Latino entrepreneurship: businesses that impact the growth of the US economy
Many Hispanic immigrants come to the United States with the dream of starting their own businesses, bringing a wealth of ideas, skills, and talents that enrich the business landscape.
Recently, the United States Department of the Treasury released a report showing the strong growth in business ownership and income of Latinos in the United States.
This report underscores the critical role of federal investments, particularly those arising from President Biden’s American Rescue Plan, in fostering the development and sustainability of Latino-owned businesses.
With more than 62.5 million Latinos, making up 19% of the population and contributing to a staggering $2.8 trillion in economic output, there are approximately 5 million Latino-owned businesses generating more than 800 thousand million dollars in annual revenue.
Reasons behind the growth
For many Latinos, the idea of running their own business is very attractive, they understand that their cultural perspectives are unique which drives them to create businesses that reflect their interests and experience.
The family plays a central role in Latin culture. Many Latino entrepreneurs are motivated to create businesses not only to achieve personal success, but also to leave a legacy for future generations. Their goal is to build companies that can be passed from generation to generation.
Hispanic-owned businesses span a variety of industries, including food and hospitality, retail, healthcare, construction, technology, and more. From corner taquerias to tech startups, these companies serve a wide range of needs.
However, the above, language barriers, access to capital and the management of complex regulations represent major obstacles. However, many overcome these challenges by understanding that they must join the system, comply with current regulations, file and pay taxes, and most importantly educate themselves.
COVID-19 was also a great challenge for Latinx companies and communities; Among the obstacles faced were disproportionate job losses, increased exposure risks due to frontline work, and significant mortality rates. Latino unemployment skyrocketed to almost 19% in 2020.
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The numbers speak
As of 2020, there has been a steady increase in business creation.
Although Hispanic-owned companies are not concentrated in one region but are spread throughout the country. States with large Hispanic populations, such as California, Texas and Florida, have a substantial number of these companies. However, they can be found in every state, contributing to local economies.
Monthly business applications to incorporate a business were 50% higher in 2021-2023 than in 2018-2019, and nearly 25% of all new entrepreneurs in 2021 identified as Latino.
Latino-owned businesses experienced an average revenue growth rate of 25% during the pandemic recovery.
From 2019 to 2022, Latino workers’ median weekly earnings increased 2.4%, even after adjusting for inflation. Surprisingly, Latino unemployment hit an all-time low in September 2023.
In the same period, the number of Latino self-employed workers increased by 26%, and the proportion of Latino workers who are self-employed increased from 8.9% in the first 8 months of 2019 to 10.2% in the first 8 months of 2023.
Federal programs have played a critical role in sustaining the rise of Latino-owned small businesses. Initiatives such as the State and Local Fiscal Recovery Fund (SLFRF) have significantly impacted the economic recovery. They have provided a broad spectrum of services to improve health, housing, employment, and economic equity in low-income communities.
The growth of Latino-owned businesses has been a driving force for a more equitable and inclusive economy.
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