Growth in Hispanic-Owned Businesses Outpacing Total Business Creation in U.S., California, and Inland Southern California

RIVERSIDE, Calif., April 13, 2016 -- (www.ucr.edu) – A new analysis of recently available Census data finds that businesses owned by Hispanics are being created at a significantly faster pace than 'total' businesses in the United States, California and the Inland Southern California region – bucking a trend of diminished business formation during the recession and post-recession years.

The study, released today by theUC Riverside Center for Economic Forecasting and Development at the School of Business Administration, examines data from the U.S Census Bureau's newest Survey of Business Owners, which is published once every five years and provides the most current snapshot of the nation's proprietors. The most recent survey includes data on business owners through 2012 and was released this past December.

The new analysis finds that from 2007 to 2012, the number of Hispanic-owned businesses grew 46.3% in the U.S., 43.9% in California, and a whopping 50.6% in Inland Southern California. Comparatively, the rate of growth among 'all businesses' was much slower: 3.4% in the U.S., 5.0% in California, and 8.0% in Inland Southern California. With this growth, Hispanic-owned businesses now comprise over one-third of all businesses in Inland Southern California (36.9%), nearly one-quarter (23.4%) of all California businesses and 12.2% of all U.S businesses.

The upsurge helps the share of Hispanic business ownership converge closer to the share of Hispanics employed in the workforce at all three levels. Hispanics comprise 46.2% of the labor force in Inland Southern California, 35.3% in California, and 15.5% in the United States.

"For years, Hispanics have made up a large and growing share of the population and workforce of the nation, state, and inland region," said Director of the Center for Economic Forecasting and Development Christopher Thornberg, one of the report's lead authors. "As a measure of socio-economic advancement, it is an important and positive trend to see propietorships increasing and a healthier balance developing between Hispanic business owners and workers."

The last time this Census data was published, Hispanic-owned businesses comprised 8.6% of all businesses in the U.S., 17.1% in California, and 26.5% in Inland Southern California.

While growing impressively in number, Hispanic-owned businesses in Inland Southern California have not kept pace with their counterparts at the state and national level when it comes to revneue or employment growth. In Inland Southern California, revenues generated by Hispanic-owned businesses increased just 5.8% from 2007 to 2012, while they jumped 23.1% in California, and 35.1% in the United States.

Over the same period, hiring at Hispanic-owned businesses in the Inland region declined by 9.2% while it expanded at the state (12.7%) and national (22.1%) level. While job growth at the state and national level bucked a recessionary trend of falling employment among all businesses, the decline locally was likely tied to the severity of the recession in the inland region.

Despite growth on many fronts, Hispanic-owned businesses account for a disproportionaltely low share of total revenues and employment across all three geographies with the disparity intesifying at the regional level. In Inland Southern California, they make up nearly 40% of all businesses but generate just 9.1% of total revenues and employ only 10.3% of the local workforce. In California, Hispanic-owned businesses comprise 23.4% of all businesses but only generate 6.5% of all revenues and employ just 8.0% of the state's workforce; in the nation they make up 12.2% of all U.S. businesses, but generate 4.0% of total national revenues and employ 4.2% of the nation's employed population.

"The disparities in revenue and employment should improve as these businesses mature," Thornberg said. Indeed, according to the analysis, many Hispanic-owned businesses have formed within the past five years and are relatively young enterprises. While some of the disparities may be related to their early stage of development, the authors also note that in Inland Southern California, Hispanic-owned businesses may need to reevaluate their business strategies in order to improve revenue and employment outcomes.

The Center for Economic Forecasting and Development is releasing a series of three reports exploring minority business ownership in Inland Southern California and beyond. A copy of the second report, Minority Business Ownership in Inland Southern California: Changes and Trends, Hispanic-Owned is available here. The first report, on Women-Owned businesses, was released March 17 and can be found here.

CONTACT: Sarah Nightingale
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         Victoria Pike Bond
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