Growth of Hispanic-Owned Businesses and Economic Contribution
Immigrants have always been vital to the U.S. economy and contribute greatly to the nation’s economic output and tax revenue. According to the 2012 U.S. Census Bureau Survey of Business Owners, foreign born Hispanics accounted for 53 percent of Hispanic-owned firms. Economists have found that immigrants complement native-born workers and increase the standard of living for all Americans. Accordingly, Hispanic-owned businesses play an increasingly important role in our economy. Between 2012 and 2017, the number of U.S. Hispanic-owned businesses increased 31.6 percent compared to 13.8 percent for all firms and faster than any other race or ethnic group. In 2017, Hispanics own and lead 4.37 million firms generating over $700 billion in revenue to the U.S. economy. By comparison, population trends for the Hispanic adult population in the U.S. between 2010 and 2017 show an increase of 21 percent to 40.5 million, accounting for 16 percent of the total U.S. adult population – in other words, Hispanic business are growing at an even faster rate than the Hispanic workforce.
NUMBER OF HISPANIC-OWNED BUSINESSES IN THE U.S.
Projected Percent Increase in Number of Hispanic-Owned Businesses from 2012 to 2017*
During the last five years, the South Atlantic Census Division has experienced explosive growth in the number of Hispanic-owned businesses surpassing the Pacific Census Division. Specifically from 2012 to 2017, the South Atlantic Division grew 42.8 percent to a projected 1,141,328 Hispanic-owned firms. During this same period, the Pacific Census Division grew 27.3 percent representing a projected 1,102,631 Hispanic-owned firms.
INCLUDES ALL FIRMS (WITH PAYROLL AND WITHOUT PAYROLL)
Among the fastest growing regions for Hispanic-owned businesses is the East South Central Division, which is projected to grow by 41 percent from 2012 to 2017, followed by West North Central and West South Central Divisions expanding 33 percent and 31 percent, respectively. The West South Central Census Division which includes Texas, Oklahoma and Louisiana and Arkansas is projected to have the largest percentage of Hispanic-owned businesses comprising approximately one quarter of all firms within the Division.
Owned Businesses by Gender and Age
While men owned over 56 percent of Hispanic businesses in 2012, women now drive more of the growth. Between 2007 and 2012, the number of female Hispanic-owned businesses grew an incredible 87 percent, from 800,000 to 1.5 million firms. This is the largest increase in female business ownership of any race or ethnic group. Owners of Hispanic businesses are relatively young. More than half (55.4 percent) of firm owners are between ages 35 and 54, compared to 44.7 percent for firms owned by non-Hispanics. Owners under 25 to 34 years old account for 20.4 percent of all Hispanic business owners, larger than the 13 percent share for non-Hispanic firms. In other words, this pattern of business ownership echoes the general age distribution of Hispanics in the country, which is relatively young.
BUSINESS OWNERSHIP BY AGE AND ETHNICITY
Changes in Ethnic Composition of Entrepreneurs
As the U.S. population becomes more diverse, the entrepreneurial landscape also is shifting to represent the “New American Mainstream”. The most recent data from the Kauffman Foundation shows that between 2015 and 2016, Asians and Hispanics experienced the largest increases in the rate of new entrepreneurship, whereas Blacks experienced a slight decrease in rates with the White Non-Hispanic rate of new entrepreneurs decreasing during this same period. By the end of 2016, the Hispanic share of new entrepreneurs represented 24 percent of all firms, compared to 10 percent a decade ago – a staggering 140 percent increase. The rapid growth of U.S. Hispanic-owned businesses outpaces the growth of other demographic groups and exceeds the overall U.S. Hispanic population growth.
RATE OF NEW ENTREPRENEURS BY RACE (1996-2016)
THE CONTRIBUTION OF HISPANIC BUSINESSES TO THE AMERICAN ECONOMY
Hispanics have become increasingly critical to America’s economic growth. Based on a recent study commissioned through the Stanford Latino Entrepreneurship Initiative, between 2007 and 2012, 86 percent of the growth in all small businesses in the U.S. can be attributed to Hispanic-owned businesses. The U.S. Hispanic population is growing, young, increasingly educated, employed, connected, entrepreneurial, and upwardly mobile in terms of income as well as consumption. Hispanics are 1.5 times more likely than the general population to start a business, according to the Kauffman Index of Entrepreneurial Activity. Sales from Hispanic-owned businesses will contribute more than $700 billion to the U.S. economy in 2017 - a 32 percent increase since 2012.
TOTAL SALES RECEIPTS FOR HISPANIC-OWNED BUSINESSES