The Latino business sector has grown so big and strong in Los Angeles that if it were its own state, its Gross Domestic Product would be larger than the GDPs of states such as Louisiana and Oregon.
That is one of the findings in a study expected to be released Sept. 8. Called the “2022 Los Angeles Metro Latino GDP,” it was conducted by two local university-affiliated research organizations and funded by the Bank of America Charitable Foundation.
The study, the first of its kind for the LA area, focuses mostly on the growth of the local Latino market, as well as its overall size and increasing educational attainment.
Not only is the Latino community larger in Los Angeles than any other US city, the report is to show that between 2010 and 2018 the number of people in the LA area with a bachelor’s degree or higher grew 2.6 times faster for Latinos than non-Latinos . And the Hispanic-Latino labor force participation rate was an average of 4.3 percentage points higher than non-Latinos. Population growth and education are associated with a vibrant economy.
Raul Anaya, the local president of business banking at Bank of America and the highest-ranking Latino at the bank, said he anticipates the report will validate what he already believes to be true of the Los Angeles Latino business community – household formation, home purchases and small-business formation are all being driven with the assistance of the Latino community across the country and specifically in Los Angeles, where Latinos make up 45% of the population.
The Los Angeles metropolitan statistical area – which the government defines as the Los Angeles, Long Beach and Anaheim area – is the single largest MSA by Latino population, with 6 million Latinos in 2018. (The study uses 2018 statistics because that’s the most recent year core data is available.)
The 2018 Los Angeles metro area Latino GDP was $285 billion, larger than the entire economy of such states as Connecticut, Louisiana and Oregon, the report says.
“These trends around growth, around wealth accumulation, around home ownership, around the formation of businesses by the Latino community, I think is something that Bank of America has always recognized for many, many years,” Anaya said.
Anaya said that his bank has 12 million Latino customers, including a million Latino small businesses, and the findings of the report will allow the company to get ahead of the future trend lines.
“To give an example, right now, over 60% of our financial centers across the country have Spanish-certified associates that are available to speak to our Latino customers, whether it’s an individual, a family or a small business, in Spanish.” Anaya added. “That’s how they choose to interact with us, so it’s important that our bankers are culturally attuned to what the needs are of our Latino customer base.”
Regionally, Latinos are starting businesses at a faster rate than the national average.
The Latino GDP report will go into detail about the way that the LA area’s Latino economy is highly diversified and how locally — and statewide — Latinos are the largest contributors to the population and labor force.
“The key industry sectors here in LA that drive this growth is around retail, transportation and hospitality,” Anaya said. “Given that the size of LA County is more than 10 million people, knowing that the Latino community is such an important part of the growth of our Greater LA economy, it’s important that we have a diverse economy so that it can weather the typical economic swings that happen in any given region.
“When you coupled the diversity of the industries with how (Latinos) are starting businesses at a faster rate, how they are accumulating wealth at a very fast rate, it bodes well for the overall growth and resiliency of the Southern California region. It’s an economic powerhouse.”
When released, the report will detail how Latinos made strong contributions to the Los Angeles workforce. Between 2010 to 2018, the Latino community added an average of 38,610 workers a year to the region’s labor force, while non-Latinos added an average of only 7,206 workers per year. Despite making up only 45% of the area’s population, Latinos are responsible for 84% of labor growth.
Raul Porto, the president of Portos Bakery Inc., said the business landscape in Los Angeles has changed since his operation opened in 1976, partly because of that growth.
“For starters, the Latino population used to be much smaller and had a much lower buying power,” he said. What’s more, non-Latinos now are more open to working with Latino businessowners, “and are far more open to trying food from different countries.”
Porto said that, like virtually every business, Porto’s had to overcome many challenges. “At the beginning it was all about getting enough customers and sales to survive. Once we got through that stage, hiring employees and managing the growth became part of our next challenge.”
Aside from significantly adding to the number of workers, the Latino community also showed big growth in homeownership. Between 2010 to 2018, the number of Latino homeowners increased by more than 16,000, while the number non-Latino homeowners increased by only 1,300.
Anaya said the key to predicting what the future of the Los Angeles business community will look like in 10 years is to look at what drives growth in the area.
“Look at the trends. The educational attainment of the Latino community is growing at 2 1/2 times faster than the educational attainment of non-Latinos here in LA,” Anaya said.
“It’s the significantly higher labor-force participation rate in LA, which is seven times higher than non-Latinos. And when you also look at the formation of businesses, because the Latino community is very entrepreneurial, it just means that over time, in the coming years, the Latino community here in greater LA will just continue to be a bigger, bigger part of the Southern California economy.”
Research for the report was conducted by Matthew Fienup and Dan Hamilton of the Center for Economic Research and Forecasting at California Lutheran University, along with David Hayes-Bautista and Paul Hsu of the Center for the Study of Latino Health and Culture at the UCLA Geffen School of Medicine.
The report will be released on Sept. 8 during the L’Attitude Los Angeles Business Summit at the Belasco Theater.