Latino families facing economic stress during COVID-19 recession
Jay Marquez, owner of a shoe store in Little Havana, was happy to be able to reopen in May and is hopeful that his business will improve after tourism returns.
Julio Rosell used to pull in up to $7,000 in monthly revenue through the interior design and carpentry business he owns in Hollywood. But things have come to a standstill as contracts have dried up. Now he’s working odd jobs trying to keep up with rent at his North Miami home and the workshop where he runs his business, International Modern Design.
Rosell’s plight is sadly familiar to Latinos nationwide. According to a new study by a leading political research group, about one in three Latino business ownpoverty ers have taken an economic hit from the pandemic. Coronavirus-related job losses have affected at least 29% of Latino families.
The results come from a National Parent Survey conducted by Abriendo Puertas, a parenting-focused nonprofit based in
Los Angeles, and Latino Decisions, a leader in Latino political opinion research. The survey polled 1,195 Latino parents and grandparents to evaluate the economic vulnerability of Latino families during the COVID-19 pandemic.
While Americans overall are struggling in the COVID economy, Latinos are generally more economically vulnerable than the general population. The Latino rate at 17.6% is higher than the national average of 11.8%, according to Census data from 2018. While median household income for Latinos has seen modest gains and sits at $51,450, according to the data, it still lags behind the national median of $61,937.
“It took about 10 years — up to 2017 — for Latinos to get the same median income they were at during the last recession,” said Gabriel Sanchez, a professor of political science at the University of New Mexico and principal at Latino Decisions. “That’s a big lesson learned. If we don’t take aggressive steps now and it takes another 10 years for Latinos to recover economically, that’s going to have a severe impact on the overall economy.”
According to Census estimates, Hispanics make up 18% of the U.S. population — 60 million people in 2019.
As the virus continues to ravage peoples’ finances, about 26% of Latino families surveyed have turned to high-interest pay-day or easy loan companies. Most of those were parents with children ages 0-4.
“What a lot of us don’t think about is the multigenerational effect this can have,” added Sanchez. “If a family struggles and the parents are unemployed, that impacts the kids who might then see their educational opportunities dwindle. That’s when things get really scary in terms of implications.”
The survey also found that people are postponing their education, added Edward Vargas, assistant Professor in the School of Transborder Studies at Arizona State University and a policy analyst at Latino Decisions. With education levels closely tied to income, the decision may have a domino effect for years to come, he said.
The survey also found that nearly half of Latino families across the country have only $1,000 or less in savings for financial emergencies, and 20% have $100 or less.
Continuing direct federal payments for people is one way to ensure that families who were already in a precarious position don’t fall off a cliff, said Sanchez. A concerted effort on smallbusiness owners will also be key.
“I think we need more focus on loans for small businesses to help them weather this,” said Vargas.
The growth of Latinoowned businesses has outpaced that of other groups. The number of majority Latino-owned businesses increased more than 13% between 2014 and 2016, compared to less than 3% growth for other demographics, according to a 2018 study by the Stanford Graduate School of Business.
For Rosell, existing support programs provided limited relief. He received a $4,000 Small Business
Loan that helped keep three employees on payroll. But with monthly rent of $2,300 for his workshop, it didn’t go far.
“I don’t want to say the word ‘close’ because I don’t want it to come to that,” Rosell said of the business he’s owned for five years. “This has been my dream and the only thing I’ve ever wanted to do. I’m going to hold on as long as I can.”
Business owners like Martha Dobrican have also felt the squeeze during the pandemic.
After seven years tucked into a tiny shopping center in Pembroke Pines, Dobrican, a Miami-based paralegal from Colombia, decided to stop paying for her office space in March.
She’s now running her business ML Documents from home. But it’s not an ideal move for her.
“An office environment is very important for Latinos because they feel more secure going to someone who is backed by an office,” said Dobrican, who helps clients with immgiration and other legal paperwork.
Previous she saw about 50 walk-in clients a month, but COVID-19 restrictions and fears kept clients away. Paying $1,300 in rent for her office on top of $1,400 for rent at home and Internet connection in both places made no sense, Dobrican said.
She worries that giving up her official storefront will cause business to dip. For now, she’s hoping for the best.