Marie T. Mora & Alberto Dvila The University of Texas Pan - - PowerPoint PPT Presentation

Marie T. Mora & Alberto Dávila

The University of Texas – Pan American Presented at the Conference on Small Business and Entrepreneurship during an Economic Recovery Board of Governors of the Federal Reserve System Washington, DC – November 9, 2011

Note: Some of these figures are preliminary; please do not quote without permission from the authors.

Why is the topic of Hispanic entrepreneurship important? Hispanics represented one out of every six people in the U.S. in 2010, up from one out of eight a decade earlier. With this growth has come a sharp increase in the number of Hispanic-owned businesses. The SBO shows that the number of Hispanic-

• wned businesses rose by 43.7% (from 1.6 to

2.3 million), from 2002-2007).

% Hispanics among All Workers % Hispanics among Self-Employed 8 10 12 14

Representation of Hispanics

2000 2002 2004 2006 2008 2010

Year

Source: Authors' estimates using PUMS and ACS data in the IPUMS. Note: The sample includes workers ages 25-64, not living in group quarters.

and among the Self-Employed

Figure 1: Representation of Hispanics in the Workforce

The disproportionate growth of Hispanics in the entrepreneurial sector directly stems from their rising presence in the U.S. workforce as well as strengthening entrepreneurial tendencies within the Hispanic population— even during the recession. Why focus on Hispanic women?

The rapid growth in the number of Hispanic entrepreneurs in the first decade of the 2000s was driven by immigrants, particularly women.

• 4
• 2

2 4

Economic Growth Rate

2000 2002 2004 2006 2008 2010

Year

Source: BEA data on the annual % change of real GDP from previous year. Non-Hispanic Men Hispanic Men Hispanic Women Non-Hispanic Women 6 8 10 12 14 16

Self-Employment Rate

2000 2002 2004 2006 2008 2010

Year

Source: Authors' estimates using PUMS and ACS data in the IPUMS. Note: The sample includes workers ages 25-64, not living in group quarters.

by Gender and Hispanic Ethnicity

Figure 2: Economic Growth and Self-Employment

Hispanic Men Hispanic Women Non-Hispanic Men Non-Hispanic Women 4 6 8 10 12

Unemployment Rate

2000 2002 2004 2006 2008 2010

Year

Source: Authors' estimates using BLS data. Hispanic Women Non-Hispanic Women Hispanic Men Non-Hispanic Men 55 60 65 70 75 80

LFP Rate

2000 2002 2004 2006 2008 2010

Year

Source: Authors' estimates using BLS data.

by Hispanic Ethnicity and Gender

Figure 3: Unemployment and LFP Rates

Hispanics appear to be creating employment

• pportunities, at least for themselves, during a

time of weak labor markets. This raises two related questions.

• What are the implications for their earnings?

(Consider skill-adjusted earnings.)

• Are they hiring others?

(Consider rates of microentrepreneurship.)

Non-Hispanic White Women Hispanic Women Hispanic Men Non-Hispanic White Men

• 60
• 40
• 20

Self-Employment Earnings Penalty

2000 2002 2004 2006 2008 2010

Year

Source: Authors' estimates using PUMS and ACS data in the IPUMS. Note: The sample includes workers ages 25-64, not living in group quarters. See text for penalty definition.

by Hispanic Ethnicity and Gender

Figure 4: Self-Employment Earnings Penalties

U.S.-Born Hispanic Women U.S.-Born Hispanic Men Hispanic Immigrant Women Hispanic Immigrant Men 4 6 8 10 12

Self-Employment Rate

2000 2002 2004 2006 2008 2010

Year

Source: Authors' estimates using PUMS and ACS data in the IPUMS. Note: The sample includes workers ages 25-64, not living in group quarters. Hispanic Immigrant Men Hispanic Immigrant Women U.S.-Born Hispanic Men U.S.-Born Hispanic Women

• 50
• 40
• 30
• 20
• 10

Self-Employment Earnings Penalty

2000 2002 2004 2006 2008 2010

Year

Source: Authors' estimates using PUMS and ACS data in the IPUMS. Note: The sample includes workers ages 25-64, not living in group quarters. See text for penalty definition.

among Hispanics, by Gender and Birthplace

Figure 5: Self-Employment Rates and Penalties

Hispanic Women Hispanic Men Non-Hispanic Men Non-Hispanic Women 85 90 95 100

% Microentrepreneurs of the Self-Employed

2000 2002 2004 2006 2008 2010

Year

Source: Authors' estimates using CPS data in the IPUMS. Years shown are for the year prior to the CPS. Notes: Self-emp. workers ages 25-64 are included; microentrepreneurs have fewer than 10 employees. Hispanic Immigrant Women Hispanic Immigrant Men U.S.-Born Hispanic Men U.S.-Born Hispanic Women 85 90 95 100

% Microentrepreneurs of the Self-Employed

2000 2002 2004 2006 2008 2010

Year

Source: Authors' estimates using CPS data in the IPUMS. Years shown are for the year prior to the CPS. Notes: Self-emp. workers ages 25-64 are included; microentrepreneurs have fewer than 10 employees.

among the Self-Employed

Figure 6: Representation of Microentrepreneurs

Summary and Concluding Remarks Foreign-born Hispanic women represent one

• f the fastest growing entrepreneurial

populations in the U.S., even in a weak economy. Locally-based initiatives to promote minority and female entrepreneurship could have larger effects on employment and tax revenues than in previous time periods.

Still, much of the Hispanic small business growth has been at the microentrepreneurial level (particularly among women), which has its own implications. Perhaps existing policies and programs aimed at helping small businesses grow can be improved to assist newly formed Hispanic-

• wned micro-businesses.

Other policies to consider include more traditional approaches, such as increasing access to education and enhancing English- language proficiency (among immigrants). These human capital investments should, in turn, enhance entrepreneurs’ strategic planning capacities and access to credit— important factors in the success of small businesses.