Latinos are more than twice as likely as their non-Hispanic White counterparts to express desires to open a business within the next five years — 24% vs 9%, according to an Oct. 1 report on Hispanic Wealth. They’re also 1.7 times more likely to become entrepreneurs than other demographics, the report notes, citing the Federal Reserve.
Latinas in particular are leading the way in employer businesses — outpacing Latinos and overall women, according to the report. Latina-owned employer businesses have accounted for 93% of the growth in overall women-owned employer businesses between 2017 and 2018, employing nearly 700,000 people, according to the report.
Latinos are doing particularly well in construction, finance and insurance, transportation and warehousing and real estate, according to the report.
Overall, Latinos are acquiring more wealth. The average Latino household’s wealth was $36,050 in 2019 compared to $15,150 in 2013, the report indicates, citing the Federal Reserve. In 2010, Latinos held $1 for every $7.80 held by white households. But that gap decreased by $1 for every $5.20 by 2019, according to the Federal Reserve.
Self-employment hikes wealth up — when Latinos work for themselves, they have a median net worth of $174,920, which is five times more than the average Latino household, according to the report. What’s more, Latinos who are self-employed with business equity have a net worth of $314,380, which is almost nine times more, according to the report.
Meanwhile, Latinx entrepreneurs face steep barriers. Latino business owners are 60% less likely to be approved for a business loan than white people, according to the Stanford report.
The pandemic was hard on Latinx founders. Between February and March of last year, one in three Latino-owned businesses shut down. That cost the country nearly 700,000 businesses, according to the Stanford 2020 State of Latino Entrepreneurship report. Latina-owned businesses closed at twice that rate, and they were 42% more likely to have to lay off workers, according to the same report.
The report was generated by San Diego-based National Association of Hispanic Real Estate Professionals and its foundation, the Hispanic Wealth Project, to gauge the state of Latino wealth in the U.S. The group surveyed 6,000 people nationally between July 29 and Aug. 1 this year. The poll was administered by Washington D.C.-based Morning Consult. The report pulls from other data sets, such as Stanford University’s “2020 State of Latino Entrepreneurship” and the Federal Reserve’s 2019 Survey of Consumer Finances.
Meanwhile, only 25% of Latino households own a retirement fund, which is lower than any demographic according to the Federal Reserve. The report notes this could be due to distrust or unfamiliarity of how stock-based investments work– 25% of Latinos report not knowing how to invest in retirement accounts, 10% report not thinking it is a safe investment, and 9% have never even heard of them, according to the report. Although, Latinos were less likely to say they couldn’t afford it than white people.
The solution: a trust-based approach could work, the report notes. “Investments in culturally relevant education coupled with development of a trusted advisor model could be the most effective strategies toward tackling the Latino retirement crisis,” according to the report.
This story and others on New Builders Dispatch are made possible by a sponsorship from the Ewing Marion Kauffman Foundation. The Ewing Marion Kauffman Foundation is a private, nonpartisan foundation that provides access to opportunities that help people achieve financial stability, upward mobility, and economic prosperity – regardless of race, gender, or geography. The Kansas City, Mo.-based foundation uses its grantmaking, research, programs, and initiatives to support the start and growth of new businesses, a more prepared workforce, and stronger communities. For more information, visit www.kauffman.org and connect with www.twitter.com/kauffmanfdn and www.facebook.com/kauffmanfdn.