Entrepreneurship in Low-Income Areas

By Maurice Kugler, Marios Michaelides, Neha Nanda, and Cassandra Agbayani, September 2017

This study describes entrepreneurship in low-income areas. It focuses on three things: the characteristics of self-employed workers in low-income areas, the income sources of these workers, and the characteristics of businesses operating in low-income areas. The report was prepared for the Office of Advocacy by IMPAQ International.

Overall Findings

Low-income areas have fewer businesses than other areas. Low-income areas are home to 2 out of every 9 workers, but only 2 out of every 11 self-employed workers, and only 2 out of every 30 businesses with employees

Businesses in low-income areas have fewer employees. Among businesses with employees, businesses in low-income areas have an average of 12 employees while businesses in other areas have an average of 15 employees.

Low-income areas were identified using data from the U.S. Census Bureau’s American Community Survey. The survey divided the United States into 2,351 geographic areas. Average household income was calculated for each area, and one-fifth of the areas, those with the lowest average incomes, were classified as low-income.

Average household income in the low-income areas was $46,432, while average household income in the other areas was $80,281. The poverty rate in low-income areas was 22.2 percent, while the poverty rate in other areas was 11.1 percent. Of the 471 low-income areas, 249 were rural and 222 were urban. Of the 1,880 other areas, 1,058 were rural and 822 were urban.

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