Tuesday, January 23, 2018
Business

PolitiFact: Claim about startup rate of Hispanic-owned businesses is half true

The statement

"The startup rate of Hispanic businesses is three times the national rate."

Libre Initiative, Aug. 10 in a Facebook post

The ruling

The Libre Initiative is a 501(c)4 nonprofit that has ties to the Koch brothers. They reach out to the traditionally liberal Hispanic community, espousing conservative ideals in favor of economic and religious freedom, and against the Affordable Care Act.

The Libre Initiative directed us to a White House report on the fiscal year 2013 budget that included the same claim, without elaboration.

"According to the most recent Census data, Hispanics are opening businesses at a rate three times faster than the national average," it said.

So we turned to the Census Bureau.

The Census Bureau conducts a survey of business owners every five years, broken down by various demographic groups, industry, size and location. The most recent report came out in 2010 and looks at the years 2002 to 2007.

The survey defines Hispanic-owned businesses as those operating in the United States that "self-identified 51 percent or more of their ownership … to be by individuals of Mexican, Puerto Rican, Cuban or other Hispanic or Latino origin."

According to the 2010 report, the number of Hispanic-owned businesses grew 43.7 percent from 2002 to 2007. The national average growth rate was 18 percent, so Hispanic-owned businesses grew at a rate that was a little more than twice as fast.

But the growth was not quite three times as fast as the national average, so we jumped back five years to the previous business owners survey results, which came out in 2006.

This survey seems to contain the claim's origin. Between 1997 and 2002, the national average growth rate for businesses was 10 percent, and the growth rate for Hispanic-owned business was 31 percent — just over three times the national rate.

We found a 2013 report by business intelligence firm Geoscape and the U.S. Hispanic Chamber of Commerce that had some more recent data. The report projected that in 2013, there would be 3.16 million Hispanic-owned businesses in the United States — a growth rate of 40 percent since 2007.

The Geospace report also said the average annual increase in Hispanic-owned companies during that time frame was 6.66 percent, compared with 3.14 percent annual growth among all U.S. companies.

"The Hispanic population has been starting and growing new businesses at nearly twice the rate of the general population and this trend has continued for more than 10 years," the report says.

Service areas and technology are among the top industries where this growth is happening.

The growth of Hispanic-owned businesses mirrors the country's rising Hispanic population. Between 2000 and 2010, the Hispanic population grew from 35.3 million to 54.1 million, which is more than a 50 percent growth, according to the Pew Hispanic Trends Project.

So, we found data that showed the number of Hispanic-owned businesses growing at three times the national rate between 1997 and 2002. However, more recent data shows a growth rate of Hispanic-owned businesses that's closer to twice the national rate. We rate this claim Half True.

Lauren Carroll, Times staff writer

Edited for print. Read the full version at PolitiFact.com.

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