Obstacles and Opportunities: Latino-Owned Small Businesses in Iowa

Abstract

Iowa is a new destination state for Latino migration in the United States (Zuniga and Hernandez-Leon, 2005). The state's Hispanic population grew by 153% between 1990 and 2000 to 83,000 and in 2005 the US Census Bureau estimated the size of Iowa's Hispanic population had grown to more than 100,000.1 Indeed, between the Censuses counts of 1990 and 2000, immigration accounted for two-thirds of the state's total population growth. About 75% of these newcomers came from Mexico.The influx of Latino newcomers started in earnest about 1993 and was driven by massive movements of Latino labor into food processing plants in several Iowa communities. Meatpacking communities in particular experienced the rapid ethnic diversification (Grey 2000) associated with Latino influxes. Five meatpacking towns-Marshalltown, Dennison, Perry, Postville, and Storm Lake-experienced Latino growth rates over 1,000% between 1990 and 2000 (Grey 2005). Other communities experienced Latino influxes as these newcomers took jobs in other agribusinesses including poultry, egg production, hog confinement operations, and dairy farms. While most of the 1990s influx of Latinos to Iowa was drawn by jobs in meatpacking plants and other agribusinesses, there has been a slow but steady movement of Latinos into other sectors of the Iowa economy. These include road and building construction, landscaping, cleaning services, nursing homes, and retail.Determining the economic contribution of Latinos to Iowa has generally been limited to their wages (well into the millions of dollars in meatpacking towns) and their buying power as expressed in the purchase of consumer goods, services, houses, and cars. Other economic contributions are generally overlooked. In particular, there has been little or no recognition of the role Latino-owned businesses now play in local economies. For the most part, established-resident Anglo small business developers, economic developers, and chambers of commerce have underestimated the size and economic contribution of immigrantowned businesses. There are three reasons for this. First, most economic developers focus on large- to moderate-scale businesses. These high profile, high-impact businesses include manufacturing plants and large retail outlets. They bring large investments of capital, enhance local infrastructure, and often employ large numbers of people. These high profile investments bring prestige to communities (and the economic developers who recruit them). In addition, development incentives such as tax breaks and special utility rates are generally geared toward recruitment of large-scale enterprises. Given the potential political and economic payoff associated with recruiting large employers, small businesses often fall off the radar screen of economic developers.Secondly, small business developers are more likely than economic developers to work with small-scale operations. But in the case of immigrant-owned businesses, cultural and language issues often get in the way. Even when language barriers can be overcome to some extent with interpreters, cultural issues often compound the process. Onesize-fits-all scripts for planning, financing, and opening small businesses that typically work for established-resident Anglos do not always work for newcomer owners because they usually come from very different operating conditions in their home countries. Chambers of commerce in Iowa meatpacking towns often try to invite Latino-owned businesses, but without much success. The reason has to do with a clash of expectations for what a chamber can do for business owners and immigrant owners often see no point in joining associations with their competitors.Finally, economic developers, chambers, and small business developers generally do not recognize or understand the role of microenterprise in the so-called silent or gray economy that is not taxed or regulated, yet these small businesses provides much needed goods and services to newcomers and established residents alike. …