done so.
Citywide, the native-born self-employment
rate is 8.6 percent, which is considerably lower
than the foreign-born self-employment rate of
10.9 percent.
1
But even this modest rate is in-
flated because it includes affluent native-born
entrepreneurs, particularly in Manhattan and
Brooklyn. For example, in Manhattan, roughly
97,000 native-born residents—or 13.3 percent
of the working-age native born population—are
self-employed, compared to only 124,000 (or just
6.7percent) in the other four boroughs combined.
2
In the Bronx, Queens and Staten Island, the
native-born self-employment rate is roughly half
that of the foreign-born self-employment rate. In
the Bronx, where working-age residents tend to
be poorer and less educated than people in the
rest of the city and nation, only 17,000 native-
born residents (4.4 percent of the total) have
started their own incorporated or unincorporat-
ed businesses, compared to 33,000 foreign-born
residents (10.2 percent). In Queens, where nearly
48 percent of residents are foreign-born, 35,700
or 6.3 percent of native-born residents are busi-
ness owners while nearly 90,000 or 11.5 percent
of immigrants are. In Staten Island, 6.7 percent
of native-born residents are self-employed, com-
pared to 10.5 percent of immigrants.
3
Similar trends are apparent within individ-
ual low-income neighborhoods. For instance, in
the Highbridge/South Concourse section of the
Bronx, the native-born self-employment rate (3.8
percent) is less than a third the foreign born self-
employment rate (12.9 percent). Meanwhile, the
native-born self-employment rate is less than
half the foreign-born self-employment rate in
several other disadvantaged communities, such
as Central Harlem (7.3 percent native-born vs.
16.8 percent foreign-born), Jamaica (3.6 percent
vs. 9.2 percent), Morissania/Belmont (4.1 percent
vs. 11.5 percent) and Ozone Park/Woodhaven (4.9
percent vs. 13.4 percent).
4
Overall, there is a remarkably strong correla-
tion between self-employment, median income
and place of birth at the neighborhood level.
This was apparent when we examined self-em-
ployment rates in the city’s 55 Census-defined
neighborhoods. We divided the 55 neighborhoods
into three groups—a bottom third, representing
the 18 neighborhoods with the lowest rates of
self-employment; a middle third featuring the 18
neighborhoods with the next highest rates of self-
employment; and a top third of the 19 neighbor-
hoods with the highest self-employment rates in
the city.
Center for an Urban Future Launching Low-Income Entrepreneurs
4
The bottom third—18 neighborhoods with
self-employment rates between 3.9 percent and
7.4 percent—are both poorer than the rest of the
city and have a disproportionate share of native-
born residents.
5
Averaged together, the 18 neigh-
borhoods with the lowest self-employment rates
have a median income of $25,150, a foreign-born
share of 32.2 percent and a 6.1 percent self-em-
ployment rate. For example, Brownsville/Ocean
Hill has a 4.5 percent self-employment rate, a
median annual income of $19,900 and a 72 per-
cent native-born population. The Soundview/
Parkchester area of the Bronx has a 5.6 percent
self-employment rate, a median annual income of
$22,700 and a population that is 70 percent native
born. Additionally, East New York, Co-op City, the
Rockaways, Morrisania, Bed-Stuy, East Harlem,
Mott Haven and Staten Island’s North Shore all
have higher than average proportions of native-
born residents, low median incomes and among
the lowest self-employment rates in the city.
In comparison, the middle third—18 neigh-
borhoods with self-employment rates between
7.4 percent and 9.8 percent—actually had lower
median annual incomes than the bottom third
($23,718, on average) but much higher levels of
foreign-born residents. In all but two of these 18
neighborhoods, the share of the population that
is foreign-born exceeds the citywide average
(36.8 percent). For instance, in Jackson Heights,
where 63 percent of residents are foreign-born,
the median annual income is $22,900, but the
self-employment rate is 9.6 percent. In Univer-
sity Heights/Fordham (40 percent foreign-born),
the median income is just $14,811 but the self-
employment rate is 9.3 percent. Other neighbor-
hoods with median incomes below $25,000 but
fairly high rates of self-employment include Elm-
hurst/Corona (9.3 percent), Sunset Park (9.1 per-
cent) and Bensonhurst (9.0 percent).
The native-born residents who are turning to
entrepreneurship in greater numbers have more
financial resources. Greenwich Village, the Upper
West Side, the Upper East Side and Turtle Bay all
have some of the highest self-employment rates
in the city and are also among New York’s wealth-
iest neighborhoods, with median annual incomes
of between $59,600 and $70,700. Brooklyn’s Park
Slope, Carroll Gardens and Brooklyn Heights—
with self-employment rates of 12.3 percent and
higher—all have lower median annual incomes
than the top neighborhoods in Manhattan, but
they are still higher than average, and residents
have much higher levels of educational attain-
ment. (Overall, the 19 neighborhoods with high-
est self-employment rates have an average me-
dian income of $38,583, a foreign-born share of
32.5 percent and a self-employment rate of 12.6
percent.)
Our research uncovered additional data sug-
gesting that low-income, native-born residents
in New York are not pursuing entrepreneurship
in large numbers. For instance, we examined the
number of establishments per capita for the 50
ZIP codes in the city with the lowest median in-
comes—all of which have median individual in-
comes under $25,000.
6
The ZIP codes with a larger
Sources: 2007-2011 American Community Survey
13.3%
6.7%
12.3%
10.6%
Manhattan Other 4 Boroughs
Self-Employment Rates by
Nativity, Manhattan vs.
Other Boroughs
Native-born Foreign-born
Center for an Urban Future Launching Low-Income Entrepreneurs
5
share of native-born residents than the city aver-
age have 1.2 establishments per capita, whereas
the ZIP codes with a smaller percentage of na-
tive born residents than the city average have 1.9
establishments per capita. For example, there are
just 0.7 establishments per capita in Bed Stuy’s
11221 ZIP code, where the median income is
$20,667 and 73.4 percent of the population is na-
tive-born. However, in Bensonhurst’s 11204 ZIP
code, which has a similar income level ($21,281)
but a smaller share of native-born residents (54
percent), there are 2.4 establishments per capita.
7
Additionally, public housing developments
across the five boroughs—where nine out of ten
residents are black or Latino, and the median
household income is $20,700—appear to have the
lowest rates of business formation in the city. In
2012, there were approximately 218,000 working-
age residents living in New York City Housing Au-
thority (NYCHA) buildings, but only 286, or 0.13
percent, reported owning their own business.
“Entrepreneurship among low-income, na-
tive-born minorities is quite low,” observes An-
dre Taylor, founder of the Taylor Insight Group,
a New York-based consultancy that encourages
entrepreneurship among minorities. “While there
have been statistics suggesting occasional surges
in entrepreneurial activity among African-Amer-
icans, my experience among the minority popula-
tion in general is a resistance to launching a busi-
ness.”
8
Citywide, native-born Whites make up 39 per-
cent of all self-employed workers (59 percent of
whom have at least some college education), com-
pared to just 5.6 percent for African Americans, 5
percent for native-born Hispanics and 1 percent
for native-born Asians. In the Bronx, Brooklyn
and Queens, foreign-born residents make up the
majority of the self-employed, but among the na-
tive-born in those boroughs, whites predominate:
In Brooklyn, 36 percent of the self-employed are
native-born White, compared to 7 percent African
American and 5 percent native-born Hispanic. In
4.4%
8.3%
13.3%
6.3%
6.7%
8.6%
10.2%
9.7%
12.3%
11.5%
10.5%
10.9%
Bronx Brooklyn Manhattan Queens Staten Island NYC
Self-Employment Rates by Borough, Native-born vs. Foreign-born
Native Born Foreign Born
Sources: 2007-2011 American Community Survey
Center for an Urban Future Launching Low-Income Entrepreneurs
6
Queens, where foreign-born residents make up
the vast majority of business owners, 22 percent
are native-born White, compared to just 5 percent
African American and 3 percent Hispanic.
The different rates of entrepreneurial activ-
ity by nativity and race are not unique to New
York. A 2013 report by the Kauffman Foundation
found that 490 out of every 100,000 immigrants
in the U.S. start a business each month (an en-
trepreneurial activity rate of 0.49 percent), nearly
double the rate of native-born Americans (which
have an entrepreneurial activity rate of 0.26 per-
cent).
9
Additionally, the African American rate of
business creation is just 0.21 percent, lower than
the rates for whites (0.29), Asians (0.31 percent)
and Latinos (0.40 percent).
10
But while the rate of business formation
among low-income minorities is low, many of
those we interviewed believe there now exists a
tremendous opportunity to change this. “There is
a huge potential to increase the number of low-
income non-immigrant entrepreneurs,” says Don-
na Kelley, an associate professor of entrepreneur-
ship at Babson College.
“There is an opportunity to do something in
the Harlems and the Bed-Stuys and those other
communities where you have folks who can be
turned on and given the skills and tools to be en-
trepreneurs,” adds Sheena Wright, president and
CEO of United Way of New York City and former
head of the Abyssinian Development Corpora-
tion. “There are real opportunities and resources
that can be used to really move the needle on en-
trepreneurship for low-income people.”
With fundamental changes to the economy
punishing those without post-secondary cre-
dentials, Kelley, Wright and others believe more
low-income individuals could begin to view en-
trepreneurship as an attractive option. After all,
the manufacturing businesses that once offered
decent-paying jobs and an opportunity for mo-
bility for people with limited skills have largely
moved overseas, and a significant share of the
new jobs created in recent years offer extremely
low wages, no benefits and little opportunity for
upward mobility. In this economic environment,
those who previously shunned the idea of starting
a business in favor of the safer route of getting a
job might view entrepreneurship in a whole new
light.
There is also growing evidence that public and
private sector initiatives in New York and else-
where to promote and support entrepreneurship
among low-income people can have an impact—
from the annual Lemonade Day that gives young
people the confidence that they can be a success-
ful entrepreneur to programs that promote and
teach entrepreneurship to kids in public schools
or community colleges.
Perhaps most importantly, many residents
of disadvantaged communities are already dem-
onstrating significant entrepreneurial potential.
Much of this is under the radar of policymakers
and the media, but hundreds if not thousands of
low-income residents in New York are earning
income from informal “side-hustles,” from cut-
ting hair in their apartment to day care. “There
Sources: Bureau of Labor Statistics 2010
1%
5%
6%
39%
49%
Native-born
Asian
Native-born
Hispanic
Native-born
Black
Native-born
White
Foreign-born
Share of NYC’s Self-Employed
by Nativity and Ethnicity
Center for an Urban Future Launching Low-Income Entrepreneurs
7
is a tremendous opportunity here, because there’s
just such a huge amount of entrepreneurial tal-
ent, energy and desire,” says Magnus Greaves, a
serial entrepreneur who co-founded 100 Urban
Entrepreneurs, which supports young entrepre-
neurs from economically disadvantaged commu-
nities.
Increasing the number of low-income, native-
born entrepreneurs in New York, however, may
not be possible without first addressing the ob-
stacles that prevent many from even considering
entrepreneurship and make it difficult for those
who do start businesses to get off the ground. For
instance, people living in poverty often have lim-
ited exposure to entrepreneurial role models and
mentors, a problem since entrepreneurs often get
the confidence to start a business after seeing
family, friends and members of their communi-
ty succeed with their own ventures. Low-income
individuals are also more likely to have limited
financial literacy skills, not to mention paltry sav-
ings, poor credit histories and limited access to
friends and family who can help finance a new
business. And some are deterred from starting a
business because earning even meager income
from such a venture might cause them to lose gov-
ernment benefits, such as Medicaid, food stamps
or housing subsidies.
Meanwhile, even as New York economic de-
velopment officials have smartly ramped up sup-
port for entrepreneurs in recent years, there has
been little focus on encouraging more low-income
people to consider entrepreneurship. Although a
number of centers offer workshops and one-on-
one technical assistance for small business own-
ers and would-be entrepreneurs, several low-in-
come communities across the five boroughs lack
these resources. “We have a lot of entrepreneurial
assistance in New York City, but we have to do a
better job at connecting them to urban entrepre-
neurs and being sure we have right mechanism of
engagement in place,” says Bishop Mitchell Taylor,
founder and CEO of the East River Development
Alliance, a community organization headquar-
tered in Queensbridge Houses, the largest public
housing community in the nation.
Meanwhile, the workforce development cen-
ters that help jobless New Yorkers find work gen-
erally steer clear of recommending entrepreneur-
ship, and the already small number of programs
that teach entrepreneurship in the city’s public
schools have been cut back in recent years.
New York certainly isn’t the only city that
could be doing more. Marc Morial, the president
and CEO of the National Urban League and an
entrepreneur himself, says that policymakers
around the country have largely failed to make
expanding low-income entrepreneurship an eco-
nomic and educational priority. “We haven’t cre-
ated the kind of ecosystem which begins in high
school or junior high through community college
to nurture and support this idea.”
New York could be a leader in this area. As
we detail in this report, there are many achiev-
able steps that city economic development lead-
ers, community-based organizations, workforce
development providers and education officials
could take to expand the pool of low-income en-
trepreneurs. Doing so could make a world of dif-
ference for low-income New Yorkers, spark eco-
nomic growth in many distressed neighborhoods
and bolster the city’s overall economy.
EDUCATION AND ENTREPRENEURSHIP
In New York City, 59 percent of individuals who are self-employed have at least some college
education, compared to 53 percent nationally and 55 percent in New York State.
11
Self-employment is highest among people with a bachelor’s degree in every borough except for the
Bronx, where the largest percentage of self-employed workers has no more than a high school diploma
(though they are self-employed at a fairly low rate of 8.6 percent). In Manhattan, 29 percent of self-
employed workers have bachelor’s degrees, a greater portion than for any other level of educational
attainment. This is also the case citywide—those holding bachelor’s degrees make up the largest group
of self-employed at 32.6 percent.
Nationally, entrepreneurial activity rates are highest among those with the lowest levels of
educational attainment. According to the Kauffman Foundation, the rate of business creation is 0.52
for individuals with less than a high school degree, compared to 0.28 for college graduates.
Bottom Third: Neighborhoods
with Lowest Self Employment
Rates
Neighborhood
% self
em-
ployed
Median
income
for per-
sons 15+
years
(2010)
% of
popu-
lation
that is
for-
eign-
born
East New York/Starrett
City
3.9% $20,572 33.6%
Brownsville/Ocean Hill 4.0% $19,939 27.9%
Throgs Neck/Co-op City 4.3% $31,441 18.9%
Williamsbridge/
Baychester
4.8% $27,524 38.4%
East Harlem 4.8% $19,153 25.4%
Soundview/Parkchester 5.6% $22,698 29.8%
East Flatbush 5.8% $26,705 53.0%
North Shore 6.2% $30,513 24.6%
Jamaica 6.5% $25,958 40.0%
Mott Haven/Hunts Point 6.8% $13,022 28.7%
Queens Village 6.9% $33,032 42.0%
Rockaways 7.0% $25,240 27.2%
Flatlands/Canarsie 7.1% $32,873 41.0%
Pelham Parkway 7.1% $27,086 35.0%
Morrisania/Belmont 7.2% $13,741 28.1%
South Shore 7.2% $41,180 14.3%
Coney Island 7.3% $20,582 51.3%
Bedford Stuyvesant 7.4% $21,441 20.1%
Average 6.1% $25,150 32.2%
Middle Third: Neighborhoods
with Middle Range of Self-
Employment Rates
Neighborhood
% self
em-
ployed
Median
income
for per-
sons 15+
years
(2010)
% of
popu-
lation
that is
for-
eign-
born
Bushwick 7.4% $18,432 37.2%
Washington Heights/
Inwood
7.8% $19,201 49.4%
South Crown Heights 7.9% $24,036 45.4%
South Ozone Park/
Howard Beach
7.9% $27,083 46.5%
North Crown Heights/
Prospect Heights
8.1% $27,357 30.9%
Kingsbridge Heights/
Mosholu
8.1% $18,319 40.5%
Middle Village/
Ridgewood
8.2% $28,592 37.4%
Highbridge/South
Concourse
8.8% $16,001 39.4%
Riverdale/Kingsbridge 8.9% $31,599 32.0%
Bensonhurst 9.0% $21,870 52.9%
Sunset Park 9.1% $21,286 46.8%
Elmhurst/Corona 9.3% $22,384 66.9%
University Heights/
Fordham
9.3% $14,811 40.4%
Sunnyside/Woodside 9.4% $28,700 58.5%
Bay Ridge 9.4% $30,048 37.1%
Jackson Heights 9.6% $22,916 63.4%
Astoria 9.7% $28,479 43.7%
Flatbush 9.8% $25,817 45.8%
Average 8.8% $23,718 45.2%
Top Third:
Neighborhoods with Highest
Self-Employment Rates
Neighborhood
% self
em-
ployed
Median
income
for per-
sons 15+
years
(2010)
% of
popu-
lation
that is
for-
eign-
born
Sheepshead Bay/
Gravesend
10.0% $26,925 45.7%
Central Harlem 10.1% $23,621 22.1%
Mid-Island 10.1% $34,466 25.4%
Ozone Park/Woodhaven 10.1% $27,531 49.9%
Hillcrest/Fresh Meadows 10.8% $30,236 46.4%
Rego Park/Forest Hills 10.9% $39,867 51.3%
Morningside Heights/
Hamilton Heights
10.9% $22,389 34.7%
Williamsburg/
Greenpoint
11.4% $24,655 24.9%
Flushing/Whitestone 11.7% $27,695 54.7%
Borough Park 11.9% $21,329 34.3%
Lower East Side/
Chinatown
12.1% $24,839 35.6%
Brooklyn Heights/Fort
Greene
12.3% $40,540 18.9%
Stuyvesant Town/Turtle-
Bay
13.4% $63,499 23.5%
Bayside/Little Neck 13.5% $36,422 41.3%
Upper East Side 13.7% $70,675 21.4%
Chelsea/Clinton/
Midtown
14.8% $51,129 25.8%
Park Slope/Carroll
Gardens
16.1% $47,011 17.2%
Greenwich Village/
Financial District
17.9% $60,680 23.1%
Upper West Side 18.3% $59,584 21.2%
Average 12.6% $38,583 32.5%
Self-Employment Rates in New York City’s 55 Census-De?ned Neighborhoods
Neighborhoods with the lowest self-employment rates are predominantly low-income and native-born, while
those in the middle range are still low-income but with much higher percentages of foreign-born residents
Source: 2007-2011 American Community Survey
Entrepreneurship should never be the primary
route to economic empowerment for low-income
individuals. After all, starting a business is inher-
ently risky, and the failure rate is high even for
the affluent and well-educated. However, there
are compelling economic reasons why more low-
income New Yorkers should turn to entrepre-
neurship in the years ahead.
For decades, New York’s economy offered
clear pathways to the middle class for individuals
without a college degree. The city had hundreds
of thousands of jobs in the manufacturing, con-
struction and clerical fields that provided decent
wages and career ladder opportunities, even for
those with relatively little education. While some
of these pathways still exist, today’s economy is
producing fewer and fewer middle-income jobs
that are accessible to those without post-second-
ary career training. The result is that an alarming
number of New Yorkers who don’t have college
degrees are unemployed or stuck in low-wage,
dead-end jobs.
In this new economic environment, entrepre-
neurship offers a viable alternative path to eco-
nomic self-sufficiency and upward mobility.
“We’re no longer in a day when you work for
one company for 40 to 50 years and get a gold
watch at the end of the day,” says dt ogilvie, dean
of the E. Philip Saunders College of Business at
the Rochester Institute of Technology and former
director of the Center for Urban Entrepreneur-
ship and Economic Development at Rutgers Busi-
ness School. “In the old days, if your family came
up from the South and you got a job working in
the [manufacturing] plant, then you were able to
obtain a middle-class lifestyle. That’s more diffi-
cult today because they don’t have that obvious
path. For a lot of people, they’re never going to be
able to have that path, so they’re going to have to
create their own path. And entrepreneurship is a
way to do it.”
In 1950, manufacturing and trade comprised
over 50 percent of the city’s jobs and paid a high-
er hourly wage than the finance sector.
12
Now, the
manufacturing sector accounts for less than 2
percent of the city’s jobs.
13
According to a 2012 report by the National
Employment Law Project, since the first quarter
of 2001, employment has grown by 8.7 percent
in lower-wage occupations and by 6.6 percent in
higher-wage occupations. However, jobs in mid-
wage occupations have declined by 7.3 percent
during this time. The report also found that three-
fifths of all jobs lost during the recession paid
middle-income wages, whereas about three-fifths
of new jobs created during the recovery pay low
wages.
14
“When we look at where there are a large
number of jobs that are growing, many of those
are low-wage,” says Stephanie Luce, a professor
of labor studies at CUNY. “Unfortunately many of
them are not career-track jobs. If you’re a cashier
or retail sales person, what we find is that there is
just very little upward mobility.”
Of the 20 occupations in New York City that
are expected to grow at the fastest rate over the
next decade, 16 pay less than the national me-
dian household income of $49,445, and four pay
under the federal poverty threshold for a family
of four.
15
The two occupations with the highest
projected growth rates in New York City—home
health aide and personal care aide—offer annual
median wages of $20,000 and $19,000 respective-
ly.
16
Meanwhile, the vast majority of higher paying
jobs that are projected to increase over the next
decade require post-secondary training.
These economic trends have led to high un-
employment rates and low earnings for individu-
als with low levels of education. Indeed, the em-
AN ALTERNATIVE ROUTE TO ECONOMIC SUCCESS
Entrepreneurship offers a vehicle to both economic self-suf?ciency and neighborhood
development, but many New Yorkers don’t see it as an option
Center for an Urban Future Launching Low-Income Entrepreneurs
10
ployment participation rate (the percentage of
adults who either have jobs or who are seeking
work) for New York City residents is only about
50 percent. In 2010, during the peak of the Great
Recession, the unemployment rate for those with
less than a high school degree was 14.9 percent
and 10.3 percent for individuals with only a high
school diploma or GED, compared to 5.4 percent
for individuals with a bachelor’s degree.
Black and Latino men, in particular, experi-
ence unemployment rates that are consistently
higher than those for Whites and other ethnic
groups. In fact, unemployment for black and La-
tino males more than doubled during the course
of the recession, when the city lost over 170,000
jobs.
New Yorkers with limited educations are not
only less likely to have jobs than more highly
educated residents these days; they also earn a
lot less. According to Census data, a high school
graduate in New York City between the ages of 25
and 29 earns an average of about $17,000 a year.
One year of college without a degree bumps the
average income up to $22,000.
In recent years, the number of low-paying jobs
in the city has been on the rise. In 2012, a whop-
ping 35 percent of adult New Yorkers worked
in low-wage jobs, up from 31 percent in 2007.
17
Alarmingly, 47 percent of residents in the Bronx
and 40 percent in Brooklyn worked in low-wage
jobs.
18
Even though starting a business isn’t a vi-
able option for many low-skilled workers, creat-
ing new paths into the middle class is extremely
important in this economy, says Thomas Boston,
an economist at the Georgia Institute of Technol-
ogy who specializes in entrepreneurship. “Even
when the economy turns around and begins to
grow again,” says Boston, “it’s not going to create
the kinds of jobs that were available in the past.”
“The low-wage worker is always going to be
on the chopping block first,” agrees Catherine
Barnett, executive director of Project Enterprise.
“So just out of necessity people are going to be—
OFF THE STREETS AND INTO A BUSINESS
Re-Connect is a small-scale entrepreneurship initiative based in Bedford-Stuyvesant run by Father Jim
O’Shea, a Catholic priest from the Monserrate church. The initiative helps young men between the
ages of 17 and 24 develop a taste for on-the-books entrepreneurship in an effort to get them off the
streets and into a legitimate trade. Many participants have little education and have recently served
time in prison.
Re-Connect organizes a stand that the young men both staff and supply which sells fruits,
vegetables, and baked goods. Currently eight men sell these goods at farmers markets and church
markets in Bedford-Stuyvesant. A local church provides the kitchen space for the production of baked
goods. In addition to the entrepreneurial side of the operation, Re-Connect provides the men with nine
hours a week of GED classes, allowing them to pursue their education while earning a modest income.
Father O’Shea is looking to start a catering business with the food that the men currently sell and hopes
to rent industrial kitchen space to expand.
Unlike some programs that help low-income young men throughout the city, at Re-Connect there
is no time limit on a participant’s involvement. After a young man leaves the program he is encouraged
to return as a mentor to the younger participants.
Many of the eight young men that are involved in the project were drug dealers before they
started working with Father O’Shea. While he does not condone selling drugs, Father O’Shea says the
experience has equipped most of these young men with astute business acumen. “They all understand
money and they know what it means to work.” Father O’Shea says. The excitement of entrepreneurship
also may appeal to these young men, already prone to risk taking, especially in contrast with the low-
skilled jobs that are otherwise available to people with no marketable credentials or skills.
Re-Connect is just one of many programs that, if brought to scale, could provide opportunities for
young people from poor and working-class neighborhoods to improve their economic prospects and
participate in the city’s formal economy. “There’s no end to the amount of guys that qualify for this,”
says Father O’Shea.
Many of the city’s poorest neighborhoods have
a dearth of locally-owned businesses, but this
doesn’t mean there aren’t entrepreneurial peo-
ple. Far from it. Indeed, thousands of low-income,
native-born residents across the five boroughs
are already engaged in entrepreneurial activi-
ties; they just take place outside normal economic
channels.
All over the city, there are barbers cutting
hair in their living rooms, people baking cakes for
neighborhood birthdays, teens deejaying parties,
moms operating informal child care centers, men
washing windows of local businesses, kids selling
M&M’s on the subway, amateur photographers
taking head shots for aspiring models and tech-
savvy high school students building Websites for
friends. On Harlem’s 125th Street between Lex-
ington and St. Nicholas Avenues, we found at least
a half dozen people doing business informally, in-
cluding a man who sells seafood cooked on-site
and another who sells CDs out of his van.
“It’s all over,” says Catherine Barnett, execu-
tive director of Project Enterprise, speaking of
the number of low-income New Yorkers who earn
income by operating “side-hustles” like these.
“It’s very prevalent, particularly in this econom-
ic environment. People are always looking for a
side-hustle because people need to patch income.
That’s the reality. That’s not going away anytime
soon.”
For many low-income native-born house-
holds, the informal economy provides invaluable
supplementary income and presents a dynamic
vehicle for harnessing and promoting entrepre-
neurship. “You have a side-hustle, you are an en-
trepreneur,” says Magnus Greaves, co-founder of
100 Urban Entrepreneurs. “It might not look like
a traditional business, but that’s a business. The
problem is that not enough of them are turned
into formal businesses.”
Regina Smith, executive director of the Har-
lem Business Alliance, says local government
should try to capitalize on the enterprise of low-
income, native-born people. “We have nothing but
talent and people who can operate businesses and
do it well,” she says. “The impediment [is] transi-
tioning them from the underground economy to a
legitimate business.”
There’s also a number of illegal side hustles,
from the numbers joint to “the local street phar-
macist,” that are run by entrepreneurial-minded
people. “There’s a lot of creativity; we have to
put people in situations where they can unleash
that creativity,” says dt ogilvie from the Roches-
ter Institute of Technology. “Right now, the choice
is limited for the kids to ‘should I go on welfare,
should I get into a life of crime to support my-
self and my family or maybe do side hustles on
the side.’ But if we can give them another choice
where they can get remunerated for their work by
having their own business, then they’re going to
be better off.”
UNDERGROUND ENTREPRENEURS
If cultivated, the ‘side-hustles’ common in many low-income neighborhoods could blossom into
mainstream businesses
“We have nothing but
talent and people who can
operate businesses and do
it well ... The impediment
[is] transitioning them from
the underground economy
to a legitimate business.”
Center for an Urban Future Launching Low-Income Entrepreneurs
12
There are a number of reasons why relatively
few low-income, native-born New Yorkers start
businesses. Not surprisingly, access to capital is
a major challenge. After all, launching a business
requires a significant amount of financing, and
many low-income people have little of their own
savings, limited connections to friends and fam-
ily with wealth and, in many cases, poor credit
histories. But our research finds that other more
fundamental problems have kept many people in
disadvantaged communities from even consider-
ing entrepreneurship. The following are some of
the challenges.
Limited Exposure to Role Models
On a stretch of Liberty Avenue in Richmond
Hill, immigrant-owned businesses abound. From
Asian-owned corner markets, to Guyanese re-
tail clothing or “fashion” stores, to the Hispanic-
owned nail salon, the operators of these small
businesses, more often than not, look like their
patrons. But in many low-income communities
with a large native-born population, there are not
only few native-owned businesses, but few busi-
nesses at all. Even the handful of fast food fran-
chises are owned by people from outside of the
community, many of them immigrants.
This lack of role models is a major reason
why the native-born go into entrepreneurship at
a lower rate. Andre Taylor explained how seeing
local business owners and entrepreneurs, includ-
ing his father, opened up the realm of possibili-
ties for him. “Seeing it happen reinforced that it
was an option,” says Taylor who grew up in Crown
Heights in the 1960s and ’70s.
Taylor recalls seeing the respect his father
garnered in the community as he sold furniture
door to door. He says seeing people like him who
were well respected and financially self-suffi-
cient—and then connecting the dots between
their status and business ownership—made him
believe that he too could be an owner. Exposure
to examples of ownership in your own immediate
reality is imperative to fostering entrepreneur-
ship—you have to see it to believe it.
Regina Smith with the Harlem Business Alli-
ance agrees. She says, in reference to the black
native-born community in particular: “Our youth
don’t necessarily see enough examples outside
of entertainment and sports. Unfortunately, other
than barbershops and beauty salons and some
restaurants, we don’t own too many retail estab-
lishments, and we don’t operate as many busi-
nesses as we used to.”
Instead of seeing people who look like them
owning and operating small businesses, they see
them working for someone else. This sends a sub-
conscious message to those born in the U.S. that
ownership is not for them. “If your family back-
ground isn’t entrepreneurship, becoming a first-
generation entrepreneur is a heavier lift. It’s a
much bigger leap and the whole culture around
being an entrepreneur is not familiar to you,” says
Nancy Carin, executive director of the Business
Outreach Center Network.
On the other hand, seeing people within one’s
own culture and ethnic or racial group owning
businesses can inspire others to become entre-
preneurs. Timothy Stearns, executive director and
founder of the Lyles Center for Innovation and
Entrepreneurship in Fresno, CA, emphasizes the
importance of role models. “They can see some-
one that looks a lot like them and they discover
that they can do what they’d hoped to do,” he says.
Failing to Promote Entrepreneurship as a Ca-
reer Option
Without much exposure to entrepreneurs in
their own family or neighborhood, low-income
individuals may need encouragement from other
BARRIERS TO ENTREPRENEURSHIP
For low-income New Yorkers born in this country owning their own business may be a foreign
concept
Center for an Urban Future Launching Low-Income Entrepreneurs
13
Establishments per Capita in NYC’s 50 Poorest ZIP Codes
Low-income ZIP codes with high foreign born populations have signi?cantly more local businesses.
ZIP Codes with Fewest Establishments per Capita
ZIP Code Neighborhood
Number of
Establishments
Population
Establishments
/ capita (%)
Population that
is foreign-born
(%)
Median Indi-
vidual Income
11692 Arverne 90 18,540 0.5% 25.72% $21,176
11233 Stuyvesant Heights 364 67,053 0.5% 24.20% $24,008
11239 Starett City 76 13,393 0.6% 30.06% $16,328
10456 Morrisania 581 86,547 0.7% 32.03% $13,351
11221 Bushwick / Bedford-Stuyvesant 566 78,895 0.7% 26.56% $20,667
10039 Central Harlem, North 183 24,527 0.7% 19.53% $19,210
10472 Soundview 506 66,358 0.8% 37.73% $17,621
11208 Cypress Hills 745 94,469 0.8% 35.46% $21,082
10453 Morris Heights 630 78,309 0.8% 39.08% $14,769
11691 Far Rockaway 490 60,035 0.8% 32.62% $19,940
Zip Codes with Most Establishments per Capita
ZIP Code Neighborhood
Number of
Establishments
Population
Establishments
/ capita (%)
Population that
is foreign-born
(%)
Median Indi-
vidual Income
11355 Flushing / Murray Hill 1,832 85,871 2.1% 70.41% $21,999
11220 Sunset Park 2,175 99,598 2.2% 53.03% $18,721
11204 Parkville / Bensonhurst 1,902 78,134 2.4% 44.05% $21,281
11223 Gravesend / Homecrest 1,948 78,731 2.5% 45.40% $22,269
11219 Borough Park 2,581 92,221 2.8% 39.84% $18,870
11211 Williamsburg 2,766 90,117 3.1% 20.68% $22,408
10002 Chinatown / Lower East Side 2,872 81,410 3.5% 44.57% $20,103
11232 Industry City / Sunset Park 1,174 28,265 4.2% 45.51% $20,973
11354 Flushing / Murray Hill 2,704 54,878 4.9% 61.90% $23,920
10474 Hunts Point 663 12,281 5.4% 26.57% $13,928
Sources: 2010 Census. Census County Business Patterns 2010.
sources if they are to see business ownership as a
viable career option. “It’s a matter of helping peo-
ple see the potential that entrepreneurship can
be a career,” says dt olgilvie.
However, our research finds that there are
very few efforts in New York City to promote en-
trepreneurship as a career path for individuals in
disadvantaged communities.
New York City has a wealth of government of-
fices and nonprofit intermediaries that support
existing small business owners as well as indi-
viduals who wish to start their own businesses.
These range from city-sponsored Small Business
Solutions Centers and federally-funded Small
Business Development Centers to chambers of
commerce and microfinance groups like Accion,
the Business Outreach Center and Project Enter-
prise. But these entities primarily serve individu-
als who already own a business or are inclined to
start one. There is little effort to encourage other
people to consider entrepreneurship.
The city’s school system offers relatively few
programs that teach entrepreneurship—and the
number of such programs has declined in recent
years. The city’s workforce development system,
which is often the first stop for unemployed New
Yorkers who are seeking new opportunities, does
virtually nothing to promote entrepreneurship
as one option for economic self-sufficiency. And
while city economic development officials have
smartly embraced entrepreneurship in recent
years, little attention has gone into initiatives that
would increase the overall pool of low-income
entrepreneurs.
“More people should be exposed to [entre-
preneurship],” says Steve Mariotti, founder of the
Network for Teaching Entrepreneurship (NFTE).
“To me it’s about self-actualization. Somebody
can’t be self-actualized if they don’t know the al-
ternatives.”
“People need to understand that it’s OK to be-
come an entrepreneur just in order to make the
$50,000 salary that you couldn’t make elsewhere,”
adds Magnus Greaves. “Becoming an entrepre-
neur and starting your own business doesn’t mean
you have to go all-in and become a multi-million-
aire. We need to encourage people and let them
know that it’s OK to start with different types of
goals. We’re not all trying to be Mark Zuckerberg.”
The Importance of Mentors
In the absence of entrepreneurial parents and
childhoods spent working in the family business,
potential entrepreneurs need exposure to men-
tors with their own businesses. Knowing how to
implement a business plan and manage a busi-
ness day-to-day can’t just be taught at a work-
shop, or even a nine-week course, because no one
can anticipate all the hiccups and challenges in
advance. Even more importantly, a classroom is
In the Bronx, native-born
individuals account for
67%
of the overall
population
34%
of the borough’s
self-employed
“[T]hose individuals
who are successful
at starting a business
generally have had
someone in their
immediate family or an
associate who was also
an entrepreneur. ”
Center for an Urban Future Launching Low-Income Entrepreneurs
15
not always an appropriate setting in which to pick
up the skills of running a business. Based on their
hands-on experience, mentors can provide direc-
tion in the context of real-world problems.
“Role models are really important,” says Thom-
as Boston. “My research has found that individu-
als who start businesses, particularly those indi-
viduals who are successful at starting a business
generally have had someone in their immediate
family or an associate who was also an entrepre-
neur. And that desire to become an entrepreneur
was nurtured within that environment.”
Beyond solving business problems, mentors
teach budding entrepreneurs a wide variety of
soft skills, ranging from how to network and ap-
proach potential clients to how to behave at din-
ner. “If you’re trying to work as a business per-
son, trying to negotiate with someone and build
a relationship, you want to make sure you know
the proper way of going about doing that, how to
present yourself to people, how to work a crowd,
selling and negotiating—all of these elements are
important,” says Timothy Stearns at the Lyle Cen-
ter.
However, like role models, mentors are few
and far between in many low-income, native-
born communities in New York.
Basic Financial Literacy
Financial issues like developing a savings
plan, paying off debt and balancing a checkbook
have a major impact on one’s ability to raise capi-
tal and make smart decisions about running a
business. Unfortunately, too many low-income
residents were never taught about basic financial
literacy. Many didn’t learn it from their parents,
and it simply wasn’t taught elsewhere.
Catalina Castano, former director of the
Brooklyn Small Business Development Center,
says this is the biggest problem among her clients.
“Financial management among the low-income is
a huge problem—personal financial management.
They came to us with credit issues that affect their
ability to get loans to grow their business, so we
tried to refer them to places where they can get a
strong financial education on the personal side.”
When Diane Williams was a little girl, she re-
members her father sitting at the kitchen table,
balancing the family’s finances and filing away
bills. She says the family called him The God-
father because everyone came to him for loans,
and, in her words, if you didn’t pay him back, “He
wasn’t loaning you nothing else.”
Williams’ exposure to managing the family’s
finances, however, is exceptional. “Non-immi-
grants don’t have the family and financial lead-
ership,” she says. “We were never taught how to
… manage money, and a lot of times it was living
paycheck to paycheck. Those that were on social
services never had the opportunity to do anything
but that, and it became generational.”
Despite her own exposure to managing fi-
nances, Williams says that it remains one of her
biggest challenges as an entrepreneur. “At the end
of the day it’s hard to do your balance sheet and
separate your business expenses from your per-
sonal expenses,” she says.
Williams is hardly alone in this. “A lot of peo-
ple don’t understand the difference between their
business’ money and their personal money,” says
Ed Rogoff, a professor at Baruch College. “We’ve
run programs here for people who fit this de-
scription. So they need a level of financial literacy
first and then they need some business knowl-
edge,” he says. “Take somebody who has never
had a checking account, you start talking about
starting a business it immediately sails into areas
they’re not familiar with.”
Access to Capital
In another lifetime, Sheena Wright, presi-
dent and CEO of United Way of New York City
and former head of the Abyssinian Development
Central Harlem
Foreign-born
Self-employment
16.8%
Native-born
Self-employment
7.3%
Center for an Urban Future Launching Low-Income Entrepreneurs
16
Corporation, practiced law at a technology com-
pany. She says she had a black friend and a white
friend who were both trying to raise funding at
around the same time. When her white friend and
his partners passed the hat around to their fam-
ily and friends, they raised over $500,000. When
her black friend, who had come from a more mod-
est family but went on to graduate from Harvard,
passed the hat around to his family he wasn’t able
to raise much of anything. “He got a lot of con-
gratulations and IOUs and ‘Can you lend me some
money?’ but he could never get the money that he
needed to [get] that beta product out to market,”
Wright says.
Like many immigrant entrepreneurs, Wright’s
white friend was able to call upon family and
friends to give him that initial boost. While her
black friend had the networks and financial
management and literacy skills to put together a
business plan, he lacked the ability to put some
of his own skin in the game. The absence of gen-
erational wealth within his immediate circles was
the difference between failure and success. This
inability to access needed capital represents an-
other hurdle for the low-income, native-born.
“You can have all of the skill and even have
some of the networks to get to that second level,
but if you don’t have the angel investment—that
friends and family round [of financing]—it can
just stop you forever,” says Wright. “There are
lots of low-income people that are going to great
schools and want to be entrepreneurs but don’t
have family and friends that can invest in entre-
preneurial pursuits.”
A 2006 study on barriers to entrepreneurship
details how liquidity constraints, such as limits
to the amount a person can borrow, significantly
limited creation and growth of businesses.
19
Busi-
ness counselors and loan officers that we spoke
with for this report consistently cited this as one
of the biggest hurdles their clients face in trying
to start a business.
While access to capital is an issue for all en-
trepreneurs and small business owners, it’s par-
ticularly acute for the very low-income.
Most entrepreneurs start a business using
their own resources or their family’s resources, he
says, including home equity lines or credit cards.
“They might bootstrap, meaning they take reve-
nue earned from their jobs to put into their com-
panies to get them going,” says Thomas Boston.
But, he adds, very low-income individuals may
have poor credit reports and may not have credit
cards, home equity to draw upon or a network of
relatives to loan them money to get started. This
makes it very difficult to launch a new venture.
Starting a business takes an estimated 4.4
times the median net worth of the average afri-
can-american household ($5,677) and four times
the median net worth of the average Latino house-
hold ($6,325), compared to just 22 percent of the
median net worth of the average White household
($113,149).
20
Meanwhile, the microfinance organizations
that do offer small loans for lower-income start-
ups tend to focus their lending on immigrants.
For instance, an estimated 75 percent of the small
business loans in New York made by Accion, one
of the country’s largest microfinance organiza-
tions, goes to immigrants. And some potential
entrepreneurs with very low incomes may not be
able to get help even from non-profit micro-lend-
ers because the prospective business owner does
not have the collateral necessary to acquire a loan
and may face a host of other issues including bad
credit and high personal debt.
A Hole in the Safety Net
Starting a business involves taking a big risk,
but many low-income, native-born New Yorkers
are risk averse. One reason is that they have a lot
to lose. While many immigrants don’t have access
to public benefits, from welfare and public hous-
ing subsidies to Medicaid, native-born poor peo-
Highbridge/South Concourse
Foreign-born
Self-employment
12.9%
Native-born
Self-employment
3.8%
Center for an Urban Future Launching Low-Income Entrepreneurs
17
ple often depend on these safety net programs.
Because of the way these systems function, recip-
ients can risk losing their benefits if they attempt
self-employment.
“New immigrant communities don’t benefit
from social safety nets to the extent that low-in-
come, non-immigrants might,” says Brian Gurski,
a Queens-based business advisor and former di-
rector of the LaGuardia Community College Small
Business Development Center.
Several people interviewed for this report
told us that the possibility of losing public ben-
efits was a major deterrent to low-income people
starting formal businesses. Low-income people
who are receiving public assistance “have a big
concern with making more money than their ben-
efits allow,” says Elisa Balabram, director of the
Women’s Business Center in Brooklyn. According
to Balabram, it’s not just Temporary Assistance
for Needy Families (TANF) benefits, but Section
8 housing vouchers, Medicaid, food stamps and
many others.
This was also a finding of a 2003 study by
FIELD, a center at the Aspen Institute that focus-
es on microenterprise. It found that while many
benefits recipients were interested in entrepre-
neurship and primed to be self-employed part or
full time, program stipulations and regulations
often hindered them from pursuing self-employ-
ment for fear of losing their benefits.
The FIELD report also found that what count-
ed as “work” and “employment” in the TANF pro-
gram often conspired against recipients looking
to self-employment, even though incorporating
a path to self-employment and business creation
has been successful in the few states that allow
it. The FIELD study found that after two years in
a TANF-sponsored self-employment program, 37
percent of participants were still self-employed,
while 43 percent went on to find jobs with other
companies. After two years, household income
among participants increased by 87 percent on
average.
Lack of Confidence
Historic bias has led some low-income peo-
ple born in the U.S. to so mistrust the system that
they are reluctant to try to go out on their own. “I
think there is a burnout among American citizens
who go, ‘you know what, the system [is] against
us, it’s not going to happen.’ Whereas that immi-
grant comes in and says, ‘you know what, back
home, they didn’t have running water, here they
do. This place is great, and I can make it happen,’
So there’s an optimism that they come with,” says
George Acevedo, coordinator of the Entrepre-
neurial Assistance Program.
This kind of confidence, trust and optimism
exuded by so many immigrants is a crucial part
of the entrepreneurial mindset that many low-
income, U.S.-born lack. The immigrant entrepre-
neur has already taken a big risk just by leaving
his or her country of origin to seek out better op-
portunities in the U.S. Compared with that, tak-
ing a chance on a new business venture may not
seem nearly as daunting. But for a low-income,
native-born person, even a very low-wage service
job with little potential for growth is more reliable
than taking a chance on a business venture.
The Entrepreneurial Ecosystem
Trish Truitt, special projects manager for the
National Association for Community College En-
trepreneurship has repurposed a well-known
proverb: ‘It takes a village to raise an entrepre-
neur.’ “The biggest thing for entrepreneurs with
no capital is they need community and they need
infrastructure,” says Truitt.
The four components that most interview sub-
jects for this report identified as key to entrepre-
neurial success are networks, mentors, capital and
knowledge. Together, these factors create a kind
of entrepreneurial ecosystem, a structure and
framework that provides support and a clear path
to follow. Aside from city- and school-sponsored
business incubators, however, few places pro-
Ozone Park/Woodhaven
Foreign-born
Self-employment
13.4%
Native-born
Self-employment
4.9%
Center for an Urban Future Launching Low-Income Entrepreneurs
18
vide access to a holistic entrepreneurial support
system. Instead, most entrepreneurial training is
done in a piecemeal fashion with a smattering of
services focusing on everything from improving
financial literacy to help writing a business plan.
Here again, immigrant entrepreneurs may
have an advantage. The natural insularity of im-
migrant communities acts as an ecosystem, which
entrepreneurs can tap into at any point in the pro-
cess of starting and running a business. They may
find informal mentors in their community who
have opened a similar business, or be able to get
capital from pooled community dollars through
arrangements like Susus. These close community
bonds are virtually non-existent in predominant-
ly native-born communities. “Immigrants have a
better support system whether it’s getting financ-
ing, mentoring, working in teams—it’s the com-
munity supporting you,” said Judi Stearn Orlando,
executive director of Astella Community Devel-
opment Corporation in Coney Island.
The immigrant business ecosystem organical-
ly promotes and incubates small entrepreneur-
ial endeavors. “Networks are vital and the classic
[example] is the Korean market—they lend mon-
ey through an informal system, they live upstairs
above the market with the family, the whole fam-
ily contributes downstairs working in the market
and the whole community buys their groceries
there. Most people don’t have that kind of imme-
diate access,” says Timothy Stearns, executive di-
rector of the Lyles Center. “They all utilized each
other’s networks to expand and grow and that’s
where their success came from.”
Lacking a similar close-knit community, non-
immigrants in disadvantaged communities who
decide to venture into entrepreneurship operate
in somewhat of a vacuum. They have to identify a
market, build their own networks and seek sup-
port. Derrick Guest, a local native-born minority
entrepreneur who runs a video production busi-
ness, says that being better integrated into some
kind of network would help him get more expo-
sure to potential clients. “There may be compa-
nies out there that are willing to purchase some
of the services that all of us provide, but how are
we going to get to them because, first of all, they
don’t know about us. People buy from people that
they trust and that they have a relationship with,”
says Guest.
“Immigrants have a better support system
whether it’s getting ?nancing, mentoring,
working in teams—it’s the community
supporting you.”
Jamaica
Foreign-born
Self-employment
9.2%
Native-born
Self-employment
3.6%
Center for an Urban Future Launching Low-Income Entrepreneurs
19
Promoting entrepreneurship among low-income
Americans has not been widely embraced as a way
to alleviate poverty or grow the economy. But that
is beginning to change. As more traditional routes
into the middle class continue to disappear—and
as the benefits of having small businesses in a
community becomes harder to ignore—a number
of promising entrepreneurial programs and ini-
tiatives have sprung up in New York and several
other cities across the country.
Although these programs are diverse and can
involve a number of different facets, they typical-
ly take one of three broad approaches: Some seek
to change the culture in low-income native-born
communities by doing outreach and introducing
individuals, especially young people, to entrepre-
neurial models and mentors. Others mimic some
of the naturally occurring services in immigrant
communities by offering low-interest loans cou-
pled with technical advice. Still others change the
terms of ownership by giving low-income people
the chance to become co-owners in a worker co-
operative, where they not only come to own a
business but gradually learn the skills necessary
to manage it.
The first category includes programs like Op-
eration Hope, which was founded in Los Angeles
in the early 1990s by John Hope Bryant, an Afri-
can American entrepreneur. Among other things,
Operation Hope challenges disaffected inner city
youths to come up with a concrete business plan
they can pitch to mentors from their community.
Participants get some basic training and, depend-
ing on their grade level, a minimal amount of
funding (between $50 and $500), but the program
is not supposed to feel like school, says Bryant.
“I’m convinced that these kids all have unorga-
nized economic energy,” he says, “unorganized,
unfunneled, unchanneled economic energy. I’m
convinced that once you ignite these natural hus-
tlers in a positive way you can change their cul-
ture.”
Operation Hope also works to recruit and train
volunteers to mentor young people in not only en-
trepreneurial matters but also basic financial lit-
eracy, including how to open a bank account and
how to save and invest for the future. In 2007, the
organization opened its Financial Dignity Center
in Harlem that serves as a community platform
for many of these activities.
Both Money Think and Lemonade Day take a
broadly similar approach, if on a slightly smaller
scale. Founded in 2009 at the University of Chi-
cago, Money Think recruits and trains college stu-
dents to serve as financial mentors to young peo-
ple in low-income minority neighborhoods, while
Lemonade Day gives children the opportunity to
build a functioning business—a lemonade stand—
if only for a day. Lemonade Day, which debuted
in Houston in 2007, has grown to include over
150,000 kids in 36 different cities, with New York
City participating for the first time in 2012. After
registering, participants get a $20 loan and a kit
that instructs them on how to set up the business,
including how to market their wares and distrib-
ute profits to employees.
The People Fund, founded in Austin, Texas
in 1994, falls in our second category by provid-
ing low-income entrepreneurs with technical as-
sistance and start-up capital. The organization
operates as a one-stop shop targeting low- and
moderate-income communities; in addition to of-
fering loans, it blankets participants with services
and resources, including technical assistance and
mentoring. Approximately 85 percent of clients
are low- to moderate-income, he says, and 20 per-
cent operate brand-new businesses.
Seattle’s Washington Community Alliance
for Self-Help (CASH) also provides clients with
loans, technical assistance and networking op-
OPENING DOORS
Although few service providers focus on low-income entrepreneurship, several promising
organizations—and models—do exist
Center for an Urban Future Launching Low-Income Entrepreneurs
20
portunities. Through a peer-lending group, the
organization offers microloans to start-ups of be-
tween $500 and $5,000, and larger loans to more
established businesses of up to $35,000. The vast
majority of CASH’s clients are minorities and over
half are women.
A New York-based non-profit called 100 Ur-
ban Entrepreneurs provides many of these same
services but in a more competitive context. Draw-
ing on the approach of venture capitalists and
angel investors, the organization seeks promising
business ideas among low-income minorities in
inner city communities and offers their found-
ers a $10,000 start-up grant while linking them
to a network of contacts. It also enrolls them in
a 12-month basic training course. Fifty percent
of the current grant recipients make between
$10,000 and $40,000 annually, and 41 percent are
between the ages of 21 and 25. The organization
also looks for businesses that will impact the sur-
rounding neighborhoods.
Our last category features several promi-
nent worker cooperatives located in two cities.
In Cleveland, the Evergreen Cooperative Corpo-
ration was founded in 2008 with the goal of es-
tablishing 10 for-profit cooperatives in the city’s
poorest neighborhoods. Based on a corporation in
Spain called Mondragan (which now has over 120
worker-owned companies with a combined $20
billion in combined annual revenues), Evergreen
has already ushered into existence a worker-
owned laundry, an urban farming company and
an energy company. In New York, Si Se Puede,
a worker cooperative in Brooklyn’s Sunset Park
neighborhood, specializes in both residential and
commercial cleaning services, while another co-
operative in the Bronx, called Cooperative Home
Care Associates, focuses on home health care.
Worker cooperatives are businesses that are
owned and controlled by the people who work for
them. They represent an excellent opportunity for
low-income entrepreneurs. As members of a co-
operative, low-income workers not only share in
company profits, but also have an equal say in all
business decisions and in many cases take turns
in most of the company’s managerial positions.
Members typically pay for their ownership stake
gradually through their wages. Since all workers
must “buy in” to the company to be an owner, the
level of risk and the capital needed from any one
person is greatly reduced. For individuals with
less access to capital, this can considerably ease
the barriers to starting entrepreneurial ventures.
Additionally all worker-owners must be
trained in management, finance and business re-
lated activities. Third party non-profit “develop-
ers” have stepped in to provide training to entre-
preneurs looking to establish these businesses
and in doing so provide a framework that helps
individuals navigate the complexities of starting a
business. According to Melissa Hoover, executive
director of the U.S. Federation of Worker Cooper-
atives, the cooperative model is far from new. She
says that a number of worker cooperatives were
founded in the 1970s when a wave of primarily
White and college-educated individuals tried to
create a more utopian society by forming com-
panies that equitably shared profits. Their inten-
tions were to form businesses based on a system
of “collective ownership” that would place both
the risk and the potential rewards of a business in
the hands of the workers. But these days, instead
of being used as a way out of the mainstream
for idealistic college-educated Whites, coopera-
tives have become a way into the mainstream for
low-income African Americans, Latinos and im-
migrants. With over 1,000 members, the Bronx-
based Cooperative Home Care Associates is the
“granddaddy” of large-scale co-ops, but Ever-
green is also extremely ambitious and, despite
being three years old, is already showing results.
Nationwide, the movement is still in its in-
fancy. According to the National Cooperative
Business Association (NCBA), there are only 223
worker co-ops out of an estimated 29,000 coop-
eratives of all types. These worker cooperatives
support a total of only about 3,000 to 4,000 em-
ployees nationally, with an average of 11 workers
per business. They are concentrated in the New
York and San Francisco metropolitan areas with
13 worker co-ops in the state of New York and 56
in the state of California. Twenty state states cur-
rently have no worker cooperatives at all.
Center for an Urban Future Launching Low-Income Entrepreneurs
21
TEACHING ENTREPRENEURSHIP
Few schools provide instruction in these skills but some promising models exist
for how it can be done
For most of this country’s history, teaching entre-
preneurial skills hasn’t been a focus. In fact, for
many years it was widely believed that entrepre-
neurship couldn’t be taught at all. But as more
people realize how important entrepreneurship
is becoming for economic mobility and how few
opportunities most people have to pick up entre-
preneurial skills, the idea has started to gain trac-
tion.
In the absence of family members and other
models and mentors engaged in entrepreneurship,
schools offer one of the few avenues for students
immersed in a culture of poverty to be exposed
to a culture of business creation and stewardship.
There a number of promising models and strate-
gies for incorporating entrepreneurial instruction
into curricula at the primary, secondary and post-
secondary level—as well as after-school programs
for students and programs geared toward people
who are no longer in school. Worthwhile as these
efforts are, they face serious constraints and chal-
lenges.
Kindergarten to High School
Teaching entrepreneurship in K-12 schools
provides an opportunity to expose low-income
minority and native-born students to fundamen-
tal concepts of money, ownership and wealth cre-
ation that they most likely will not get outside of
the classroom. For these kids, the fabric of home
and community life, and in turn, their relation-
ship to money and how to make it, differs starkly
from that of more privileged students.
Several prominent national programs with a
foothold in New York City seek to introduce K-12
students to different facets of starting and run-
ning a business. The most established and well-
known of these are Junior Achievement (JA),
Virtual Enterprise and the Network for Teaching
Entrepreneurship (NFTE).
In terms of the sheer number of students
reached every year, JA is by far the largest of
these programs, though the instruction it pro-
vides is comparatively shallow, amounting to just
one full day per year per student. The JA curricu-
lum, which has programs for students from kin-
dergarten to 12th grade emphasizes experiential
learning. On field trips and between classes dur-
ing the school day or after school, students are
introduced to basic concepts and practices like
personal budgeting and creating business plans,
as well as to real-world businesses and business
owners. In the 2010-2011 school year, over 67,000
students in New York City and Long Island at-
tended JA programs.
Virtual Enterprise and NFTE provide deep-
er entrepreneurial instruction than JA, but they
serve a fraction of the students—and at least in
the case of NFTE, the number of participating
schools has been cut dramatically in recent years.
Virtual Enterprise, an elective course offering
for 11th and 12th graders, served approximately
1,200 students at 40 different schools in New York
City during the 2011-12 school year. Classes run a
simulated business using an online platform with
each student taking on different responsibilities
throughout the semester. Teachers receive a short
training course, though much of the learning hap-
pens online as the students produce business
documents and manage transactions with other
participating schools.
NFTE’s entrepreneurship programs are di-
verse—pitched to students from the 6th through
12th grades—and comparatively intensive.
21
Stu-
dents visit wholesale markets to purchase goods
for resale, develop business plans and, at the end
of school year, enter business plan competitions.
Center for an Urban Future Launching Low-Income Entrepreneurs
22
The teachers who manage the program receive
four days of intense training at NFTE University
and have to take 16 hours of ongoing professional
training to maintain certification. Participating
students receive 65 hours of instruction over the
course of the school year, making it perhaps the
most in-depth K-12 entrepreneurial program in
the city, and probably the country.
Unfortunately, NFTE reaches significantly
fewer kids in New York than it did five years
ago. In 2007, NFTE was in 100 of the city’s public
schools, but in the 2012-13 school year it is down
to just 25 city schools.
22
Although the organization
was founded in the five boroughs and remains
headquartered downtown, four other cities have
more public schools with NFTE programs than
New York—Los Angeles (32 schools), Chicago (32
schools), Dallas (26 schools) and South Florida
(26 schools). Overall, NFTE serves approximately
2,800 students in New York (1,300 at the middle
school level and 1,500 in high school).
23
Although JA and Virtual Enterprise both try
to introduce students to real-world entrepre-
neurs, NFTE’s network of volunteer mentors from
the business community is unique. In fact, NFTE
founder Steve Mariotti credits much of the orga-
nization’s success to its mentorship component,
which in the New York region alone includes over
700 individual volunteers. “The entrepreneur is
the artist of the business community,” says Mari-
otti, “so it’s hard to expose kids to [entrepreneur-
ship] without having someone who’s actually
done the artwork come in, talk and work with the
kids on their business plans.”
All three of these programs—as well as sev-
eral newer programs like Operation Hope, Project
Restaurant, Lemonade Day and MoneyThink—
have to contend with similar challenges and
constraints: In the absence of a more integrated
approach that treats financial and business con-
cepts as a part of the official school curriculum,
they have to find a way to reach students who
already face extensive demands. Making matters
worse, with the ongoing implementation of the
common core curriculum—and the increased fo-
cus on testing in math and English—many if not
most schools in New York City have dramatically
cut down on extracurricular activities. A lot of
schools, says Robert Piercey at NFTE, can’t justify
putting kids in an entrepreneurial class or focus-
ing class time on entrepreneurial lessons, when
so many need remedial work just to pass the Re-
gents exams.
And yet low-income students in underprivi-
leged communities are often the most alienated
by this emphasis on testing. “If you talk to [at-risk
students and dropouts],” says Mariotti, “they’ll say
that they were bored or that the program wasn’t
relevant to what they were interested in. And if
you talk to them further, they all say they’re inter-
ested in how to make money, how to make a living,
because they don’t have any money.”
JA’s low touch/high volume approach works
around the constraints posed by testing by of-
fering programs that can fit more easily into stu-
dents’ existing schedules during the day or after
school. Virtual Enterprise and NFTE’s in-depth
courses require a more focused commitment on
the part of the participating schools. Virtual En-
terprise works a bit like a capstone course for
high school students who are thinking about their
next steps and even helps arrange post-high
school internships for participating students at
major companies. NFTE focuses on integrating
an entrepreneurial component into a student’s
Source: NFTE
100
25
2007 2012
Number of NYC Schools
with NFTE Programs
Center for an Urban Future Launching Low-Income Entrepreneurs
23
regular curriculum, but requires even more of a
commitment than Virtual Enterprise on the part
of the individual school. To be successful, admin-
istrative buy-in is essential.
Community Colleges
If primary and secondary schools are where
the seeds of entrepreneurship are planted, then
community college is the place where those seeds
should be able to sprout and bloom.
Unlike most four-year colleges, community
colleges are not just degree-granting institutions
but community hubs serving a wide variety of lo-
cal needs. In addition to offering an affordable
route to a four-year degree and training for those
looking for professional development, community
colleges host technical assistance offices for lo-
cal businesses and provide space for a whole host
of information sessions and courses for residents
who either already own businesses or plan to start
one. The schools offer a wide spectrum of profes-
sional certificate programs in which lots of entre-
preneurial training happens in bits and pieces. As
a part of a licensing program for interior design,
for example, a student may have to take a course
on business and financial issues, such as sourcing
materials, billing clients, filing taxes and the like.
So far, however, very little has been done ei-
ther in New York or elsewhere in the nation to
link all of these resources together to make entre-
preneurship a viable option for any but the most
driven students, particularly if they are enrolled
in a degree program rather than a non-credit
course. The National Association for Community
College Entrepreneurship is at the helm of inte-
grating entrepreneurial learning into community
colleges. The association lists 278 NAACE mem-
bers around the nation, but just two of the city’s
seven community colleges are members— Bronx
Community College and Kingsborough Commu-
nity College.
Upstate, Daniel Larson, president of Cayuga
Community College near Syracuse, has created
SUNY Engine, a consortium of community college
campuses in the State University of New York
(SUNY) system that helps elevate entrepreneur-
ship as a goal for community colleges. With an eye
toward creating a more sustained and systematic
array of entrepreneurship offerings, the consor-
tium has begun to exchange information on best
practices and to document what’s already hap-
pening in terms of entrepreneurial learning at
participating schools.
“I think this idea of entrepreneurship has an
opportunity to sit very well within the context of
the mission of community colleges, particularly
in terms of workforce development” says Jamie
Lester, a member of the Council for the Study of
Community Colleges. As Lester notes, by work-
ing with municipal agencies and deepening their
own sector-based training programs and relation-
ships with employers, community colleges have
been repositioning themselves as workforce de-
velopment providers rather than just affordable
pathways to a four-year degree. They train nurs-
es, home health aides, computer technicians and
dozens of others to take jobs directly after receiv-
ing their associates or program certification. But,
as yet, there has been no systematic effort to roll
in entrepreneurial training or even to offer the
kind of add-on training given by organizations
like NFTE in high schools. Lester says much more
could be done to integrate financial literacy and
business training in many of the existing credit
courses, and nearly all community colleges need
to create more linkages between the degree pro-
grams and the business resources and courses of-
fered to non-credit students.
“I think this idea of
entrepreneurship has
an opportunity to sit
very well within the
context of the mission
of community colleges”
Center for an Urban Future Launching Low-Income Entrepreneurs
24
“We have math courses and English courses
and social sciences—these are your require-
ments—but we don’t think about [them] in an
interdisciplinary way,” says Lester. Focusing on
entrepreneurship could provide students with a
process for integrating these subjects, she says,
and as is the case in high schools, make them
much more relevant and practical to a lot of stu-
dents.
As a way of engendering more of an entre-
preneurial ecosystem on campus, community col-
leges could also embrace incubators for fledgling
start-ups and link them meaningfully to pro-
gramming offered to degree-seeking students. La
Guardia Community College in Long Island City
has housed an incubator for young design busi-
nesses since 2002, but like so many of CUNY’s
other entrepreneurial offerings very little effort
has been made to link that initiative to any of La
Guardia’s credit programs or any of its other non-
credit offerings.
For those campuses without the space or re-
sources for a brick-and-mortar incubator, so-
called virtual incubators may be an option. The
American Association of Community Colleges
(AACC), the National Association for Community
College Entrepreneurship (NACCE), the National
Business Incubation Association (NBIA) and the
U.S. Small Business Administration have recently
partnered to build a toolkit for virtual incubation.
This includes information on how to establish vir-
tual incubators, who the “clients” are, what servic-
es they need, how those services can be delivered
and who the key players are at 11 of the nation’s
most successful campuses with virtual incubators.
However, while most people interviewed
agreed that community colleges are uniquely po-
sitioned to bolster entrepreneurial learning, they
also agreed that there is a capacity issue, since
community colleges already address so many oth-
er community needs. Lester, for one, thinks the
community college system has become overex-
tended. “What’s the tipping point? At what point
can’t they fulfill what we’re asking them to do?
And to fill it well.”
AN ECONOMIC SPARK FOR LOW-INCOME
COMMUNITIES
Expanding the number of low-income entrepreneurs isn’t just a way to empower self-employed
people. Their successes could also redound to the bene?t of under-resourced neighborhoods as new
businesses set up shop locally and hire from the community.
According to Thomas Boston, the Georgia Tech economist, low-income entrepreneurs, particularly
minority entrepreneurs, are more likely than not to set up shop in their neighborhoods and hire from
their communities. “Minority entrepreneurs are very committed to developing their communities,”
Boston says. “They also generally tend to hire from lower income segments of the community than non-
minority businesses and that then adds to the income in the community that allows more successful
retail establishments and professional establishments, medical practices and grocery stores and others
to grow. It’s all linked together in a giant chain.”
This has certainly proved to be the case in many immigrant-dominated neighborhoods in New
York, including Washington Heights, Richmond Hill, Jackson Heights, Brighton Beach, Sunset Park
and Flushing. In the 1970s and ’80s, many of these neighborhoods were plagued by high-levels of
unemployment and crime; their main commercial corridors were dotted with empty storefronts and
subpar buildings. But as more and more immigrant establishments, ranging from restaurants and
grocery stores to dentists and doctors, moved in throughout the late 1990s and the 2000s these
neighborhoods revived and are now among the most vibrant in the city.
Center for an Urban Future Launching Low-Income Entrepreneurs
25
A NEW LAUNCH PAD FOR LOW INCOME
ENTREPRENEURS
NYCHA is home to an unmatched concentration of low income New Yorkers, but few residents are
turning to entrepreneurship
While public schools and community colleges may
be the ideal setting to plant the seeds of entrepre-
neurship, the city’s massive public housing prop-
erties provide another powerful opportunity. No
other place has a greater concentration of poor
and unemployed New Yorkers, many of whom
could greatly benefit from self-employment.
The New York City Housing Author-
ity (NYCHA) provides subsidized housing for
397,522 residents in public housing units and an
additional 235,655 residents through the Section
8 voucher program, which gives low-income resi-
dents rent subsidies that can be used in private-
ly-owned buildings.
24
These are some of the most
disadvantaged residents in the city. Only 97,031
(44.5 percent) of the 218,108 NYCHA residents
between the ages of 18 and 62 report any income
from employment, and NYCHA-assisted house-
holds have a median income of $20,700.
At the moment, a strikingly low percentage of
NYCHA residents own formal businesses. Of the
218,108 working-age NYCHA residents, only 286,
or 0.13 percent, reported owning their own busi-
ness.
25
With some support, however, it should be
possible to expand the number of entrepreneurs
living in NYCHA buildings.
The low rate of business formation is under-
standable given the huge financial challenges
facing public housing residents. Thomas Boston,
who has conducted extensive research on fami-
lies living in public housing, says that these in-
dividuals find themselves “further outside the
business network” and have far less access to
capital or the knowledge that middle- and upper-
income households have when starting a busi-
ness. Furthermore, many public housing families
are struggling on a daily basis to make ends meet,
limiting their ability to choose how to earn money.
“They don’t have the luxury of devoting X number
of hours to starting a business that they’re not go-
ing to receive any revenue from for, say, a year or
two,” says Boston.
Yet, Boston contends that this demographic is
“very, very interested in [entrepreneurship],” and
has a “strong desire” to start their own business
and be self-employed. The problem, he says, is
that “that desire seldom translates into reality.”
Nancy Carin, executive director of the Busi-
ness Outreach Center Network, says that NYCHA
residents may feel wary of entrepreneurship as
a method of economic advancement: “If someone
is reporting themselves as very low-income, and
they live in a housing authority building and they
start a business, it’s a risk. It’s not just a disincen-
Other
55.51%
Employed
44.36%
Self-employed
0.13%
Employment and Self-Employment
Among Working-Age
NYCHA Residents
Sources: NYCHA
Center for an Urban Future Launching Low-Income Entrepreneurs
26
tive because the risk is that they will lose a lot
of [welfare] benefits, and it’s hard to get [those
benefits] back if [the business doesn’t] work out.”
Although NYCHA residents are not currently
starting formal businesses at a typical rate, there
are some considerable advantages that NYCHA
residents have over other New York City residents
in starting their own business. These include the
naturally occurring networks and social capital
that many NYCHA housing developments provide
because of the large numbers of residents living
close together. “You have hundreds of thousands
of people living there, you have a stable living, a
great way to start and a natural population to sell
to. It seems like a great opportunity,” says Joan
Bartolomeo, president of the Brooklyn Economic
Development Corporation (BEDC).
Approximately 56 percent of low-income New
Yorkers pass through NYCHA’s doors as resi-
dents, Section 8 voucher holders or as households
on the wait-list. This gives the agency unique
access to their economic status and contact in-
formation, which is extremely valuable to local
organizations that are trying to promote entre-
preneurship. NYCHA already operates 135 com-
munity centers in their housing developments,
which make excellent resources for reaching cli-
ents, tapping into social networks and giving out
information about entrepreneurship initiatives.
26
Furthermore, NYCHA occupies a seat on the pub-
lic-private Workforce Investment Board, which
oversees New York City’s broader workforce de-
velopment programs.
Importantly, NYCHA already has a vehicle to
promote and support entrepreneurship among
its residents. In 2009, NYCHA created an Office
of Resident Economic Empowerment & Sustain-
ability (REES), which develops and implements
programs with a focus on employment, financial
literacy and occupational training. In 2010 near-
ly 1,000 NYCHA residents found employment
through this office.
Understandably, most of the REES initiatives
focus on getting residents into jobs—not promot-
ing self-employment and entrepreneurship. But
there is a clear opportunity to develop new entre-
preneurship initiatives in the months ahead.
A NEW START(UP) AFTER PRISON
Adrienne Smalls served two years in New York’s Westchester County Jail from 1989 to 1991. She spent
much of the following ?ve years shuttling from New York City to upstate to visit her son, who was jailed
on a drug offense. This experience provided her with a business idea: she could sell toiletries and
other small essentials to the family members of incarcerated individuals who frequently made the same
journey upstate on her bus to visit their loved ones. Roughly 20 years later, her micro-entrepreneurial
endeavor, Prisonhelp, still sells goods to visitors making the trip upstate and has expanded to provide
counseling services for formerly incarcerated persons who are transitioning to life on the outside.
It’s no surprise that a number of formerly incarcerated individuals turn to entrepreneurship. Many
of those who served time in prison are enterprising and open to taking risks. Perhaps most importantly,
the formerly incarcerated typically encounter serious barriers to securing full time gainful employment
upon release, and often view self-employment as the least arduous path to economic self-suf?ciency.
But there is a clear opportunity to expand the number of formerly incarcerated individuals in New
York who pursue self-employment or business formation. Doing so would not only give the formerly
incarcerated a chance for a fresh start, but also potentially reduce rates of recidivism among returning
prisoners, an important goal given the staggering number of New Yorkers serving time.
In 2008, approximately 650,000 people in the United States were projected to return from state or
federal prison, and another 9 million were to cycle in and out of local jails.
27
There are several programs throughout the nation that promote and support entrepreneurship
among the formerly incarcerated. One of the most well-known is the Prison Entrepreneurial Program,
an initiative based in Texas that provides entrepreneurial skills training to soon-to-be-released inmates.
A mere 5 percent of participants in this program end up behind bars again, compared to 24 percent
of all inmates in the Texas Department of Criminal Justice.
28
Last year, the organization got every
single graduate a job within 90 days of release—70 percent of whom successfully found one within 30
days—with an average wage of $10 an hour. Over the past eight years, more than 100 business have
been started by their 700 graduates in an array of industries, including landscaping, commercial print
businesses, manufacturing, automotive services and contracting.
New York City arguably has more places where
small business owners and aspiring entrepre-
neurs can go to get counseling and technical as-
sistance than any other American city. Some of
these programs are run by microfinance organi-
zations and chambers of commerce, and others by
government agencies, such as the city’s Business
Solutions Centers and the federally funded Small
Business Development Centers.
However, few of the entrepreneurial assis-
tance programs across the five boroughs are con-
centrated in the city’s poorest neighborhoods,
particularly those with a disproportionate share
of native-born residents. “You have pockets of
certain neighborhoods where [these programs
are] concentrated and then other areas where it’s
a wasteland,” says Catherine Barnett, executive
director of Project Enterprise.
“What I’m finding is a lack of technical as-
sistance as the biggest barrier to people meeting
their dreams,” adds Bishop Mitchell Taylor of the
East River Development Alliance. “If I was to put
a sign in my window saying, If you are interested
in opening a business come down and sit down
with a biz solutions specialist, his schedule will
be booked.”
It’s certainly understandable that public agen-
cies and non-profit organizations choose to set up
small business assistance centers where there
are fairly high rates of entrepreneurship. They
are simply following demand. Moreover, many
of these organizations are funded based on the
number of clients they serve, a system that en-
courages them to steer clear of neighborhoods
with low rates of business formation, even though
there may be significant potential to increase lev-
els of entrepreneurship.
Barnett believes that more must be done
to attract service providers to the communities
that need them the most. “You’re funded a finite
amount based on the number of people that you
work with,” she says. “Certainly you won’t close
your doors to [potential entrepreneurs in low-in-
come neighborhoods] but you might spend more
time trying to recruit or market toward more high-
potential folks. There needs to be more funding
allocated to organizations to do this kind of work
[and] incentives for them to have sites in some
neighborhoods where there’s more of a need and
a lack of services.”
While many neighborhoods lack entrepre-
neurship assistance programs altogether, a relat-
ed problem is that many potential entrepreneurs
GETTING TECHNICAL
New York City has a number of small business assistance programs, but most of them aren’t
reaching low-income residents
GOVERNMENT-SPONSORED SMALL
BUSINESS ASSISTANCE CENTERS IN NYC
ata Sources: NYC DCP, DOITT, NJDEP, NYS CSCIC
Prepared by the Pratt Center for Community Development, 11/2012
0 5 2.5
Miles
New
Jersey
Long
Island
0 5 2 5
Mi es
.
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Staten
Island
Bronx
Queens
Brooklyn
M
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a
t
t
a
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NYC Business Solution Centers
Small Business Development Centers
Entrepreneurial Assistance Program Centers
Center for an Urban Future Launching Low-Income Entrepreneurs
28
in low-income communities aren’t aware of the
resources that do exist. Most of the entrepre-
neurship assistance organizations interviewed
for this report rely heavily on word of mouth,
email blasts, referrals and fliers to market their
services. The limited outreach—primarily a func-
tion of small operating budgets with hardly any
dedicated funding for marketing—means limited
reach. Both service providers and clients say that
even though aspiring entrepreneurs have become
more active in seeking out resources, it’s difficult
to get initially connected and figure out what or-
ganizations are out there and what resources they
offer.
“Technical assistance can be the lion’s share of
what someone needs to get started, but technical
assistance is not something that’s readily avail-
able, or they don’t know it’s available,” says Bishop
Taylor. “Although there is a Small Business Solu-
tions center, a lot of people don’t take advantage
of it because they don’t know it’s for them. They
think big business solutions even though it says
small.”
“I definitely think that if technical assistance
was effectively marketed to people interested in
opening a business,” Taylor says, “it would defi-
nitely be a sea change for urban entrepreneurs.”
A NEW LIFT
To its credit, the Bloomberg administration has greatly expanded its support for entrepreneurs over
the past ?ve years. The city’s Economic Development Corporation has been at the center of these
efforts, rolling out more than a dozen initiatives to support local start-ups—from new incubators to
seed funds. Perhaps understandably, however, the bulk of these new programs have bene?ted college
educated entrepreneurs in ?elds such as technology, fashion and media. Immigrant entrepreneurs have
also been aided by a handful of initiatives, including a competition to fund organizations that develop
innovative programs to support immigrant-run businesses.
Thus far, few of NYCEDC’s programs have focused on supporting low-income, native-born
entrepreneurs. But this may be changing. Earlier this year NYCEDC announced plans to build a new
incubator space and technical assistance program in the Norwood/Bedford Park neighborhood of the
South Bronx that will speci?cally target low-income entrepreneurs.
The goal of NYCEDC’s LIFT Entrepreneurship Program is “to increase entrepreneurship and
business development amongst low-income and unemployed residents of underserved communities.”
Beyond providing of?ce space, the LIFT initiative will offer promising business owners one-to-one
technical assistance in how to set up an incorporated business, create a business plan and market
products. It will also link members to mentors in the neighborhood who can help them think through
a wide variety of broader, more strategic issues. NYCEDC anticipates that the program will help 30
Bronx-based, low-income, minority entrepreneurs.
Smartly, NYCEDC has already worked with several anchor institutions in the area, including
Monte?ore Medical Center, the Bronx Botanical Garden, The Bronx Zoo and Fordham University, to
research promising opportunities for new local businesses, whether it’s setting up a ?ower shop on
Jerome Avenue near the hospital or linking into the supply chain of one of the anchor institutions
themselves. Joshua Winter, a senior vice president at NYCEDC, says that Evergreen’s contract with
the Cleveland clinic to provide laundry services was an explicit model for the program and that all four
Bronx institutions have cooperated with NYCEDC to ?nd similar sorts of opportunities in their own
supply chains.
Center for an Urban Future Launching Low-Income Entrepreneurs
29
Perhaps the most underutilized asset for aspir-
ing entrepreneurs is New York City’s workforce
development system, which operates one-stop
centers in all five boroughs called “Workforce1
Career Centers.” Unemployed adults enter Work-
force1 Career Centers by the thousands seeking
help getting a job, while small-business owners
look for help managing or expanding a business.
Workforce1 centers provide an important re-
source for unemployed adults in New York City. In
the early days of the Bloomberg administration,
the Department of Small Business Services over-
hauled much of the city’s workforce development
infrastructure in order to create an employer-
focused system of recruiting, training and place-
ment. Workforce1 Career Centers opened in every
borough and over time built up a large repertoire
of services and clients. According to SBS data, the
Workforce1 Centers collectively served more than
149,000 jobseekers in 2010 and placed roughly
31,000 in employment.
In theory, an unemployed adult could go to a
Workforce1 Center and receive support in both
finding a job and starting a business. In practice,
however, the job seeking and entrepreneurship
service lines remain entirely separate, squander-
ing their potential synergy.
Because each Workforce1 Center houses a
Business Solutions Center, some of the thousands
of adults who enter seeking employment could
also be encouraged to take advantage of services
like FastTrac NewVenture, a series of seminars
for aspiring entrepreneurs happening literally
across the hall in many cases. But workforce de-
velopment staff are expected to focus strictly on
connecting job seekers with existing employment
opportunities. In fact, the SBS policy guide, which
defines the terms of the agency’s performance-
based contracts, explicitly states that “self-em-
ployment can never be entered as a placement.”
29
Not only do contractors who run Workforce1 Cen-
ters lose money if they fail to meet stringent job
placement standards; they can also lose their con-
tracts—and some have.
Many organizations with Workforce1 Cen-
ter contracts struggle with their dual mission to
serve unemployed adults and small businesses.
“The unfortunate issue is that if someone gets
self-employed, it’s not an outcome and we don’t
get paid,” says one workforce development prac-
titioner, noting that having Business Solutions
Centers in the same building leads some job ap-
plicants to look into entrepreneurship anyway,
but it is not an area of focus for intake personnel
or counselors.
The same is true for SBS’s website. Users can
click on “Help for Jobseekers” to access online job
listings and seminar schedules, but the page does
not encourage jobseekers to visit a Business Solu-
tions Center to explore entrepreneurial opportu-
nities, or even link to outside agencies or organi-
zations that could provide such assistance.
“There are lots of people who would like to
consider starting their own business,” says an-
other workforce development expert, “but it’s not
sufficiently brought to their attention.”
Community-based organizations that special-
ize in workforce development represent another
opportunity to support entrepreneurism. These
groups understand the needs of the low-income
adults in their communities better than anyone
else. Almost 200 groups that provide work readi-
ness and training services collaborate closely
with Workforce1 Centers, but they do not general-
ly tackle subjects like entrepreneurism and self-
employment, either on their own or in the work
they do for the Workforce1 Centers.
“I have personally struggled with the entrepre-
neurship question in this job,” says Jeanie Tung,
director of training at Henry Street Settlement
THE WORKFORCE SYSTEM
The city’s centers could provide a huge help to low-income entrepreneurs
Center for an Urban Future Launching Low-Income Entrepreneurs
30
on Manhattan’s Lower East Side. “To be honest,
our first mission is just to connect people to em-
ployment. When people have their own ideas and
want to start their own businesses there aren’t a
lot of resources.”
Creating more synergy between the city’s
workforce development and small business ser-
vice centers could benefit clients on both sides.
Even those clients who are really driven to start
their own business may benefit from being placed
in a job in the short term, as developing a busi-
ness plan, seeking licenses and lining up financ-
ing all take time. Others may simply be unready
to climb the steep hill to starting a business and
would benefit from getting a job with an employer
instead.
To create this synergy, the city should consid-
er establishing a rigorous system to count self-
employment as the equivalent of a job placement.
At Business Solutions Centers, a formal process
already exists to register a business and docu-
ment income generated through that business.
Integrating self-employment outcomes into the
workforce system, she says, would spur additional
activity to promote entrepreneurism without low-
ering the standards of performance-based con-
tracts.
RECOMMENDATIONS
Expand NYC’s Entrepreneurship Initiatives to
Target Low Income, Native-born New Yorkers
The city’s Economic Development Corpora-
tion (NYCEDC) has impressively ramped up its
support for entrepreneurs in the past four years,
with a range of new initiatives—from creating new
incubators to establishing seed funds. While the
Bloomberg administration deserves ample credit
for embracing the city’s entrepreneurial economy,
much of its focus has been on college-educated
entrepreneurs, particularly in fields such as tech,
fashion and food, or immigrant entrepreneurs.
It’s now time for NYCEDC and the Department of
Small Business Services (SBS)—perhaps work-
ing in tandem with the New York City Housing
Authority, the Center for Economic Opportunity,
the Office of Financial Empowerment and the
Department of Education—to develop a series of
programs designed to expand the number of low-
income, native-born entrepreneurs in the city and
help more of the people who do start a business
grow to the next level.
Encourage More Low-Income People to Turn to
Entrepreneurship
Any new entrepreneurial initiative that targets
low-income individuals should go beyond simply
supporting existing business owners or assisting
those who are already inclined to start a business.
While those things make sense, a significant focus
should be on promoting and encouraging entre-
preneurship, and expanding the overall pool of
low-income native-born New Yorkers who pur-
sue business ownership. Currently, too few low-
income people from disadvantaged communities
ever consider entrepreneurship as a pathway to
economic self-sufficiency (and thus never set foot
in a publicly or privately run center that offers
counseling for existing businesses and prospec-
tive entrepreneurs). City policymakers should set
a goal of increasing the number of low-income,
Center for an Urban Future Launching Low-Income Entrepreneurs
31
native-born entrepreneurs by 10 to 20 percent
over the next four years.
Incorporate Entrepreneurship into Workforce
Development Programs
At a time when the city’s unemployment rate
hovers over 9 percent and there is a dearth of
middle-income jobs for individuals without a col-
lege degree, city policymakers should encourage
at least some unemployed or underemployed New
Yorkers to consider entrepreneurship as a career
option. The city’s workforce development system
presents a golden opportunity to do just that, since
tens of thousands of New Yorkers pass through
the city-run Workforce1 centers and countless
others seek help from private workforce prepa-
ration programs. Currently, however, New Yorkers
who show up at these offices looking for help in
finding a job or developing the skills they need
for a career rarely ever hear about self-employ-
ment or entrepreneurship as an option. Indeed,
current procedures and funding guidelines dis-
courage workforce development staff from doing
anything but placing someone in an existing job.
The city’s Office of Human Capital Development
(OHCD) and Department of Small Business Ser-
vices (SBS), which oversees the city’s Workforce1
Centers, should require all job centers—includ-
ing the Workforce1 Centers, to feature materials
on self-employment and starting a business. SBS
should also alter its policy guide to enable indi-
viduals pursuing self-employment to count as a
“placement”.
Expand Teaching Entrepreneurship Programs
In low-income communities with few entre-
preneurial role models and mentors, exposing
school kids to the world of business ownership
is enormously important. Unlike immigrants and
more affluent residents, the vast majority of kids
in low-income, native-born communities don’t
have family members or friends who have started
their own businesses. As a result, most won’t even
think to consider entrepreneurship as a possible
career path. While school-based entrepreneur-
ship programs, such as NFTE and JA, exist in
New York, they have been cut back dramatically
in recent years and even at their height reached
only a tiny fraction of the city’s 1.1 million stu-
dents. Because in-school programs like these are
the only way many low-income students will ever
learn basic business and financial skills, they are
a promising way to increase the number of busi-
nesses in low-income neighborhoods. But they
are also a good way of capturing the imaginations
of students who are failing in school. With the
implementation of the common core curriculum
and its emphasis on critical thinking, new oppor-
tunities exist to use entrepreneurship as a focus
in project-based learning assignments. In fact, in-
class assignments could easily play off of existing
programs and resources, many of which are out-
lined in this report. But officials inside the NYC
DOE need to make entrepreneurial learning a
priority and make sure principals and teachers all
understand what resources are available and how
they might integrate them in their classrooms.
Develop Startup Competitions For Low-Income
Entrepreneurs
Few weeks go by in New York without the
city playing host to a startup competition, a pitch
event or a demo day—all of which showcase lo-
cal entrepreneurs and, in many cases, give them
a chance to promote their company and get ad-
vice from investors and business experts. Unfor-
tunately, few of these events bring low-income
entrepreneurs into the mix. The city’s Economic
Development Corporation should fund a series
of startup competitions around the five bor-
oughs that specifically target low-income entre-
preneurs—not focusing on tech entrepreneurs,
but everything from neighborhood based retail
to services. NYCEDC might include a competi-
tion at one or more of the city’s community col-
leges and another for entrepreneurial-minded
residents of a NYCHA complex. This seems ripe
for partnering with private sector sponsors—such
as a bank—that could fund the award money. But
while a monetary prize would be a nice incentive,
simply getting a number of low-income residents
to participate in a business plan competition—
and building their confidence—would be a huge
win by itself.
Center for an Urban Future Launching Low-Income Entrepreneurs
32
Help Individuals Turn Side Hustles into Formal
Businesses
One of the most encouraging findings of our
report is that loads of low-income, native-born
New Yorkers operate “side hustles” as a way to
generate income. City economic development of-
ficials should develop a plan to work with these
entrepreneurial individuals, and provide the sup-
port to help some of these side hustles grow into
formal businesses. This might include everything
from helping the individuals establish savings ac-
counts to teaching them how to write a business
plan and providing access to microloans.
Eliminate Disincentives to Self-Employment for
Recipients of Government Benefits
Some low-income people shy away from en-
trepreneurship out of fear that they will make just
enough money to cause them to lose longstanding
government benefits. Policymakers should elimi-
nate this kind of disincentive for those receiving
different types of public assistance. Officials at
the federal, state and city level should restruc-
ture existing policies so that those who receive
payments from TANF (Temporary Assistance
for Needy Families) or subsidized housing from
NYCHA don’t immediately lose their benefits if
they start a successful business.
Philanthropic Foundations, CBOs and City
Agencies Should Support the Formation of More
Worker Cooperatives
Worker Cooperatives can be an effective way
to deliver many of the benefits of business own-
ership—including on-the-job training in basic
management and financial skills—while mitigat-
ing many of the risks. But worker cooperatives
tend to have a hard time finding sufficient capital
and technical assistance when starting out. Many
banks, attorneys and other service providers
aren’t familiar with their unique organizational
needs, and the founding members need extensive
support in laying the legal and organizational
ground work for future profit-sharing and mem-
ber training. Philanthropic foundations in the city
should work with CBOs to provide start-up funds
for cooperatives in low-income neighborhoods,
and NYCEDC and SBS should provide targeted
technical support. In fact, the city could create an
incubator for worker cooperatives and provide
not only much-needed space for founding mem-
bers but a wide variety of services around busi-
ness and organizational development.
Create Opportunities for Successful Business
Owners to Mentor Start-Ups.
Mentors play an enormously important role in
not only educating potential new entrepreneurs,
but in raising the profile of entrepreneurship
in the first place. Mentors are common in many
immigrant communities with high rates of self-
employment, but they are lacking in many native-
born, low-income neighborhoods in New York.
One reason for that is the dearth of opportuni-
ties for established business owners to connect
with new, would-be entrepreneurs in their com-
munity. Any effort to raise business incorporation
rates in low-income communities across the city
has to tackle this problem and create opportuni-
ties for existing business owners to share their
knowledge and know-how with others. These
could include networking events held by local
development corporations or public programs at
neighborhood library branches. With the help of
the city or philanthropic foundations, community
based organizations could also take the lead in
pairing established business owners with young,
high potential entrepreneurs in low-income
neighborhoods.
Expand Technical Assistance Programming in
Low-Income Neighborhoods
If efforts to encourage more low-income New
Yorkers to pursue entrepreneurship are success-
ful, many of the emerging entrepreneurs will
need business counseling and technical assis-
tance on everything from writing business plans
to accessing capital. But many of the city’s low-
income neighborhoods currently lack these re-
sources. Policymakers and philanthropic leaders
should make a commitment to expanding techni-
cal assistance programs in low-income neighbor-
hoods. There are at least a few options for this.
First, existing government programs, like the SBS
Center for an Urban Future Launching Low-Income Entrepreneurs
33
Business Solutions centers, could partner with
community based organizations or libraries, and
offer regular workshops on starting or growing
a business. They might even consider sending a
business counselor into the community for one
full day each week. Another option is to provide
incentives that would allow microfinance orga-
nizations—the entities that are arguably best
positioned to work with and support very small
businesses run by low-income residents with
limited collateral—to open offices into low-in-
come neighborhoods that currently have rela-
tively limited demand for their services. Finally,
government agencies and philanthropic funders
ought to consider providing new funding for mi-
crofinance organizations to better market their
services, particularly to residents of low-income
neighborhoods who may not currently be famil-
iar with these opportunities.
Establish Entrepreneurship Initiatives for
NYCHA Residents
With so many NYCHA residents disconnect-
ed from the world of work, the time may be ripe
to create new programs aimed at expanding the
number of public housing residents in New York
who turn to entrepreneurship as a pathway out
of poverty. There is a clear opportunity to make
progress here. As it is, only 0.13 percent of adult
New Yorkers living in NYCHA properties report
owning their own business. NYCHA leaders and
city economic development officials should set a
goal of increasing these numbers, and work with
community leaders to develop a new initiative
that encourages and supports entrepreneurship.
This could include bringing in successful minor-
ity business owners as speakers and mentors,
new technical assistance programs, subsidized
business spaces and competitions that award
cash prizes—or discounted real estate—for the
best business plans. This would be an ideal ini-
tiative for NYCHA’s Office of Resident Economic
Empowerment & Sustainability.
Expand and Improve Financial Education for
School Kids
Too many low-income children grow up with
only limited knowledge about the value of man-
aging their money and little awareness that they
could one day run a business. The city’s public
school system should expand efforts to teach fi-
nancial education and bring in successful busi-
ness owners from the community to speak about
their experiences. This might even include rais-
ing awareness about successful minority busi-
ness owners during Black History month. As one
African American small business expert told us,
“We are decades out, and people are still only
learning about Rosa Parks, Malcolm X and Mar-
tin Luther King [in Black History month]. We’re
not learning about the inventors or the business-
men that are out there. You can tell them all about
Magic Johnson, and don’t focus just on his career
scoring averages, but about how he is an amazing
businessman. Teaching that in school is impor-
tant and sets a mindset that ‘I can have a busi-
ness of my own.’”
Reform New York State’s Occupational Licens-
ing Laws
The state’s onerous occupational licensing
laws may serve as an obstacle for some low-in-
come entrepreneurs, many of whom simply don’t
have the time or resources to complete the re-
quirements. For instance, according to a 2012 re-
port by the Institute for Justice, New York State
requires those seeking a barber’s license to com-
plete 884 hours of education and training, more
than all but one state (the average is 416), in ad-
ditional three exams and $60 in fees. If these re-
quirements were eased, it might prompt some of
the low-income New Yorkers who cut hair as a
“side-hustle” to set up formal businesses. Addi-
tionally, cosmetologists and massage therapists in
New York need 233 days of education and expe-
rience to get a license, while child care workers
require a year of training, more than every other
state except for New Jersey. State officials should
immediately undertake a review of its occupa-
tional licensing laws and restructure the training
requirements so they are more in line with other
states.
Center for an Urban Future Launching Low-Income Entrepreneurs
34
1. Infoshare, Census Public Use Microdata Sample
(PUMS) (2007-2011 American Community Sur-
vey): Bureau of the Census, U.S Department of
Commerce. For counties, boroughs and the 55
Census defined neighborhoods in the city, the self-
employment rate was taken by calculating self-
employed workers as a percentage of all working
age adults in the labor force.
2. Ibid.
3. Ibid.
4. Ibid.
5. Ibid. Please see page 9 for a table of self-em-
ployment rates for the city’s 55 Census-defined
neighborhoods.
6. 2010 Census, Census County Business Patterns
and American Fact Finder.
7. Ibid.
8. Email Correspondence with Debra-Ellen Glick-
stein, former director of community programs and
development, NYCHA Office of Resident Economic
Empowerment & Sustainability, May 29, 2012.
9. Robert W. Fairlie, Kauffman Index of Entrepre-
neurial Activity 1996-2012, The Ewing Marion
Kauffman Foundation, April 2013.
10. Ibid.
11. 2002 American Community Survey Estimates, New
York City, NY, prepared by the U.S. Census Bureau,
2002, available from Infoshare. .
12. Bureau of Labor Statistics, “100 Years of Consumer
Spending: Data for the Nation, New York City and
Boston”, August 3, 2006http://www.bls.gov/opub/
uscs/
13. This calculation is based on New York State De-
partment of Labor Current Employment by Indus-
try Data as of June 2012. Manufacturing made up
1.9 percent of the total non-farm jobs in the city.
14. National Employment Law Project, “The Low-
Wage Recovery and Growing Inequality,” August
2012.
15. United States Department of Labor, Bureau of
Labor Statistics, Occupational Outlook Handbook,
2012-2013 Editionhttp://www.bls.gov/ooh/
16. United States Department of Labor, Bureau of
Labor Statistics, Occupational Outlook Handbook,
2012-2013 Editionhttp://www.bls.gov/ooh/
17. Data from U.S. Population Reference Bureau cited
in “Low Wage Jobs, 2012,” Center for an Urban
Future, April 2013.
18. Ibid.
19. Barth, James R., Yago, Glen, and Zeidman, Betsy.
“Barriers to Entrepreneurship in Emerging Do-
mestic Markets.April 2006. Available at: http://
www.iowabiotech.com/econ_dev_reports/Milken_
Barriers_Entrepreneurship.pdf
20. Kochhar, Rakesh, Fry, Richard, Taylor, Paul.
“Wealth Gaps Rise to Record Highs Between
Whites, Blacks, Hispanics”, July 2011http://www.
pewsocialtrends.org/2011/07/26/wealth-gaps-rise-
to-record-highs-between-whites-blacks-hispan-
ics/
21. Nationally NFTE offers curricula for students in
the 1st through 12th grades; in New York City,
however, they are only offered to students at grade
6 through 12.
22. NFTE.
23. Ibid.
24. New York City Housing Authority, Annual Report,
2010http://www.nyc.gov/html/nycha/downloads/
pdf/annual-report-2010.pdf
25. Debra-Ellen Glickstein.
26. Community Service Society” How NYCHA Can
Connect Residents to Opportunity Even in Hard
Times”, October 2011.
27.http://www.jjay.cuny.edu/VenturingBeyondthe-
Gates.pdf
28. Phone interview with Bert Smith, CEO of Prison
Entrepreneur Program, Wednesday February 15th
2012
29. Worksource1 Placement & Promotion Policy, New
York City Department of Small Business Services,
2011.
ENDNOTES
Center for an Urban Future Launching Low-Income Entrepreneurs
35
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