Is L.A. Latino Friendly? : Hispanic Business Magazine Ranks the City as 10th in Providing Opportunities
With a population of 1.4 million Latinos and an estimated 75,000 Latino-owned businesses--the largest of any city nationwide--Los Angeles would seem the premier business locale for Latinos.
Yet, in a recent survey of the top 50 cities for Latino business opportunities, Los Angeles came in at No. 10, ranking behind such cities as Chicago, Phoenix and Albuquerque. A key factor hurting Los Angeles was the relatively high cost of doing business here, which affects all businesses, not just Latino-owned.
But members of the Latino business community here, accustomed to perceiving themselves as No. 1, admit that problems persist for Latino entrepreneurs even in a city with a population 40% Latino.
Latinos in Los Angeles get a disproportionately low number of government contracts and have lacked the political clout for years to remedy it, these Latino business people say. Latinos here also struggle in business, they say, because they lack a strong professional base and are still burdened with a poor immigrant legacy and continuing prejudice. Even Latino business habits come in for criticism, including the “bodega mentality” under which Latinos choose to be conservative and not expand.
“I would like it if there weren’t, but I think it’s pretty obvious that there are problems,” said Frank Villalobos, president of Barrio Planners Inc., a community planning corporation that gives technical assistance and loans to Latino small businesses.
However, these problems have not escaped the notice of public officials. In the past year, efforts to strengthen the business environment for Latinos and other minorities have included creation of a computerized minority contracting office in the mayor’s office, the opening of a government-funded, low-fee consulting service and, more recently, the first-ever bus trip by bankers to East Los Angeles.
The efforts are not charity, said Linda Griego, president of RLA (formerly Rebuild L.A.) and a former restaurateur.
“The Latino community just has to learn how powerful it is on an economic basis,” Griego said.
But for now, Los Angeles is saddled with its 10th-place ranking in the April issue of Hispanic Business. The Santa Barbara-based monthly magazine surveyed 50 cities nationwide. It examined statistics in each city pertaining to Latinos and other factors that affect all businesses, such as taxes, real estate prices, workers’ compensation costs and crime rates.
Because of those purely economic factors, Los Angeles, which is still struggling out of the recession, necessarily scored lower, said Alberto Alvarado, district director of the Small Business Administration. But, he added, taxes and regulations also impact minority businesses with greater force. Unlike Anglo business owners, Latinos may not fully understand government rules and regulations and are less likely to assign special employees just to deal with them. Thus, in a city with more regulations and taxes, Latino business owners would find it harder to succeed, he said.
Los Angeles also did not rate high in the Hispanic Business survey when the percentage of Latino elected council members, 20%, was compared to the percentage of Latinos in the population, 40%. Third-place Albuquerque, with its smaller percentage of Latinos, 34.5%, has a city council that is 80% Latino, according to the survey.
For decades, Latinos were underrepresented politically in Los Angeles, gaining political clout and representation only after a successful fight in the late 1980s to keep a state prison out of East Los Angeles, said Villalobos. Decades of Latino absence from public office has meant that Latinos received few government contracts, even with affirmative action programs, he and others said.
For example, according to statistics from the Metropolitan Transit Authority, Latinos have received less than 10% of the contracts to build the Red Line through Hollywood. According to Los Angeles County statistics for fiscal year 1993, Latinos received less than 8% of all county government contracts.
“As the leadership goes, so goes the business opportunity,” observed Joe Ortiz, spokesman for the 6,000-member Latin Business Assn., a nationwide networking organization.
Villalobos added that Latino firms even now often can’t apply for government contracts because of their lack of experience, training, licensing or even the financial strength to get bonding needed to guarantee completion of government contracts.
In addition, some believe that Latinos themselves are to blame for failing to take advantage of business opportunities and instead following the concept of el negocito , or the little business. Also known as the “bodega mentality,” it refers to simply sustaining a livelihood for family members and avoiding business expansion and growth. Such values are typically held by Los Angeles’ more recent Latino immigrants, said Griego, who added that second and third generations are willing to take more risks.
Latinos also will typically keep business in the family. Instead of selling stock or pieces of their company to get money to expand, they will retain 100% ownership, said Griego.
Such conservative business practices mean “they are not going to build,” she said. “They are just handling inventory.”
Other obstacles to Latino entrepreneurship here include the legacy of a poor immigrant past, many say. Unlike the prosperous and well-educated Cubans who fled to Miami in the 1960s, the majority of Mexicans who fled revolution in the early 1900s for Los Angeles were, for the most part, unskilled peasants. Lacking education and with large families to support, they continued to do blue-collar or unskilled work, Villalobos said.
Their upward mobility was hampered by discrimination that continued through the 1940s, as symbolized by the Latino “Zoot Suit” riots, when Latinos were attacked, and in the 1950s, when Latino high school students were routinely funneled into shop classes, he said.
Thus, now only a small number of Latino engineers and architects work in Los Angeles and the city lacks a strong business and professional network, said both Villalobos and the SBA’s Alvarado. Those involved in Latino business organizations characterize them as still at a fledgling level. “The lowest numbers in the professional world are in the Latino community,” Villalobos added.
While Hispanic Magazine said Latino networks may not be essential in smaller cities such as Albuquerque, in urban, sprawling Los Angeles, Latinos who largely own smaller businesses find it hard to break into the well-established “old boy” network of big companies, said Hector Castillo, president of the Los Angeles chapter of the Society of Hispanic Professional Engineers.
And now, as Latinos are returning to the marketplace, many fear a resurgence of prejudice. The passage last year of Proposition 187, which seeks to deny health care and other services to illegal immigrants, and efforts to limit affirmative action could harm Latino business opportunities, some say, by limiting Latinos’ admissions to colleges and universities, slowing government business contracts to Latinos and ultimately reducing the Latino business and professional ranks.
“A lot of us (Latinos) thought we were making progress,” said Ortiz of the Latin Business Assn. Proposition 187 and the proposed California Civil Rights Initiative that seeks to eliminate affirmative action programs “will set us back five or 10 years,” he said.
Yet, many programs still exist to aid Latinos and other minorities in business.
The SBA recently took 140 bankers through the streets of East Los Angeles in three buses in an effort to get more loans for Latinos. Although the retail area of thriving small businesses is surrounded by a stable working-class neighborhood with a population employed in nearby food-processing and manufacturing plants, bankers have failed to lend there because they are unfamiliar with the area and fearful of negative Latino stereotypes of crime and run-down housing, Alvarado said.
Only three banks currently operate branches there now, even though “the volume of business conducted on Whittier Boulevard is five times that on Rodeo Drive,” said a prideful Alvarado, an East Los Angeles native.
Since the tour, Alvarado said, scores of bankers now are seeking information about businesses there and a group is now working to form a consortium of banks to open a new banking office.
But other Latino business owners, like Marcelino Miyares, co-owner of Tamayo-Miyares Advertising, see themselves as unfettered by difficulties others cite and say they don’t need government aid.
The 31-year-old has a unique perspective. Although his parents ran an advertising agency in Chicago, Miyares left his hometown to start his own firm in Los Angeles. Doing business is easier for Latinos in Chicago, Miyares said, because Latinos who work for the mayor are highly visible, the city treasurer is a Latino and there exists a deputy director for Hispanic affairs. With a smaller Latino population in Chicago, a handful of Latinos call the shots for contracts and big construction jobs, he said.
By contrast, “in Los Angeles, it’s more difficult to know who’s who,” Miyares said. “It’s a lot harder to find a business godfather in Los Angeles than Chicago.”
But Miyares believes the opportunities are greater in Los Angeles, despite the turn against affirmative action and immigrants here. Latinos must stop thinking that others need to provide opportunities for them and instead look to their own resources and community, he said.
He cites his own experience of growing his operations out of a Sherman Oaks living room to a suite in Canoga Park with 26 employees and annual billings of $10 million, by concentrating on the Spanish-language market.
With its large Latino population and greater overall wealth in Los Angeles, Miyares concludes, “In my experience, Los Angeles is the land of opportunity for me.”
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Best for Latino-Owned Businesses
To rank the nation’s 10 best cities for new Latino entrepreneurs, Hispanic Business magazine surveyed 50 cities nationwide and ranked them according to 10 overall factors, including business failure, crime and tax rates. Three factors were directly linked to Latino issues: the Latino percentage of the population, the percentage of elected Latino officials and the number of companies listed on the 1994 Hispanic Business 500 directory.
No. of Cities Score Latino-owned Businesses 1. Chicago 66 7,848 2. Phoenix 65 4,507 3. Alburquerque 64 4,579 4. Miami 62 66,600 5. San Antonio 61 21,000 6. Houston 60 22,200 7. Dallas 59 12,000 8. El Paso 58 8,214 9. Austin 57 3,366 10. Los Angeles 56 75,000
Note: Hispanic Business Magazine used 1994 U.S. Census projections to determine the number of Latino-owned businesses in Miami, San Antonio, Houston, Dallas and Los Angeles. Figures from other cities are 1987 census data. Dallas figure is for Dallas/Fort Worth Worth combined.