PolitiFact: Claim about Hispanic businesses needs context

This article was edited for length. To see a complete version and its sources, go to www.politifact.com/truth-o-meter/statements/2014/aug/12/libre-initiative/conservative-group-says-hispanic-business-growth-t/.

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

Libre Initiative on Sunday, August 10th, 2014, in a Facebook post

A conservative grass-roots organization is targeting a demographic group that the GOP is struggling to win over — Hispanics.

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

Its stated stance on immigration is that it believes the system should have a streamlined process for allowing immigrants to work legally in the United States, though its view on how to handle illegal immigrants already in the country is less clear.

Part of the Libre Initiative’s mission is to promote business development in the Hispanic community, even hosting a small business summit with the U.S. Chamber of Commerce. It shared a positive fact about Hispanic-owned businesses on Facebook and Twitter over the weekend.

“The startup rate of Hispanic businesses is three times the national rate,” it said.

Knowing that Hispanics continue to make up a larger and larger share of the U.S. population, we decided to look into their business growth, too.

The Libre Initiative directed us to a White House report on the fiscal 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 bureau will release the next report in 2015.)

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 claims’ 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 the 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 firms during that time frame was 6.66 percent, compared with 3.14 percent annual growth among all U.S. firms.

“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.

All businesses are responding to the growing Hispanic consumer base — and its more than $1 trillion in purchasing power — said Javier Palomarez, the CEO of the U.S. Hispanic Chamber of Commerce.

The Hispanic community is generally aware of and responds well to Hispanic-led businesses, which might be aiding the growth, Palomarez said. He added that the Hispanic population is younger than the non-Hispanic population, which means it tends to be more technology-able and innovative.

Our ruling

The Libre Initiative said, “The startup rate of Hispanic businesses is three times the national rate.”

We found data that showed the number of Hispanic-owned businesses growing at three times the national rate between 1997 and 2002. More recent data, however, shows a growth rate of Hispanic-owned businesses that’s closer to twice the national rate.

The overall trend — that Hispanic-owned businesses are popping up faster than other demographics — is correct, though.

We rate this claim Half True.