The Resilience of Latina-Owned Businesses
The Resilience of Latina-Owned Businesses: Thriving Despite the Odds
Entrepreneurship has long been a staple of the United States’ economy. While the economic turmoil in recent years may have damaged the often romanticized white-picket-fence dream, specific population segments have retained the dream of creating businesses to support themselves and their families. In fact, many people have emigrated to the U.S. in an effort to make a name for themselves and seek better livelihoods.
Despite more significant difficulties in finding financing, narrower professional networks, racial discrimination and deeply rooted inequalities in the school systems, nearly 1 in 4 new businessesin the U.S. are Hispanic-owned. Since 2007, the number of Latina small business owners has increased faster than any other racial or ethnic segment, representing a growth rate of 172%. That’s roughly 400 Latina-owned businesses being launched daily, generating $97 billion annually for the U.S. economy. This is no easy feat considering the many barriers women, especially Latina women, face when attempting to start their businesses.
Even accessing high-quality educational opportunities is a challenge to the Hispanic-American community. Although significant strides have been made in the educational sector over the last few years, Latinas have the highest high school dropout rate of any ethnicity of women, except American Indian women. Regardless of such dismal statistics, Latinas are graduating from high school and college in unprecedented numbers. Between 2000 and 2019, the number of Latinas aged 25 years and older who had earned a bachelor’s degree or higher nearly doubled. Education has long been touted as an equalizer for gender and racial gaps in income, yet in 2019, Latinas earned an average of 55% of what white, non-Hispanic men earned and 81% of what Latinos earned. Overall, increased education correlates with higher earnings and lower unemployment, yet Latina women with advanced degrees still make less than white, non-Hispanic men with bachelor’s degrees.
In addition to educational impediments, Latinos face notable discrimination when accessing funding for their entrepreneurial endeavors. Roughly 26% of Latino entrepreneurs believe their ethnicity limits their ability to access capital. Hispanic-owned businesses are less likely than white-owned businesses to be approved for large loans by national banks, and Latinas face more obstacles when securing loans. Hispanic entrepreneurs have the lowest rate of using bank and financial institution loans compared to any other ethnic or racial demographic. Latino entrepreneurs face greater economic insecurity and volatility in their small businesses once established, as they rely on private funding sources rather than large financial institutions. More than half of Latinas are second-, third- and fourth-generation Americans. Yet, the ability of Latinas to build generational wealth is stagnated by deeply rooted structural inequities in education, health, and the economy, with many Latina entrepreneurs using solely personal funds for their business ventures.
Furthermore, Hispanic entrepreneurs tend to have a narrower professional network with fewer growth opportunities. Latinos are less likely than their white counterparts to establish a mentoring relationship with professional advisers or colleagues. Part of this phenomenon can be blamed on occupational segregation and the underrepresentation of Larina women in well-paying sectors, such as finance, business, and upper management. One in five white women works in these occupations compared to nearly one in eight Latina women, widening the wage gap between Latina women and non-Hispanic white men. Historically, women also shoulder the bulk of domestic duties, from caring for the home and children to helping aging parents. This unpaid labor puts significantly more stress on women and has had reported effects on the mental health of Latina women. One in 5 Hispanic community members suffer from mental health issues, and Latina women are twice as likely to develop depression as any other ethnicity of man, including Latino men.
Despite the odds against them, it is evident that Latina women are moving forward and making monumental steps in many spheres. With a youthful workforce — roughly 33 percent of Latino entrepreneurs are younger than 45, compared to just 22% of non-Latino entrepreneurs — the Hispanic entrepreneur community will only grow to become an even more significant segment of the U.S. economy. The resilience and strength of this community have shown that women of the Hispanic community can overcome gender discrimination, racism, and deeply rooted inequalities to create their businesses and thrive.