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One-third of Arizona’s workforce is Latino, yet only 8% of businesses are Latino-owned. Here's why

Though 34% of Arizona’s workforce is composed of Latino people, few serve as business owners and employers.

Despite over one-third of Arizona’s workforce being Latino, only 8% of all employer firms in the state were owned by people of Latino descent, according to the US Census Bureau’s 2021 Annual Business Survey.

“While the Latino-owned share of businesses is higher in Arizona than it is nationally, Latino-owned businesses tend to be smaller and earn lower revenues than white-owned businesses in the state,” said Alberto Murillo, a research fellow at the University of California, Los Angeles.

According to Murillo, people of Latino descent own less than 10% of employer businesses in the state.

Murillo contributed to a statistical report about Arizona’s Latino-owned businesses in September, which detailed statistical differences between Latino and white business owners. 

As a whole, Arizona has more than 111,000 employer businesses — or businesses with at least one employee — operating throughout the state. As of 2020, 9,000 of these businesses were Latino-owned. In contrast, there are 86,000 white-owned businesses – nearly ten times as many. 

Murillo said the report reflects historical discrimination that has for decades impacted business owners who are of Latino descent. 

“In the headlines, we see that Latinos start more businesses than any other racial or ethnic group in the United States, but this data shows that there is still progress to be made,” Murillo said. “Previous practices that excluded people of color from buying homes, such as redlining, affect families of color by having less generational wealth or assets to rely on to fund educational opportunities or, in this case, business ventures.”

Murillo describes how a combination of lower-generation wealth and credit scores puts Latino entrepreneurs in a difficult situation where economic downturns could be more detrimental.

Established issues, like redlining, can discourage people of Latino descent who are attempting to start a business of their own. To do so would require establishing credit and hiring employees, work that can often discourage young entrepreneurs from following this path, as explained by Murillo.

“It’s something always kind of plaguing me in the back of my mind,” said Dale Acevedo, a social work major at Arizona State University. 

Acevedo, who is of Puerto Rican descent, wishes to own a business someday, specifically selling vintage clothing and accessories. Acevedo’s skin color, however, seems to always be the first thing people see, which creates judgments when discussing credit history or opportunities with employees. 

“My history with credit is clean, I have experience maintaining expenses and being responsible for handling people,” said Acevedo, who is also a community assistant. “Still, sometimes I consider dropping everything because I know how hard it is to get my career off the ground.”

Murillo refers to a study from the Stanford Graduate School of Business discussing how people of Latino descent often find it difficult to get the necessary capital to fund start-ups. According to a study from the Los Angeles Business Journal, 30% of Latino owners have issues obtaining capital, and 86% have difficulty obtaining funding opportunities, often due to historical discrimination issues.

Despite current monetary and racial discrepancies impacting business owners, many Arizona business owners who are of Latino descent find ways to run their businesses. 

Lorena Lopez, owner of Alidani Hair, Skin, and Nail Salon, has been running her Tucson business for over a decade. Lopez said she has found comfort in her Latina identity, and uses it to her advantage. 

“I think my identity as a Latina business owner has positively impacted my history as a business owner,” Lopez said. “The statistics showing fewer Latino business owners only empower and motivate me to continue my journey as a business owner and encourage young Latinos … to pursue entrepreneurship.”

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