How Latino-owned businesses and entrepreneurs are driving the U.S. economy

For 27-year-old Irán Sanchez Salazar, being a Latino entrepreneur in Los Angeles is a source of immense pride.

The Bell resident, who spent two years in Mexico waiting for his permanent residency paperwork to come through, took that time to hone his craft and pursue a career in specialty coffee. Now Sanchez Salazar co-owns a coffee brand called “Malcriada,” with a menu inspired by Mexican and Chicano heritage and culture. In 2022, Sanchez Salazar and his girlfriend started making and selling the beans and blends at pop-ups across southeast L.A.

“I think for me, being a Latino-owned business is something I really take with me everywhere I go,” Sanchez Salazar said. “For us, it’s very important. It’s part of our mission: to preserve the culture that we inherited and also share it with other people.”

Sanchez Salazar is among a growing number of Latino Americans pursuing entrepreneurial dreams — and whose demographic has become a major driver of U.S. economic growth. New reports, released in mid-September and October during Hispanic Heritage Month, show that Latinos in the U.S. are propelling the economy forward — both as consumers and business owners. As older, non-Latino workers retire, research shows younger Latinos stepping into the labor market, contributing through personal businesses, spending and tax revenues.

With nearly 5 million Latino-owned businesses nationwide, Latinos generate more than $800 billion in annual revenue, according to a report card from the U.S. Treasury Department and the Stanford Latino Entrepreneurship Initiative, released Oct. 12. The U.S. is home to over 62.5 million Latinos — 19% of the U.S. population, the report says.

An annual study, from UCLA Health’s Center for the Study of Latino Health and Culture and California Luthern University, shows the total economic output of U.S. Latinos was $3.2 trillion in 2021 — up from $2.8 trillion in 2020 and $1.7 trillion in 2010.

The report also noted Latinos in the U.S. have the fifth largest GDP — gross domestic product, a measure of the overall value of goods and services — in the world, larger than that of India, France or the U.K. It represents a growth of 7.1%, adjusted for inflation, and surpasses the $3 trillion mark for the first time, researchers said. Researchers said the numbers are driven by rapid gains in Latino income.

California also had the largest Latino economic output in 2021, amounting to $682 billion — followed by Texas and Florida, according to the latest U.S. Latino GDP report by the Latino Donor Collaborative, published in late September. With a growing consumption and purchasing power, the California Latino economy alone would rank the 21st largest in the world, between Poland and Switzerland.

Despite economic challenges, businesses shuttering and high unemployment rates during the coronavirus pandemic, more Latino entrepreneurs are starting their own businesses.

Nearly 25% of all new entrepreneurs in 2021 were Latino, research shows. Areas with a higher proportion of Latino and Black residents saw large increases in business application rates in 2020. Also, from 2019 to 2022 — during the pandemic and as businesses continued to recover — median weekly earnings increased 2.4% for Latino workers, accounting for inflation. Unemployment rates in this community also hit a record low last September, at 3.8%, according to the Department of Labor.

Notable among the numbers: younger Latinos are joining the workforce, spending and starting businesses.

The Latino Donor Collaborative report emphasizes this demographic as “significantly younger” than other groups. The majority are under age 25, with the most common age range being 10-to-14 years, compared to 60-to-64 years among non-Latinos.

A combination of “robust population growth, high labor force participation, and increasing human capital will continue to drive the dynamic growth witnessed so far,” the report says.

More Latinos are also graduating — though at lesser rates than their White peers — and becoming employed. This influx of younger, working-age Latinos, alongside economic advancements, is what’s making a difference, said Sol Trujillo, co-founder of the Latino Donor Collaborative.

“The Latino GDP is growing bigger every year, simply because of age. It’s a youthful cohort. If you took all Anglo Americans in the country, aged zero to 100, the most populated age for that cohort would be 58. If you took all the Latino Americans in the zero to 100 category, the most populated age would be 11,” said Trujillo. “There’s a million Latinos in the country turning 18 every year… they’re now supplying almost 80% of all workers in our economy.”

With overall “youthfulness, strong work ethic, deep family values, entrepreneurial spirit, healthy lifestyle and patriotism… Latinos are poised to power the U.S. economy into the mid-21st century, continuing to be a source of economic strength and resilience that benefits all,” researchers from the 2023 U.S. Latino GDP Report said.

Latinos’ growing purchasing power, representation

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Coffee connoisseur Sanchez Salazar was proud to hear about the growing Latino GDP. He and his business partner hope to one day open up Malcriada cafés of their own around southeast L.A.

“I think this information is good to see how much of this country we carry on our shoulders,” he said. “I like to believe I’m one of those people who are really hard working and do things without expecting. For generations, we don’t necessarily expect the best working conditions, the best benefits… Latinos are here to contribute. We’re not freeloaders.”

Seis Solis Wine Co. owner Christopher Rivera sells wines wholesale in Orange, Santa Ana and across the region, with dreams of opening up a tasting room in Orange County. The Northern California native said that grapes are grown Lodi, but the coronavirus shutdown made him redirect business online.

The company’s name — Seis Soles, the “sixth sun” — is inspired by Aztec ancestry and lore, respecting traditional Mexican family values while promoting new ideas. It represents the growth of “a new generation’s culture and values,” according to the website. Rivera’s business model supports representation and inclusivity which, he said, the wine industry needs more work on. He hopes to create a brand “that Latinos can identify with” and can be shared.

“I launched (Seis Soles Wine Co.) because Latinos are growing in purchasing power, in political power and in representation, especially in California,” Rivera, 38, said. “People always kind of pigeonhole us and act like we’re a monolith. They have almost a caricature of what a Latino or Mexican might be in California. Now, our disposable income tends to be increasing, as we’re expanding out from just manual labor jobs… we’re coming into our own, learning new things and participating in the economy.”

After finding a lack of inclusive children’s clothing to gift to her expecting uncles, L.A. resident Jessica Sosa-Cardenas co-founded a children’s clothing brand called PeaTree, selling hand-sewn, organic onesies and children’s clothes at pop-up markets and retailers across the region.

Now the small business, started by two second-generation Mexican sisters in 2019, carries a range of children’s clothes that represent being Latinx. PeaTree’s collections also celebrate LGBTQ+ parents and those with children through in vitro fertilization, surrogacy or adoption.

Sosa-Cardenas said PeaTree contributes to the community through local partnerships. She feels it’s important to uplift other women of color and their businesses.

“To work on this brand that is representative of my culture is so huge because it’s the double layer of not only being Latino, but also being a woman, and knowing that I was able to achieve all of this. I want it to be an example of what true commitment and hard work can do,” Sosa-Cardenas, 38, said. “The love for my family, the love for my culture, the love for our traditions is what it’s all about.”

Staff writer Allyson Vergara contributed to this report.