Thinking Beyond the Recession

An unforgiving national unemployment rate of nine percent and stagnant – or declining – wages for the average household for the last ten years dominate the minds of Americans worried about the economy.  As important is the number of business closings, though it seldom gets the same amount of ink.  More than 1.5 million businesses have closed since the start of the current recession. A high unemployment rate and extenuated business closures feed off each other in an economy with little demand.

Most HispanicLatinos know generally what it is to be unemployed but fewer know the anxiety of losing a business.  The two are one and the same.  So in a world in which large businesses can be crushed by changes in global competition that spin off unemployed workers by the hundreds of thousands, the owners of small and medium-size businesses can be laid low by those same changes.  And the American economy is being overcome slowly by increased productivity around the world and by the conversion of millions of hands in foreign lands into a gigantic manufacturing workforce toiling at low wages.  Any force pushing gross national output downward generally is felt across the board, and HispanicLatino businesses are no exception.

The success of every HispanicLatino business is critical for its owners, obviously, but as much as for the country as a whole.  It should be obvious why:  The greater a share of the national population, the greater the share of responsibility for local, state and federal budgets the HispanicLatino population will have to bear.  Yet the average HispanicLatino household income in real dollars is about the same as it was 40 years ago.  Since 1972, when some observers began to pay attention to inexorable HispanicLatino population growth, the median HispanicLatino household income as measured by the Census Bureau in 2009 dollars increased from $35,200 to only $38,039.

I have written elsewhere (“What Every HispanicLatino Needs to Know”) that the growth of the HispanicLatino population is a key component of the future national security of the country.

So HispanicLatino businesses that can increase household incomes and create jobs are a key component of how the nation survives in the future.  Business owners fighting to stave off disaster are as important as the valiant men and women serving abroad in the armed forces staving off another terrorist attack.

How to keep a business alive today is the same as growing it: Finding new markets, increasing sales, monitoring costs, etc.  But a new perspective is needed as well: Businesses of all sizes must understand fully the demographic and social transition that the country is undergoing.

It is imperative that business owners understand how the demographics of their markets are changing.  The principle of location, location, location almost always is the overriding factor but it must be expanded to include where a business fits in the always changing geographic-demographic trend of city; where it fits in the geographic-demographic trend of a market sector; and where demography is causing some non-HispanicLatino business owners to retreat, allowing HispanicLatinos to take over still-viable businesses.  Critical management and marketing skills can be transferred to new lines of business – and to new markets – in these rapidly-changing times.

The promise of trading internationally today is not outside the realm of almost any business that is not a local service, although what stands in the way of a local professional business from offering its services globally?

The tremendous wave of global change that rocked the American economy also produced a new global market – a classic case of Joseph Schumpeter’s creative destruction at work.  A global middle class far larger than any ever imagined has formed, and will grow according to the World Bank from 1.9 billion people in the middle class today to 3.2 billion by 2020 and 4.9 billion by 2030.  Capitalizing on this new group of consumers is a way the country – with a consistently growing HispanicLatino population – can itself succeed in the future.

Local economies that have retrenched from the reordering of the global economy and internal population changes do not have to take HispanicLatino business owners with them.

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