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Job Creators: It's Not Just The 1%

According to the most recent Census Bureau Survey of Business Owners (2007), Hispanic-owned businesses are the fastest growing segment of the small business sector, expanding at nearly twice the rate of the national average between 2002 and 2007.
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"Job killer!" "Job taker!" These are epithets that are too often hurled in our present political discussion. The slow pace of the economic recovery, and the persistence of high unemployment, has rightly focused our national dialogue on job creation. But many politicians have taken to draping the mantle of job creator over almost any policy or project that they want to advance. Putting our nation back to work is too important to allow empty rhetoric to go unexamined; it is too important to overlook effective economic development.

So who are the job creators? One argument says that it's the wealthiest 1% among us. While this is partially true - there are job creators among the super wealthy - there are also a great many venture capital investors and titans of industry that slash as many jobs as they create.
Another argument suggests that it is the elite classes of innovators in sectors like technology that create jobs. Again, innovative tech companies undoubtedly create jobs, but it's worth remembering that Facebook, which some would value as high as $100 billion, employs only about 3,000 people.

At best, the super wealthy and the super techie make up only a partial picture of who drives job creation in our economy. Let's go beyond the shallow sound bite definitions for a moment and examine some facts:

  • Data released by Advanced Data Processing (ADP), one our country's largest payroll service provider, indicates that businesses with fewer than 50 employees made up 45% of non-farm, private payrolls in October 2011 and, in the past two years, these smaller businesses increased payrolls more than companies with more than 50 employees.
  • The Kaufman Foundation's research indicates that nearly all net job creation since 1980 has occurred in firms less than five years old.
  • So small businesses are a critical source of employment in our economy; and entrepreneurial startups, in particular, are the driving force of job creation.

    And who are these entrepreneurs and small business owners? According to the most recent Census Bureau Survey of Business Owners (2007), Hispanic-owned businesses are the fastest growing segment of the small business sector, expanding at nearly twice the rate of the national average between 2002 and 2007. What's more, Hispanics owned 2.3 million nonfarm U.S. businesses operating in the fifty states and the District of Columbia in 2007, an increase of 43.7 percent from 2002.

    The Kaufman Index of Entrepreneurship found that, even in the face of this economic crisis, the entrepreneurship rate among Latinos has increased. These rates are higher yet among immigrants.

    For example, Kansas City, MO, a city like so many that is experiencing a Latino population boom, is home to family-owned Mary's Hair Salon. Established last April, Mary's Salon offers bilingual customer services. Karen Caballero (owner/daughter) and Maria Barron (business administrator/mother) have a mission to provide quality hair salon services at affordable prices. Ms. Caballero and Ms. Barron received technical support and training from the Hispanic Economic Development Corporation of Kansas City (HEDC), a nonprofit organization dedicated to providing bilingual and bicultural support to Kansas City's small business community. A strong entrepreneurial drive and some strategic support from HEDC, were key ingredients to this small business success. Ms. Caballero and Ms. Barron originally wanted to start with two hair stylists to meet the demands of their clientele but quickly developed the need to hire two more. The business now employs five people.

    Nicolas Canales launched Spanish Black Belt in 2004, a Spanish language institute that specializes in high-powered tutoring programs. After being turned down by a major bank for having a fledging business, Nicolas started his business with a $30,000 micro-loan from Latino Economic Development Corporation in Washington, DC and has created 20 jobs. Since launching his business, Nicolas has doubled the size of his teaching staff, increased his revenues by 150 percent, and Spanish Black Belt has entered new markets including Denver and New York.

    With so many unemployed people turning to small business strategies to earn a living, our political leaders and Federal small business policy should place a greater focus on delivering capital and technical support to micro businesses.

    Wouldn't it be refreshing for Speaker Boehner to balance his vision of wealthy job creators by recognizing the job creating potential of small business owners like Ms. Caballeros? And wouldn't it be encouraging for President Obama to put more muscle behind making federal agencies - whose job it is to focus on growing small businesses - really work for Mr. Canales and the thousands of other entrepreneurs across the country that are adding people to their payrolls?

    So who are job creators? I'll offer my own admittedly partial picture - Latinos, that's who.

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