Hispanic Businesses are Hit Hardest by the Recession

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 Employment in Hispanics/Latino-owned small businesses was hit hardest among all race and ethnic groups. A new National Survey of small business CEOs indicates that 55% of businesses owned by Hispanic/Latino entrepreneurs reduce their workforce as a result of the recession. Of that number, 29.2% cut it by more than one-half. While the effect of the recession on all groups was significant, none was hit quite as drastically as was Hispanic/Latinos. The disproportionate impact was likely caused by the fact that their businesses are more heavily concentrated in construction and more likely to be located geographically in the West and South—industries and regions where the recession took its greatest toll. These results are from the 4th Quarter, 2011 Gazelle Index survey of small businesses owned by minority, women and nonminority entrepreneurs.

Since the recession, black CEOs have cut their workforce by 47% while white and women business owners cut theirs respectively by 47%, and 49%. What also hurt Hispanics/Latinos was that after the manufacturing sector, construction employment sustained the greatest loss, according to the survey results. For example, 64.6% of firms in heavy construction and 48.5% in specialty trades contracting cut employment. This was only exceeded by firms in manufacturing where 70.3% of durable goods producers and 56.8% in nondurable goods producers cut jobs as a result of the recession. Among Hispanic/Latino owned small businesses, 26.4% are in construction related industries. There were also clear regional implications because businesses located in the western and southern regions of the country were hurt the most–84% of Hispanics/Latino businesses are located in the those regions while only 62% of businesses owned by whites are.

All of this means that Hispanic/Latino businesses have further to go to crawl back from the effects of the recession than do other groups. Certain indicators, such as new claims for unemployment insurance, retail sales, fixed investment in equipment and software, and consumer revealed any significant signs of life. Business owners, small and large, want to feel more certain about the economy before they are willing to climb onboard and rehire large numbers of workers. Unfortunately, the survey found that the most pessimistic owners among all groups is Hispanic/Latino entrepreneurs.

The Gazelle Index is a national random survey of 631 CEOs, who operate minority-owned, women-owned and nonminority-owned small businesses. It was designed by EuQuant and administered during November 2011. Each company included in the survey employed 10 to 100 workers, and the results for each group have a margin of error of + or -5%.

By Julie Kent

Last modified: December 13, 2011

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