Chamber Studies
The Chamber partners and holds periodic symposia, forums and studies focusing on issues of the most relevant topics for the small business community. Alongside leaders from a broad and diverse representation of the businesses, industries and people driving our economy these studies and forums offer members and partners the opportunity for engagement with the Chamber and their peers through unique and informative meeting formats and speaker presentations.
For additional information, contact the GWHCC, 202.728.0352 or [email protected].
For additional information, contact the GWHCC, 202.728.0352 or [email protected].
Assessing Impacts of the COVID-19 Pandemic on Latino-OwnedBusinesses in the DC-Metro Region
In partnership with American University
By: Robert Albro and Eric Hershberg*
June 23, 2020
It became clear early in the pandemic crisis in the Washington, DC metropolitan area that racial and ethnic minorities are suffering disproportionately, with marked disparities in both infection and mortality. Latinos have the highest rate of infection of any group,[i] including in the District and its Maryland and Virginia suburbs.[ii] And as a result of pandemic-related shutdowns, they are experiencing job losses at almost twice the rate of white counterparts, with losses significantly higher among undocumented workers.[iii] Latino and other minority workers are bearing the brunt of the economic crisis caused by Covid-19, in large part because they are overrepresented in industries hit hardest by social distancing orders, such as leisure, hospitality, hotels, restaurants, retail or construction. They also disproportionately experience congested housing arrangements that complicate physical distancing.
There has been little analysis, however, about how Latino-owned businesses are navigating this crisis, which is urgently needed in light of their growing importance for the DC-metro region.
This report summarizes findings from a survey of 152 Latino business owners throughout the DC-metro region that addresses the impacts of the pandemic on their businesses. The survey, which can be found here, was launched on April 28th and has been in the field for approximately eight weeks. Survey results offer a snapshot of how Latino businesses are being affected by the Covid-19 crisis in our region, and of how they are seeking to adjust to direct impacts of the virus, public health requirements put in place in order to combat the virus, or loss of customers as people observe stay at home orders. The survey asks about the greatest sources of disruption and main challenges to Latino-owned businesses, their most urgent needs, steps they are taking to address the new business climate, and future business plans. This report is intended to help researchers, chambers of commerce, community assistance organizations and city and county decision-makers in our region to identify areas in which ongoing research is needed as well as specific policies and programs that might best support Latino small businesses during this challenging period.
Latino-owned firms have become a major source of economic growth nationally and in the DC area, with Latinos the most likely to start a business among any group. Latino businesses are now a main driver of small business growth.[iv] Stanford’s 2019 State of Latino Entrepreneurship report notes that over the past decade, the number of Latino business owners grew 34 percent compared to one percent for all other business owners in the US, and enjoyed 14 percent revenue growth.[v] The economic health of the DC-metro region is also increasingly tied to the success of Latino entrepreneurs. The area now has approximately 66,000 Latino-owned firms, which represent 12 percent of all businesses in the region,[vi] a significant increase from a decade ago.
But Latino enterprises have reason to be deeply concerned about their prospects amid the pandemic. For Latino business owners, the pandemic crisis threatens a decade-long climb back to financial stability, after the Great Recession saw Latino families lose 66 percent of their household wealth, the greatest decrease among any racial or ethnic group.[vii] Early in the pandemic crisis two thirds of Latinos in the US already viewed Covid-19 as a serious threat to their health and to their finances, compared to half the general population.[viii]
Their concerns are not misplaced. A late March survey by Stanford’s Latino Entrepreneurship Initiative found that 86 percent of Latino small business owners were already reporting significant negative impacts on their business as a result of the pandemic.[ix] The National Bureau of Economic Research reported in June that, since the onset of the pandemic, the number of Latino business owners had declined by 32 percent,[x] the second largest decrease among any group. Such a precipitous drop bodes ill not just for Latino entrepreneurs, but for Latinos nationally and in the DC-metro region, as recovery from the pandemic will depend significantly upon the well-being of Latino-owned businesses, as major employers of Latinos[xi] and as community anchors.
With some exceptions, the businesses described here are typically small.[xii] The three largest firms surveyed,[xiii] measured by number of workers, report 430, 124 and 78 employees respectively. But a significant majority of respondents employ less than 10, with most of those between one and five. And a surprising number of all firms represented in the survey, 45 percent, are run out of the home. One indication that Latino-owned businesses are increasingly important drivers of the region’s economy is that for a majority of respondents Latinos are not their primary customer base.[xiv] Nearly a fifth do not know the ethnicity of their clientele, a plurality of 38 percent cater to only “a few” Latinos, and 26 percent report that Latinos compose between “one-third and two-thirds” of their customers. Fewer than one in five of those surveyed claim their customers are “mostly Latinos.” When gauging the region’s efforts to recover from the pandemic, in other words, as Latino-owned businesses go, so will the area’s economy.
[i] Moya, José, “Covid-19 and Latino Immigrants,” http://ilas.columbia.edu/covid-19-and-latino-immigrants/
[ii] Olivo, Antonio, Marissa J. Lang and John D. Harden, “Crowded Housing and Essential Jobs: Why So Many Latinos are Getting Coronavirus,” The Washington Post, May 26, 2020.
[iii] Tracy, Jan and Scott Clement, “Hispanics Are Almost Twice as Likely as Whites to Have Lost Their Jobs Amid Pandemic, Poll Finds,” The Washington Post, May 6, 2020.
[iv] Cimini, Kate and the Salinas Californian, “Puro Cash”: Latinos Are Opening More Small Businesses than Anyone Else in the US,” USA Today, May 23, 2020.
[v] Orozco, Marlene, Inara Sunan Tareque, Paul Oyer, and Jerry I. Porras, “2019 State of Latino Entrepreneurship,” https://www.gsb.stanford.edu/sites/gsb/files/publication-pdf/report-slei-state-latino-entrepreneurship-2019.pdf, p. 4.
[vi] https://www.goodcall.com/data-center/2016-best-places-hispanic-entrepreneurs/
[vii] Kochhar, Rakesh and Anthony Cilluffo, “How Wealth Inequality Has Changed in the U.S. since the Great Recession, by Race, Ethnicity and Income,” Pew Research Center, November 1, 2017.
[viii] Pew Research Center, “U.S. Public Sees Multiple Threats from the Coronavirus – and Concerns Are Growing,” https://www.people-press.org/2020/03/18/u-s-public-sees-multiple-threats-from-the-coronavirus-and-concerns-are-growing/
[ix] Stanford Latino Entrepreneurship Initiative, “The Impact of Covid-19 on Latino-Owned Businesses,” https://www.gsb.stanford.edu/sites/gsb/files/2020_slei_first_covid_survey _results.pdf
[x] Fairlie, Robert W., “The Impact of Covid-19 on Small Business Owners: Evidence of Early-Stage Losses From April 2020 Current Population Survey,” National Bureau of Economic Research Working Paper 27309, June 2020, http://www.nber.org/papers/w27309
[xi] Previous CLALS-sponsored research on Latino entrepreneurship in the DC-Metro area found that almost three in five Latino-owned businesses surveyed (57 percent) employed only Latinos, and among all Latino-owned businesses, more than three-fourths of employees are Latino. See: Bird, Barbara and Michael Danielson, “Capital Start-Ups: What We Know and Need to Know about Latino Entrepreneurship in the DC-Metro Region,” CLALS Working Paper No. 10, p. 11: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2733807.
[xii] This result is consistent with previous CLALS research on DC-metro Latino entrepreneurs, which also found that a large majority of Latino-owned businesses were small, with almost three-fourths of businesses having three or fewer paid employees. See Bird and Danielson, ibid, p. 10.
[xiii] All are identified their industry as in “business services and technology,” which composes a subset of 28 responses, discussed in greater depth below.
[xiv] 84 percent of respondents are themselves Latino business owners. The remaining 16 percent cater to Latino communities.
In partnership with American University
By: Robert Albro and Eric Hershberg*
June 23, 2020
It became clear early in the pandemic crisis in the Washington, DC metropolitan area that racial and ethnic minorities are suffering disproportionately, with marked disparities in both infection and mortality. Latinos have the highest rate of infection of any group,[i] including in the District and its Maryland and Virginia suburbs.[ii] And as a result of pandemic-related shutdowns, they are experiencing job losses at almost twice the rate of white counterparts, with losses significantly higher among undocumented workers.[iii] Latino and other minority workers are bearing the brunt of the economic crisis caused by Covid-19, in large part because they are overrepresented in industries hit hardest by social distancing orders, such as leisure, hospitality, hotels, restaurants, retail or construction. They also disproportionately experience congested housing arrangements that complicate physical distancing.
There has been little analysis, however, about how Latino-owned businesses are navigating this crisis, which is urgently needed in light of their growing importance for the DC-metro region.
This report summarizes findings from a survey of 152 Latino business owners throughout the DC-metro region that addresses the impacts of the pandemic on their businesses. The survey, which can be found here, was launched on April 28th and has been in the field for approximately eight weeks. Survey results offer a snapshot of how Latino businesses are being affected by the Covid-19 crisis in our region, and of how they are seeking to adjust to direct impacts of the virus, public health requirements put in place in order to combat the virus, or loss of customers as people observe stay at home orders. The survey asks about the greatest sources of disruption and main challenges to Latino-owned businesses, their most urgent needs, steps they are taking to address the new business climate, and future business plans. This report is intended to help researchers, chambers of commerce, community assistance organizations and city and county decision-makers in our region to identify areas in which ongoing research is needed as well as specific policies and programs that might best support Latino small businesses during this challenging period.
Latino-owned firms have become a major source of economic growth nationally and in the DC area, with Latinos the most likely to start a business among any group. Latino businesses are now a main driver of small business growth.[iv] Stanford’s 2019 State of Latino Entrepreneurship report notes that over the past decade, the number of Latino business owners grew 34 percent compared to one percent for all other business owners in the US, and enjoyed 14 percent revenue growth.[v] The economic health of the DC-metro region is also increasingly tied to the success of Latino entrepreneurs. The area now has approximately 66,000 Latino-owned firms, which represent 12 percent of all businesses in the region,[vi] a significant increase from a decade ago.
But Latino enterprises have reason to be deeply concerned about their prospects amid the pandemic. For Latino business owners, the pandemic crisis threatens a decade-long climb back to financial stability, after the Great Recession saw Latino families lose 66 percent of their household wealth, the greatest decrease among any racial or ethnic group.[vii] Early in the pandemic crisis two thirds of Latinos in the US already viewed Covid-19 as a serious threat to their health and to their finances, compared to half the general population.[viii]
Their concerns are not misplaced. A late March survey by Stanford’s Latino Entrepreneurship Initiative found that 86 percent of Latino small business owners were already reporting significant negative impacts on their business as a result of the pandemic.[ix] The National Bureau of Economic Research reported in June that, since the onset of the pandemic, the number of Latino business owners had declined by 32 percent,[x] the second largest decrease among any group. Such a precipitous drop bodes ill not just for Latino entrepreneurs, but for Latinos nationally and in the DC-metro region, as recovery from the pandemic will depend significantly upon the well-being of Latino-owned businesses, as major employers of Latinos[xi] and as community anchors.
With some exceptions, the businesses described here are typically small.[xii] The three largest firms surveyed,[xiii] measured by number of workers, report 430, 124 and 78 employees respectively. But a significant majority of respondents employ less than 10, with most of those between one and five. And a surprising number of all firms represented in the survey, 45 percent, are run out of the home. One indication that Latino-owned businesses are increasingly important drivers of the region’s economy is that for a majority of respondents Latinos are not their primary customer base.[xiv] Nearly a fifth do not know the ethnicity of their clientele, a plurality of 38 percent cater to only “a few” Latinos, and 26 percent report that Latinos compose between “one-third and two-thirds” of their customers. Fewer than one in five of those surveyed claim their customers are “mostly Latinos.” When gauging the region’s efforts to recover from the pandemic, in other words, as Latino-owned businesses go, so will the area’s economy.
[i] Moya, José, “Covid-19 and Latino Immigrants,” http://ilas.columbia.edu/covid-19-and-latino-immigrants/
[ii] Olivo, Antonio, Marissa J. Lang and John D. Harden, “Crowded Housing and Essential Jobs: Why So Many Latinos are Getting Coronavirus,” The Washington Post, May 26, 2020.
[iii] Tracy, Jan and Scott Clement, “Hispanics Are Almost Twice as Likely as Whites to Have Lost Their Jobs Amid Pandemic, Poll Finds,” The Washington Post, May 6, 2020.
[iv] Cimini, Kate and the Salinas Californian, “Puro Cash”: Latinos Are Opening More Small Businesses than Anyone Else in the US,” USA Today, May 23, 2020.
[v] Orozco, Marlene, Inara Sunan Tareque, Paul Oyer, and Jerry I. Porras, “2019 State of Latino Entrepreneurship,” https://www.gsb.stanford.edu/sites/gsb/files/publication-pdf/report-slei-state-latino-entrepreneurship-2019.pdf, p. 4.
[vi] https://www.goodcall.com/data-center/2016-best-places-hispanic-entrepreneurs/
[vii] Kochhar, Rakesh and Anthony Cilluffo, “How Wealth Inequality Has Changed in the U.S. since the Great Recession, by Race, Ethnicity and Income,” Pew Research Center, November 1, 2017.
[viii] Pew Research Center, “U.S. Public Sees Multiple Threats from the Coronavirus – and Concerns Are Growing,” https://www.people-press.org/2020/03/18/u-s-public-sees-multiple-threats-from-the-coronavirus-and-concerns-are-growing/
[ix] Stanford Latino Entrepreneurship Initiative, “The Impact of Covid-19 on Latino-Owned Businesses,” https://www.gsb.stanford.edu/sites/gsb/files/2020_slei_first_covid_survey _results.pdf
[x] Fairlie, Robert W., “The Impact of Covid-19 on Small Business Owners: Evidence of Early-Stage Losses From April 2020 Current Population Survey,” National Bureau of Economic Research Working Paper 27309, June 2020, http://www.nber.org/papers/w27309
[xi] Previous CLALS-sponsored research on Latino entrepreneurship in the DC-Metro area found that almost three in five Latino-owned businesses surveyed (57 percent) employed only Latinos, and among all Latino-owned businesses, more than three-fourths of employees are Latino. See: Bird, Barbara and Michael Danielson, “Capital Start-Ups: What We Know and Need to Know about Latino Entrepreneurship in the DC-Metro Region,” CLALS Working Paper No. 10, p. 11: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2733807.
[xii] This result is consistent with previous CLALS research on DC-metro Latino entrepreneurs, which also found that a large majority of Latino-owned businesses were small, with almost three-fourths of businesses having three or fewer paid employees. See Bird and Danielson, ibid, p. 10.
[xiii] All are identified their industry as in “business services and technology,” which composes a subset of 28 responses, discussed in greater depth below.
[xiv] 84 percent of respondents are themselves Latino business owners. The remaining 16 percent cater to Latino communities.
Defining the Region’s Resources for Latino-Owned Businesses Amidst the Pandemic
Panel discussion held on August 12, 2020
Panel discussion held on August 12, 2020
