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Immigrants and the Economy: Latinas Rise in Entrepreneurship

Posted November 9, 2016 • Filed Under Economy

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Over the past several years, the United States has seen an increase in business growth that has counteracted the lingering effects of the recession. The role of women entrepreneurs is particularly noteworthy among the brackets of business owners whose revenue has contributed to this growth. According to the 2016 State of Women Business Report, the national trend shows a 45 percent rise in women-owned firms from 2011 to 2016, as compared to a nine percent increase overall. In other words, the growth-rate for women-owned businesses is five times the national average. Business growth among women of color, especially Latinas, is especially noteworthy. This demographic has seen the highest increase in minority women-owned firms over the past 11 years. The 1.9 million Latina-owned firms in 2016, which generated $97 billion in revenue are illustrative of this phenomenon. This blog post, the second in our series about the relationship between immigrants and the economy, will cover the role of Latina women and their entrepreneurial advances in the United States economy over the past decade.   

Before moving on, it is important to make the distinction that Latinas are not always immigrants and vice versa, although the two categories are often (mistakenly) lumped together in public discourse.  Many women who immigrate to the United States and start their own businesses are from ethnic backgrounds that are not Hispanic or Latino; similarly, there are also women who are U.S. citizens and, while they are ethnically Latina, are not immigrants themselves. The available body of research tends to highlight Latinas as a cohesive entity, without distinguishing on the basis of immigration status. Whether or not a Latina entrepreneur immigrated herself,  is the granddaughter of immigrants, or comes from a family that has resided in U.S. territory for hundreds of years, the information is still important to consider. With all of that said, the remainder of this post will examine the contributions of these women regardless of their national origin.  

According to the State of Women-Owned Businesses 2016 report, since 2007 the number of Latina-owned businesses increased by 137 percent, which was the highest increase among firms owned by minority women. As of the release of the report, there were 1,863,600 Latina owned firms in 2016. This growth has resulted in Latinas owning 46 percent of all Latino businesses (i.e. businesses owned by people of Hispanic or Latino descent). Annual revenue for Latina owned firms averages at $52,087. Although this number may seem relatively low, it is indicative of the fact that many of the women who own their own businesses are just starting out and have the potential to grow in the future. Finally, Latinas are most likely to start their own businesses in the areas of administration, support, waste management, and construction. 

Businesses owned by minority women have steadily increased over the past several years. Graphic courtesy of TIME.

This information begs the question “why the current rise among Latina entrepreneurs?” The increase in immigration from Latin American countries over the past 11 years is certainly a major factor. In addition, there are a few important reasons why the entrepreneurial business model is so successful for Latinas. Firstly, women who start their own businesses often do so because an entrepreneurial model provides flexibility which is ideal for immigrants and women with young children. Also, according to Tessa Berenson of TIME, “one reason Latinos may be more willing to gamble on a new business is that so many have already taken considerable risks–whether to get to the US in the first place, or just to get ahead. Compared with the risks of crossing a border or merely enduring the hardships that can still result from belonging to a minority group in the country, the uncertainty of starting a business can seem almost negligible.” Uncertainty, especially in a business venture is never entirely negligible; however, Berenson’s statement still holds weight. Certain life experiences help individuals cultivate the resilience necessary to survive in the foundational years of building a small business. This same resilience is a key reason for Latina entrepreneurs’ success. In other words, “starting a company is a lot like moving to America, you have to adapt to survive” (Fortune). 

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Latinas have spearheaded entrepreneurial growth among businesses owned by minority women. Graphic courtesy of TIME.

While the exponential growth among Latina business owners and other minority groups in recent years is remarkable, there are also factors that elucidate information about the flip-side of these numbers. Rosalie Chan of TIME explains:

“Those numbers mask a complex reality. Yes, more women of color are starting businesses, thanks to rising levels of education and work experience. But there were very few businesses owned by women of color to start with. And the businesses tend to be small, averaging less than $70,000 per year in revenue, often in the retail or service industry, researchers said. Meanwhile, many of the nearly 3 million women of color who have started companies since the recession did so because they, like many other Americans, weren’t able to find jobs elsewhere.”

On one hand, growth among Latina entrepreneurs is a positive change; however, on the other hand, the lack of accessible employment opportunities for immigrants and women of color demonstrates the inequity that is still prevalent in the United States. Additionally, Latina entrepreneurs may be at a disadvantage because they lack access to long-standing, well-established networks that other entrepreneurs, particularly white men with deep pockets, are frequently connected to. In light of this information, Latina entrepreneurs should still consider their current business situations as opportunities rather than barriers.  Resources such as the Adelante Movement celebrate Latinas in the business world and help them create support networks. Current Latina entrepreneurs can also provide advice and support to other  women in coming generations, as the business trend continues. Hopefully, this vector  will continue  and women of various ethnic backgrounds will be able to push through to create  vibrant and diverse networks, while simultaneously bolstering the economy. 

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About the Author: Lindsay Wright is a 2016 graduate of James Madison University, where she double majored in Communication Studies and Spanish. She is currently completing a nine-month internship at NewBridges, where she is producing content for the blog and getting experience working with clients. In her free time, Lindsay enjoys reading, cooking, and spending time outside in the beautiful Shenandoah Valley. Contact Lindsay at [email protected].