EDITOR’S NOTE: The opinions expressed in this piece are solely those of the author and do not reflect the views of Latino USA.
Latino business owners have a like-hate relationship with President-elect Donald Trump.
Based on a recently conducted survey among Latino business owners by Camino Financial, 51% respondents stated they’re not satisfied with an incoming Trump administration. However, 44% of the respondents believe Trump will be good for their business, 22% think nothing will change, while the remaining 34% believe their business will be worse off.
Mixed feelings among Latinos could have implications on the United States economy at large.
There are many reasons why Latinos are not happy with Trump. During his campaign, Trump alienated many Latinos when using divisive rhetoric, such as supporting mass deportations and challenging the efficacy of an American judge based on his Mexican heritage.
“I’m nervous about the future of Latinos because Trump said a lot of negative things about us. I am offended by his comments [. . .],” said Sergio G., an undocumented small business owner from California. “We are making a big contribution to the economy, creating jobs and paying taxes.”
Concerns about a Trump administration may quell Latinos from starting new businesses, who are among the largest and fastest growing entrepreneurial segments. Latino businesses disproportionately contribute to the U.S. economy. According to a Harvard Business School report, small businesses employ half of the private sector workforce and create approximately 60% of net new jobs in our country. Latinos play a big role in small business, comprising 12% of all small businesses. Moreover, Latino-owned businesses are growing at 2.5 times the rate of all small businesses. Today, approximately 20% of new entrepreneurs are Latino. The American entrepreneurial fabric is increasingly Latino. Thus, President-elect Trump must take measures to demystify any concerns among this growing demographic, otherwise, job creation and innovation stemming from small businesses will be at risk.
Yet despite concerns around Trump’s campaign rhetoric towards Latinos, a large segment of Latino business owners still believe Trump is good for business.
“I am a small business owner located in Florida who has been in business for 12 years,” said Blanca H., a small business owner from Florida. “We generate jobs but we are also struggling. [. . .] I don’t know how [Trump] will do it, but I have hope he will focus on helping small business owners. I am an American citizen. I know I am the voice of many Latinos who don’t speak.”
Small businesses expect to benefit from Trump’s proposal to cut the corporate tax rate from 35% to 15%. These tax cuts are expected to apply to sole proprietorships, Limited Liability Companies (LLCs) and other pass-through entities, all of which are typical legal structures of most Latino-owned businesses.
In the same survey, we asked Latino business owners to rank policy areas most important to them. The top business policy areas are the following:
President-elect Trump announced his intentions for mass deportations of undocumented immigrants. Among the 8.5 million Latino undocumented immigrants, our company estimates that between 500,000 and 850,000 entrepreneurs legally own or operate a small business, paying billions in taxes. Furthermore, many small business owners are dependent on the employment of undocumented immigrants, most of whom take jobs that would otherwise be vacant or difficult to fill. President-elect Trump has recently toned down his tough rhetoric toward immigration and refocused on re-evaluating federal worker visas.
Employment is a key growth and cost driver among small businesses. For many consumer-interfacing small businesses, more jobs create additional disposable income that will likely trickle down to local retailers, restaurants, and professional service providers. There are also employment measures that could have large cost implications to small businesses. Most notably, several key states, such as California, New York, and Arizona, recently passed minimum wage increases that could adversely impact the cost structure of many small businesses.
1. Health Care
Health care is the most important policy area ranked by Latino business owners. And yet, this is the trickiest area to draw clear conclusions on how Trump’s proposed policies will likely help or hurt small businesses. On one hand, the repeal of the Affordable Care Act (“ACA”) would result in potential cost savings to small businesses with over 50 employees mandated to offer health care insurance to full-time employees. On the other hand, most Latino business owners do not employ over 50 people. The repeal of ACA would result in the loss of tax benefits available to businesses with less than 50 employees that offer healthcare to motivate and retain employees. While ACA may not be the most cost-effective solution for small businesses, a simple repeal will leave many businesses with higher costs and disgruntled employees.
Besides these three top issues, other policy areas mentioned in the survey included corporate taxes, education, bank regulation, and international trade.
Overall, Latino business owners are ready to engage in a constructive dialog about shaping the policies over the next four years. All they need is an open hand. Our economy may depend on President Trump’s willingness to extend one.
Sean Salas is the co-founder and CEO of Camino Financial, an online lender for Latino small businesses. Previously, he worked at a private equity fund where he helped manage several companies with over $250 million in combined revenue. Before then, Sean worked as an investment banker at UBS. Sean holds an MBA from Harvard Business School and a BA from UC Berkeley.