To first understand the Hispanic(1) market and the makeup of Hispanic businesses, some background information is necessary. This report will attempt to explore Hispanic groups through brief comparisons to other groups as well as further identification of the various groups within the Hispanic community. Further analysis of Hispanic businesses as well as labor statistics will be presented in order to give a clear understanding of demographics and related issues. Finally information on current programs aimed towards helping Hispanics will be presented transitioning into explorations of future programs that can help Hispanics.

From a background informational perspective, it is worth noting the make-up of Hispanics compared to other groups. Table 1(8) lists comparisons between Hispanics, Whites and Blacks. The statistics this paper will focus on are the percentage values, in particular housing tenure, education and working status. In the category of home ownership, a higher percentage of Hispanics are renters (57.8%) vs. home owners (42.1%); this is in striking contrast to Whites (30.7% vs. 69.3% respectively) and worse than that of Blacks. When education is considered, the numbers are equally dismal, indicating that fewer than 11% of Hispanics obtained a college degree vs. almost 27% of Whites and over 12% of Blacks. This has further implications on the working status category, as Hispanics have the highest percentage of wage/salary earners, almost twice the rate of people not working vs. whites and only about half the rate of self-employed workers as whites.

The next question to ask is, does a variation exist within the Hispanic group? Table 2 (8) addresses this issue. Again, the sample size is in proportion to the overall representation percentages (with Mexican descent making up over 60 percent of Hispanics in the United States). Observing the three previous categories of interest, we note that even within the Hispanic group there are discrepancies. There are however similar trends. Trends such as the fact that a majority (52% to 74%) of all Hispanic groups are renters vs. homeowners, a majority of Hispanics have not obtained a college degree (76.7% to 94.3%), and again, a vast majority are wage/salary earners (57.8% to 76.3%).

While these numbers seem dismal, it is a fact that the U.S. Hispanic population has grown rapidly in recent years, rising from 6% of the population in 1980 to a projected 12% in 2005 (9). With this growth rate, the amount of consumer spending and the subsequent buying power of Hispanics have become important parts of the economy (spending $194 Billion per year in 1994-1995 and about double that in 1998). So it seems despite the low numbers presented previously, the number of Hispanic businesses and business opportunities should be on the rise right? This is in fact correct. Between 1987 and 1992 the number of businesses owned by minorities increased 60%, more than twice the growth rate for all new firms. The receipts for minority owned businesses also grew nearly twice as fast as the overall increase during the same five year span - a 128% rise compared to 67% for all U.S. firms. Hispanics owned about 39% of these businesses (6) (with Mexicans only accounting for 49.1% of the firms and 39.7% of the receipts, despite comprising over 60% of the group). In terms of growth, Hispanic owned businesses led the increase, posting a growth rate of 76%. (10)

Though these numbers seem outstanding, they should be put into context. Despite the tremendous growth of firms, minority owned firms are still likely to be small, with average annual receipts of $98,000 versus $193,000 in receipts for the average U.S. firm (less than 50%).(6) Total receipts for Hispanic owned firms, which increased from $32.8 billion to $76.8 billion, is still a far cry from the numbers for all U.S. firms, rising from $2 trillion to $3.3 trillion. (12)

The question, which needs to be addressed is, despite this tremendous growth and this lucrative and increasingly important market, why does such a discrepancy still exist between successful Hispanic businesses and poor Hispanic people? As the initial categorization and numbers suggested, there are discrepancies and differences within the Hispanic community which lead to dis-unification. This is in sharp contrast to the Asian ideology of community embracement and assistance or the ideas of microcredit and the Grameen bank. The Grameen bank idea was born from the ideas of an economic professor where people borrowed capital from within a small group and were accountable to that group. Thus the lines of credit were thus dependent on each of the members in the group.(1 1) Instead, partly due to distrust, lack of knowledge and lack of personal funds, Hispanics are less apt to loan money within their own communities, especially large sums of money. This problem seems to be a cyclical one; people are not willing to consolidate the capital they have because in the first place, they do not individually possess much capital and secondly there is some disdain and resentfulness towards those with more money and capital. Some solutions may lead to outside lenders, such as banks. But what can be done internally, by the community, to erase this void?

One encouraging statistic, which addresses the education of Hispanic employees, is training. People of Hispanic origin had the highest percentages of those taking advantage of training, both formal training (90.8% vs. 85.2% of Whites and 82.6% of Blacks) as well as informal training (96.9% vs. 95.5% of Whites and 96.4% of Blacks).(4) Over 85% of Hispanics also took advantage of classes conducted by their company's personal (vs. 74.8% of Whites and 76% of Blacks), though they were less likely to take courses at other institutions or attend lectures/seminars during work time than Whites were. (5) This data though encouraging, does not address the majority of unskilled and less educated Hispanics in the U.S. Training and learning need to go on at all skill levels, not just the higher ones. So what can be done at the lower skill-levels?

One area which would benefit by "hands on training" and which general academic schooling is not essential is that of construction. Yet despite this fact and the fact that many Hispanics are employed in this industry, only 8.2% of Hispanics in construction obtain supervisory roles (which includes contracting). The rest make up the manual labor types of jobs.(2) "Latinos take warehouse jobs and lower-end jobs," remarks Armado Huerta, a contractor who has been in the business for over 15 years. Mr. Huerta says that many of the Hispanic workers he encounters are complacent with their current job and lack motivation and belief that they can aspire to greater positions. Many would agree with this observation, noting that many recent Hispanic immigrants have a fear of the U.S. system as well as a fear of the unknown simply because there are few role models out there for them to draw inspiration from. The attitude of "Yes, it can be done and you can do it" is not prevalent. One proposal Mr. Huerta suggests to remedy the situation is to offer accredited magnet-school-type programs in high schools or even a similar accredited night school program. Incorporating hands-on experience, working together to build homes for low income people and selling them at cost for example, coupled with the essential business skills will help get the participants beyond third-world values and begin their focus on handling the managerial and high-end side of this business. Mr. Huerta cautions that quality must be the emphasis, for there are many low-rate operations out there, which do not amount to much in terms of opportunity or advancement. Another program put in place actually brings the facilities to the employees. Acme Building Maintenance is one of the largest employers of custodial and building service maintenance workers in Silicon Valley. Their movable training trailer provides facilities to help improve the skills of their minimally skilled workers. Acme's client list includes Adobe, Cisco Systems, Hewlett-Packard, 3Com, Nortel, Bay Networks, and the City of San Jose to name a few. (7)

Once the barriers of training and education have been cleared, there are various programs to help Hispanics start their own businesses. The administrator of the U.S. Small Business Administration (SBA), Aida Alvarez has publicly made strides to help minorities and in particular Hispanic entrepreneurs start and grow their businesses. Though loans to Hispanic businesses have tripled during the Clinton administration and a proposed increase of $2.SBillion is estimated by the year 2000, the assistance is not only a monetary one but also provides instructional and educational programs as well. (7)

Another source of help has been the local government of California, which along with Texas and Florida account for almost half of the nations minority-owned firms.(6) With the resulting losses that California took from the economic crisis in Asia, Governor Gray Davis and his staff, which includes lieutenant Governor Cruz Bustamante, are focussing the state's business sector to look to Mexico and Latin America for new market opportunities. Recent trade missions to Mexico by the SBA demonstrate the importance of this untapped market and the vast amount of opportunities it holds, especially to those who are familiar with the language and culture. (7)

Various other groups are committed to helping Hispanic businesses succeed. The U.S. Hispanic Chamber of Commerce (USHCC) has been around for more than 20 years, advocating, promoting and facilitating the success of Hispanic businesses.(12) With programs such as Procurement Pavilion, which brings Hispanic entrepreneurs into contact with corporate America and government agencies, they provide a forum of interaction which is beneficial to both sides. Other groups such as the Hispanic Business Association (HBA) and the Latino Business Association (LBA) support and maintain similar programs for Latinos and Hispanics.

This paper has identified the main problems thwarting the advancement of Hispanics as a whole, in business and as a community. Mainly: lack of education, third-world mindsets, and fear/lack of knowledge are the ideologies which have impeded the betterment of Hispanics as a whole. A more in-depth look was then taken at the construction industry noting first hand possible solutions to these problems. In summation, there are many opportunities out there, but they will not be obtainable without the proper education and perseverance. On the other hand, the many organized groups which perform similar tasks, some catering to "Latinos" (people of Latin American descent) while others catering to "Hispanics" need to be cognizant of one another. Dividing Hispanics into more distinct pieces oftentimes hinder the efforts of the group as a whole. If a substantial movement is to be made against prejudice and poverty, Hispanics as a people must bond together, drawing strength from what makes them similar, not from what differentiates them.

1. Hispanic is a term which encompasses five main groups: Mexican, Central or South American, Puerto Rican, Cuban, and other as categorized by the Bureau of Labor Statistics

2. Bureau of the Census, "Hispanic Owned Businesses: Reaching New Heights," Statistical Briefing, SB 96-4, August 1996. For more information on Hispanic business data contact Eddie Salyers or Valerie Strang 301 763-5726

3. Bureau of Labor Statistics, "Household Data: Annual Averages, Table 11," 1998 http://stats.bls.gov/

4. Bureau of Labor Statistics, "Table 3 Percent of Employees who received training by selected demographic characteristics," April 1997, http://stats.bl s.gov/news.release/sept.t03.htm

5. Bureau of Labor Statistics, "Table 10: Percent of Trained Employees Participating in any of the following formal training activities within the last 12 months by selected demographic characteristics," April 1997 http://stats.bls.gov/news.release/sept.t10.htrn

6. Dart, Bob, "Minority Owned Businesses on Rise, Census Bureau Says," November, 1996 LatinoLink republishing of article from Cox News Service

7. Hispanic Business Journal, May 1998 for more information contact angelhbj@hccscv.com or http://www.hispanicjournal.com

8. Paulin, Geoffrey D., "A Growing Market: Expenditures by Hispanic Consumers," Monthly Labor Review, March 1998

9. Paulin, Geoffrey D., and Ferraro, David L., "Do expenditures Explain Income? A Study for Income Permutation," Journal of Economic and Social Measurement, 22 1996, pp.103-128

10. Recio, Maria, "Hispanic Owned Businesses Grow at Explosive Rate," July 1996 LatinoLink republishing from Fort-Worth Star

11. The Economist, "From Sandals to Suits," February 1997 for more information see http://www.citechco.net/grameen/bank Referred from ENGR297 volume 4 course reader, Spring 1999, Stanford University

12. USHCC home page http://www.ushcc.com for more information contact Andres A. Alejo (202) 842-1212 aalejo@ushcc.com