Economic Mobility

Editor's Note: This piece is part of an ongoing series on female entrepreneurs of color. Read more here. For Hispanic female entrepreneurs, there are specific hurdles to navigate and overcome on the path to business ownership -- for example, the notion that Latinas (regardless of nationality) are one and the same, or the gender barriers imposed within their own ethnic communities. Yesterday's interview with University of California at Merced educator and author Zulema Valdez was all about the experiences of minority entrepreneurs in the United States. Today, our discussion focuses on Hispanic business owners in particular. In it, Valdez emphasizes a truth that is too often forgotten when discussing the startup experiences of different racial and ethnic communities: One group or subgroup's experience is not the same as another's. "Latino entrepreneurs are not a homogeneous group," she says. "Their conditions of arrival and settlement shape different trajectories of business ownership and economic progress, as does the opportunity structure of the economy." Valdez also describes how the pasts of various groups inform their present conditions, and the role that gender still plays in the formation and growth of Latina-run ventures. Edited interview excerpts below. The Story Exchange: Are there any particular experiences or difficulties that are unique to Latino entrepreneurs? First, it is important to recognize that Latinos are not a heterogenous group. For example, Cuban Americans report much higher rates of business ownership than Mexican Americans do. This is due, in part, to different pre-migration characteristics, patterns of migration and settlement, and the American societal and government reception context. The Story Exchange: How do the pasts of these two groups influence their present entrepreneurial prospects? The first significant wave of Cuban migrants to the U.S. entered this country as political refugees, and as such, benefited from U.S. government policies that provided aid to refugees, including the passage by congress of the Cuban Adjustment Act in 1966. This act granted $1.3 billion in financial aid to Cuban refugees, including low-interest college and business loans. This post-Castro Cuban migration was largely comprised of a professional and managerial class, who settled in a concentrated ethnic enclave in Florida known as “Little Havana." Not surprisingly, a thriving Cuban entrepreneurial class and ethnic economy soon followed. In contrast, the long history of Mexican migration to the U.S. can be characterized as a revolving door of low-skilled, low-wage and often unauthorized or temporary labor on the one hand, and authorized family reunification migrants on the other. As such, Mexican Americans have been much less likely to engage in entrepreneurship than Cuban Americans, and when they do, are less likely to achieve economic mobility or business longevity. They are also less likely to enjoy the moniker of “job creator,” as approximately 80 percent do not hire any paid employees (but often require unpaid family labor). Instead, they are likely to engage in business ownership to combat unemployment or underemployment in the general labor market. They are basically providing themselves with a job in the absence of other labor market opportunities. The Story Exchange: How different are the startup experiences of Latino entrepreneurs who are immigrants and those who are born in the United States? Generally, U.S.-born Latinos have greater access to financial capital from personal savings, friends or family, and are more likely to qualify for small business loans than foreign-born Latinos. Foreign-born Latinos, however, may have greater access to informal ethnic-based lending sources. Access to financial capital is critical for a successful startup. The Story Exchange: What characteristics do different Hispanic business owners have in common? Latino business owners, whether Mexican or Cuban, men or women, immigrant or native, high-skilled or low-skilled, are all striving to achieve the American dream. My research shows that, without a doubt, Latinos do not lack the ambition, drive, passion or “entrepreneurial spirit" needed to succeed in business ownership. Many, however, lack the human, social and government capital resources and support that foster business ownership, economic mobility and longevity. The Story Exchange: Is it especially difficult for Latina entrepreneurs to access such resources? Yes. In particular, Latinas are less likely to benefit from social capital resources rooted in family membership. Family-based resources that facilitate entrepreneurship include unpaid or paid family labor, "entrepreneurial capital" and inheritance. The Story Exchange: How does this affect female Hispanic business owners? Family labor is based on trust between family members, who perceive their labor as contributing to the collective good of the household. The use of family labor is well documented among multiple ethnic groups, including Latinos. In examining how family roles and responsibilities among Latina and Latino entrepreneurs shape their entrepreneurial activity and economic progress, I've found that Latinos are more likely to rely on unpaid family labor from their spouse, whereas the spouses of Latina entrepreneurs are more likely to work outside the family business. Also, several studies show that ethnic entrepreneurs view family labor as “training systems” that “socialize” family members to become business owners themselves. Some studies show that a family history of enterprise acts as a resource that increases children's likelihood of becoming an entrepreneur. Nevertheless, Latinas who grow up experiencing a family-owned business are less likely than Latinos to start a business as adults. This is due, in part, to traditional gender expectations that discourage Latinas from becoming business owners. Finally, the intergenerational transmission of wealth through inheritance fosters entrepreneurship within middle-class Latino families. Middle-class Latinos are more likely than working-class Latinos to possess assets that can be transferred to descendants from one generation to the next. Additionally, middle-class entrepreneurs are more likely than working-class entrepreneurs to have established profitable and stable businesses that can be passed down to adult children. My research suggests that, regardless of whether the entrepreneur parent is a male or female, Latino parents are still more likely to pass down the family business to their male children.

Economic Mobility

‘American Enterprise’ – Latina Business Ownership

The Story Exchange

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