Latina/o Entrepreneurship Is Not The Solution To Poverty

Authored By 
Pedro A. Regalado
Blog contributor 
Policy Fellow
March 27, 2017

This post was originally published in Public Seminar.

In the months since the US presidential election, some in the Latina/o business community have expressed confidence in Trump’s ability to empower Latina/os nationwide. After praising the president-elect’s business-friendly approach, Hector Barreto of the Latino Coalition recently wrote, “Hispanics know that owning your own business is the best way to achieve upward mobility; this is the conversation they will want to have with President Trump.” These recent perspectives on Latina/o economic potential are not new.

For more than 30 years now, liberals and conservatives alike have positioned Latino/a entrepreneurs as the cutting edge of community empowerment and economic mobility. Yet, history shows that the growth of the Latina/o business class has had limited impact on the broader Latina/o community’s socioeconomic status nationwide. Despite the success of Latino businesses, Latino poverty persists at high levels. Such findings prompt us to reject the idea that Latina/o entrepreneurship is the solution to Latino poverty.

To be sure, Latino businesses have done remarkably well over the past three decades. In 1985, a study titled “New York’s $10 Billion Spanish Market” conducted by the Strategic Research Corporation estimated that New York City’s Latina/os owned more than 18,000 businesses, including supermarkets, restaurants, beauty salons, laundromats, and travel agencies. In 2012, that number had grown to almost 200,000.

In a 1985 issue of Hispanic Business, Pedro Aguirre, president of the National Bankers Association, confidently asserted,

It is time we recognized that minority groups now constitute one of our nation’s greatest untapped resources. If they are to be a productive part of our society and fulfill the potential to enrich the nation as a whole, they must be allowed to become participants in the free enterprise system.

In espousing free-market values, Aguirre’s comments reflected how the emerging Latina/o business elite perceived the rising Latina/o population during the 1980s: less as marginalized peoples who struggled to lead healthy lives amid hostile urban contexts and more as a group of individuals who could, and should, adapt to those contexts as any good businessperson might. The fact that the broader Latina/o community continued to suffer from severe poverty rooted in segregation, poor city services, and a lack of political representation was of less interest to elite Latina/o entrepreneurs and the business and political leaders who celebrated them.

Yet, as more Latina/o businesses opened nationwide during the tail end of the 1980s (popularly touted as the “decade of the Hispanic”), the economic position of Latina/os was largely unchanged. Despite the wide expansion of Latina/o businesses in New York City, the local poverty rate for Latina/os grew from roughly 29% in 1970 to 33% in 1990 (when the national poverty rate was 17%). In 2014, while the national poverty rate stood at nearly 15%, Latina/o poverty reached more than 23%: in New York, it reached almost 29%; in Los Angeles, 23%; in Chicago, 24%.

The numbers are sobering. Along with the histories of Latina/o business growth during the 1980s, they remind us that calls for Latina/o entrepreneurship are not the solution to the Latina/o community’s consistent poverty. Public policy should be oriented toward not only investing and creating new opportunities for Latina/o entrepreneurs, but also the large majority of those who fall outside that class. In the 1980s, the narratives that prioritized entrepreneurs and their benefits to Latina/o communities may very well have foreclosed other avenues toward Latina/o empowerment, which included addressing suppressed wages, lack of adequate school funding in Latina/o areas, and social programs for successful immigrant integration.

With the election of a president inclined toward principles of individualism, entrepreneurship, and the glorification of business, it is more important than ever that policymakers prioritize tackling these structural factors that so deeply affect the standard of living for the nation’s growing Latina/o population. They must invest in education, affordable and decent housing, and — perhaps most crucially for the present — a living wage. If they fail to do so, we will likely see an even greater increase in Latina/o poverty.

Pedro A. Regalado is an ISPS Graduate Policy Fellow and a PhD student in American Studies at Yale. As an urban historian interested in structural inequality, his research focuses on the intersections of urban poverty, immigration, race, and policy.