How the Pandemic Is Pressuring the Latino Success Story

Yet these successes are being threatened by the coronavirus pandemic. Latinos are overrepresented in some of the sectors hit hardest by shutdowns and social-distancing guidelines, from restaurants to construction, and in some of the jobs most exposed to the virus, from nursing-home aides to slaughterhouse workers. And they’re still underrepresented in the white-collar jobs that can easily be done from home. Together, these dynamics have exposed the vulnerabilities of many Latino households.

Fredy Gochez, 21 years old, and his family illustrate this well. He was born in El Salvador and emigrated to the U.S. with his parents at age 5. He expects to graduate later this year from the aerospace engineering program at the University of California, Los Angeles, and hopes to get a job designing airplanes or spacecraft.

For now, however, Gochez’s family in Hayward, Calif., is trying to survive the pandemic. His father works as a carpenter for a company that installs corporate workspaces, and was out of work for three months because of the lockdowns imposed to slow the coronavirus’ spread. His mother is on the housekeeping staff at a hospital and contracted Covid-19. She has recovered and returned to work.

That was tough, Gochez says, as was adjusting to an elite engineering program at UCLA after graduating from a public high school where many of the students weren’t pointed toward college. But now, as then, he says he was motivated by his family’s perseverance. “My parents had to leave everything they know and had in El Salvador,” says Gochez, who became a U.S. citizen in February. “That was part of the driving force for me.”

The coronavirus health crisis hit just as the 60 million Latino Americans were flexing their economic muscles like never before. If the U.S. Latino population were an independent country, it would rank as the eighth-largest economy in the world, with 2017 output of $2.3 trillion, according to a study sponsored by the Latino Donor Collaborative, a nonprofit aimed at elevating Latinos’ profile in American society.

Latino population growth—even though it has slowed a bit in recent years—has accounted for half of total U.S. population growth since 2010. Latinos make up 18.5% of the U.S. population, up from 5% in 1970.

Their growing economic power reflects how the Latino population is changing, including rising education rates. William Stancil, a research fellow at the University of Minnesota law school, did an analysis of the top 200 school districts in the country, and all of them posted an increase in Latino students from 1998 to 2018. Pew Research Center found that 41% of Latino adults 25 and older had at least some college experience in 2018, up from 36% in 2010.

“The fast growth of the Hispanic population in the 1990s and 2000s is coming of age,” says Mark Hugo Lopez, an expert in demography and Hispanic trends at Pew Research Center. “And it’s shaping everything from how many are going to college, buying a home, entering the labor market, and establishing small businesses.”

Latinos are likely to keep outpacing the rest of the economy as the largely white baby boomer generation retires. The average age of Latinos is just 30 years old, 14 years younger than non-Latino whites. The biggest growth in the Latino population now comes from U.S. births, not migration.

Around half of Latino adults in the U.S. are immigrants who came to this country to find work. Latinos have had higher labor-force participation rates than other ethnic groups. If they can’t find a job, they start their own businesses, says Paul Lewin, an associate professor and specialist in community economic development at the University of Idaho. In 2017, Latinos made up 24% of new businesses, compared with 10% in 1996, he says.

“They are the most entrepreneurial group in the country,” Lewin says.

It hasn’t always been easy for Latino entrepreneurs. Latinos have lower household wealth than non-Latino whites, and many—particularly immigrants—don’t have a strong credit history. What’s more, low homeownership rates among Latinos means that many Latino business owners don’t have access to cheap financing through home-equity loans.

A 2018 study commissioned by the U.S. Small Business Administration found that Latino businesses, like Black-owned businesses, weren’t as well capitalized and tended to have higher failure rates than businesses owned by non-Latino whites, or Anglos. The study also cited research that showed Latinos experienced lending discrimination at a greater rate than white borrowers.

Chula Vista, a Latino-majority city of 275,000 midway between San Diego and Tijuana, Mexico, is a case study of both the growing Latino economy and the damage it has sustained from the coronavirus crisis.

The eastern part of Chula Vista is growing rapidly, as affluent families, many of them Latinos, move into swanky new neighborhoods springing up like mushrooms in the Otay Ranch area. Large stucco houses with red tile roofs are shoehorned onto small lots.

In the older, western part of Chula Vista, many restaurants and other businesses owned by Latinos are helping revitalize neighborhoods full of smaller, post–World War II houses. A group of Chula Vista natives, both Latino and Anglo, moved back to the city in recent years to open restaurants and brewpubs in the city’s Third Avenue Village, helping transform it from a sleepy commercial district, says Eric Crockett, a deputy city manager in charge of economic development.

Then the coronavirus came. The city in July commissioned a study that found 60% of its small businesses expected to fail in the next six months because of the pandemic. It also found that minority-owned businesses had less access to credit than Anglo businesses and frequently paid higher rates.

“They’re still struggling,” Crockett says. “I don’t know how they’ll last.”

Neither do they. Sabina Cortes is the floral designer at Sea of Flowers, a shop owned by her boyfriend, James Perez, in Chula Vista. The 15-year-old business lost some big orders for weddings and other events after the pandemic struck, and has moved to a smaller location partly to save money, Cortes says.

“We’re trying to cut down as much as possible to keep the business alive,” she says. The business applied to the federal Paycheck Protection Program for financial help, but she said the application was rejected.

A prolonged downturn will hit Latinos harder than most other Americans because—despite all of the headway they’ve made—they entered the recession in weaker shape. Even before the recession, 64% of Latinos rated their personal finances as fair or poor, according to a Pew Research study.

Things are worse now. The unemployment rate for Latinos soared to 18.9% in April from 4.4% in February. It is currently 10.5%, higher than the 8.4% jobless rate for the entire U.S.

Fewer Latinos work in the white-collar corporate jobs that can be done from home during the pandemic. In February, only 24% of Latino workers held management, professional, and related jobs, compared with 42% of U.S. workers overall, Pew Research found.

Some fear a repeat of the 2007-09 recession, when the incomes of U.S.-born Latinos plunged 10% from 2007 to 2013, far greater than the 3% drop for native-born Americans overall.

“I think it’s going to be worse,” says Alfredo Romero, an associate professor of economics at North Carolina A&T State University in Greensboro. “At least during the great recession, it was only a matter of time until jobs came back….This time, it’s related to a health crisis.”

Latinos are also getting sick more from the coronavirus. The hospitalization rate for Latinos is 4.6 times as high as that of Anglos, and they also have a somewhat higher death rate, the Centers for Disease Control and Prevention reported in August. Some of the worst outbreaks have been in businesses heavily staffed by Latinos, including nursing homes and meat-processing plants.

Romero predicts that the rebound will be much slower for service businesses, a disproportionate number of which have Latino owners and workers. Before the pandemic, the median household income of Latino households was $51,000, versus $71,000 for non-Latino whites. That gap is likely to widen, he said.

Despite the rocky road back, the growing size of the Latino community means that they will have growing buying power—and that consumer-product companies ignore them at their peril. The Census Bureau predicts that the Latino share of the population will be 28% by 2060, roughly 10 points above its current level.

Yet Latinos aren’t monolithic, and reaching them can be tricky. Mexican-Americans constitute 62% of Latinos, but their share is shrinking as immigration has increased from elsewhere in Latin America. Venezuelans, Dominicans, and Guatemalans have experienced the fastest population growth since 2010, according to Pew Research.

New York–based Krasdale Foods supplies groceries, marketing, and merchandising to hundreds of supermarkets targeting Latino consumers in the Northeast and Florida. While Mexican-Americans are the dominant group in the West, Puerto Ricans, Cuban-Americans, and Dominican-Americans have huge populations in the East. Each group eats different foods.

Most of the Krasdale stores are owned by Latinos who come from the communities they serve, says Gus Lebiak, chief operating officer of Krasdale’s marketing unit. The owners know how to tweak the product offerings to serve whichever Latino group is dominant in that area, he said. A Krasdale-supplied grocery chain like Bravo, for instance, will have cheeses for Salvadoreans, cheeses for Guatemalans, cheeses for Mexicans.

“Our folks have definitely been more attuned on how to focus on that market, because it’s really their market,” Lebiak says. Krasdale’s sales have improved during the pandemic, as has been the case at many grocers.

Nestlé

(SWX.Switzerland) is a huge international food company, but it also sees Latinos as crucial to its growth. Alicia Enciso, the Mexico-born chief marketing officer at Nestlé USA, says that American Latinos are key consumers of global Nestlé brands like La Lechera and Abuelita, but also of mainstream brands such as Carnation, Stouffer’s, and Hot Pockets.

She said that Nestlé is cognizant of taste preferences between different Latinos groups in the U.S. and tweaks its offerings accordingly. For example, she said that Mexican-American customers tend to prefer cinnamon, whereas many Caribbean-Americans like coconut. “If you are able to understand and appreciate these flavor preferences…you can become their brand of choice,” Enciso says.

The pandemic poses a huge test for Latinos in the U.S. But their youth and growth rate means that they could quickly recover and resume their upwardly mobile trajectory over the coming decades.

Write to Neal Templin at [email protected]