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Archived: California’s Economic Challenges Are Hurting Latinos and Latino Owned Businesses

Most people have the same goals. We want to support our families, we want our children to get a good education that will make them successful, and we want to live in a safe community where people care about their neighbors.

For many Latino families, however, those goals are getting harder to realize. This past year, California’s economic problems impacted the Latino community most severely and there seemed to be little attention from Sacramento to address the issues – let alone solve them.

It may be simplifying things too much to say that the solution starts with creating jobs, but I firmly believe that unemployment in the Latino community is the single most important issue. According to the U.S. Department of Labor, in 2011 California had over 900,000 unemployed Latinos, the most of any state. Many skilled workers have given up and left California to find opportunities in other states. We can all testify to the accuracy of the statistics that show that the scarcity of jobs has forced many young people in the twenties to live with their parents.

The economic downturn has affected all of us, but it has disproportionately affected the Latino community. According to a survey conducted by the Pew Hispanic Center a majority of Latinos (59%) said that they or someone in their household has been out of work in the past year; 75% said that their personal finances are in “only fair” or “poor” shape and 49% said that they canceled or delayed a major purchase in the past year.

In the past, aerospace, furniture, clothing, and other industry sectors provided high paying jobs and small business opportunities. Now, our communities are at risk because the same opportunities are not available. Skilled jobs are hard to find and the government seems to be more interested in regulating rather than facilitating job creation and business growth.  .

Unless the state makes it a priority in 2013 to proactively make it easier to create jobs, recovery for Latino communities may not arrive as fast or as be as expansive as we hope.  As we watch the governor and legislature begin to formulate priorities for the new session we urge them to seriously address the state’s faulty business climate. And here are three areas where we need them to focus:

First, a job matters and the type of job makes a difference. For Latinos to have the chance to move into the middle-income segment, we need skilled jobs such as manufacturing and construction jobs. Unfortunately, we have seen a decline in manufacturing in our state. According to the California Manufacturing and Technology Association, we have lost 33% of our industrial base (613,000 manufacturing jobs) between 2001 and 2011 and these are jobs that are not coming back.

Second, small business cannot pull California out of the economic decline if business costs keep rising. According to the U.S. Census Bureau the number of Hispanic-owned businesses in the United States increased by 43.7% to 2.3 million, more than twice the national rate of 18.0 percent between 2002 and 2007. Despite these gains, the Small Business Administration reports that in 2007 Hispanic-American-owned businesses had average receipts of $120,000 – far less than that of Asian-owned businesses at $290,000. Higher energy costs, health care mandates, utility increases, business licensing fee increases, over regulation, lawsuits, and higher transportation costs are weighing heavily on Latino businesses.

Third, Latino business owners need local government to assist in the development of jobs and business. Every year, more money flows out of Latino communities to fund state priorities while local governments have their hands tied when they try to attract employers.  A good example is development. The redevelopment program that was vital to improving commercial areas in Latino communities was eliminated at the same time efforts to reform the permitting process were shelved. Permitting delays and litigation hurt every business, but they are especially destructive to communities that are struggling and need to demonstrate growth.

Once a state of opportunity, California has lost some of its luster and become a place where risk is too high and reward is too distant. It’s time to develop programs that help our communities attain the same opportunities that were available to previous generations – security for our families, quality jobs, the ability to start or expand a business, and the belief that the best days are ahead.

Ruben Guerra is the Chairman and CEO of the Lain Business Association