a special supplement to national journal

A SPECIAL SUPPLEMENT TO NATIONAL JOURNAL
Next Economy
the
SUMMER 2011
A JOINT PROJECT WITH THE ATLANTIC
A WORLD
NATION
UNIVISION LEADS AMERICA
INTO AN ECONOMY OF COLOR
BY NANCY COOK
PLUS:
WHY ARE BLACKS
GETTING LEFT BEHIND?
BY KAI WRIGHT
ARTICLES BY
RONALD BROWNSTEIN
and ALINA TUGEND
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summer 2011
Next Economy
the
a special supplement and joint project of the atlantic and national journal
t h e at l a n t i c . c o m
nat i o na l j o u r na l . c o m
4 Univision’s Vision
14 Elusive Middle Class
By NANCY COOK
By KAI WRIGHT
8 India in Virginia
17 Tinted Markets
In a Miami office park, meet the
corporate paradigm for America’s
ethnic future.
In trying to get ahead, blacks and
Latinos keep swimming against
the tide.
A high-tech corridor near the nation’s When selling to blacks and Latinos,
capital is a suburb of Mumbai.
distinguish between stereotypes and
By DEREK THOMPSON
cultural accuracy.
10 Selling Back Home
Only in America can an immigrant
start a business by looking
homeward.
Jeffery A. Salter/redux
By DARREN DAHL
12 The Big Picture
By ALINA TUGEND
21 Getting Started
SBA deputy chief Marie Johns
seeks opportunity for entrepreneurs
of color.
By JIM TANKERSLEY
A majority of minorities inhabit more 22 Brown v. Gray
Minority youth will wrestle with
than 300 counties—and counting.
elderly whites over government’s role.
By PETER BELL, BRIAN McGILL,
and RYAN MORRIS
By RONALD BROWNSTEIN
From the Editors
cover: Jeffery A. Salter/redux
T
h i s nat i o n o f i m m i g r a n ts is taking on a different
complexion—literally. By 2042, racial and ethnic minorities
will make up a majority of the U.S. population, demographers
predict. The bulge has begun: In last year’s census, people
of color—blacks, Hispanics, Asians, and American Indians—
accounted for nearly 47 percent of everyone under 18. Already, a
white-bread nation and its mass-market commerce are fading.
This edition of The Next Economy, a quarterly supplement produced jointly by The Atlantic and National Journal, explores the
economic implications of the United States as a “world nation.” In
the cover story, our intrepid business reporter Nancy Cook searches
for the emerging Microsoft of an ethnic economy and winds up in
Univision’s Miami studios. The Spanish-language television network,
which recently surpassed CBS and NBC among viewers ages 18 to 34,
has ambitions to combine entertainment and news with an increasingly political presence in hopes of empowering the nation’s Latinos
(and, presumably, itself ). As such, it’s the model for how a business
can thrive in a majority-minority nation.
It’s the scope of the changes ahead that is so startling. Check out
the dramatic map on pp. 12-13 to understand its geographical reach: In
nearly a tenth of the nation’s counties—including some you wouldn’t
expect—minorities already outnumber non-Hispanic whites. In many
more, their economic presence is being felt. Along the high-tech corridor in Northern Virginia, for instance, Derek Thompson finds an
ingathering of entrepreneurs from India who’ve created a Silicon Valley of the East by helping one another along. Alina Tugend chats up
the marketing strategists who are searching for routes into black and
Latino consumers’ hearts—well, their wallets.
But hold on a sec: A premise behind this pursuit of markets of a
different hue is that demographic power is tantamount to economic
power. Yet it isn’t. Kai Wright examines the evidence and argues that,
despite gains in income and education, blacks and Latinos are getting left behind. They missed out on the golden postwar era in which
government and industry created a middle class; now, they lag behind
in amassing the wealth that provides a feeling of economic security.
However the nation’s demographic changes play out, one thing
seems sure: It won’t be pretty. Ronald Brownstein prophesies decades
of American political strife between minority youth who want the
government to do more for them and white baby boomers resistant
to paying higher taxes to fund it. Whether the result is political impasse or social explosion—or both—rest assured that our children and
grandchildren will inhabit a worldlier nation than we do.
The Next Economy is a joint project of The Atlantic and National Journal. ©Copyright 2011 by Atlantic Media Group Inc., 600 New Hampshire Avenue NW,
Washington, DC 20037. All rights reserved. Reproduction and/or fax transmission of The Next Economy is prohibited without written permission of the publisher.
For more information about this or any Atlantic Media Group projects, call 202-266-7260 or 800-424-2921.
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Cover Story
By combining entertainment, news, and
a rising political presence, the Spanishlanguage TV network has charted a course
for success in a demographically evolving
nation, where racial and ethnic minorities
will soon constitute a majority.
A (Uni)Vision
For Life After
A Mass Market
By NANCY COOK
M
IAMI—In a cavernous television studio in an
office park far from downtown, Cesar Conde
fumbled at the teleprompter. The 37-year-old
wunderkind and brains behind Univision,
the nation’s preeminent Spanish-language
television network, is not normally an on-air
personality. In a dark suit, white shirt, and
red tie, he dresses more like a politician than a star. But on a
springtime afternoon, before an audience of producers, cameramen, and policy wonks, Conde was introducing a three-part
public-service program on the future of education. His short,
impassioned speech in Spanish spoke of the consequential role
that Latinos could play in the United States if they armed themselves with diplomas.
After the taping, Conde air-kissed a producer, nodded
good-bye to the crew, and quickly exited the studio into the
hallway. Before he rushed off to his next meeting, though, he
couldn’t help but express his earnestness about the role he
wants Univision to play in the new, emerging economy. “It’s
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our responsibility to help connect viewers with resources,”
he said. “We believe in our core responsibility of empowering Hispanics.”
Ordinarily, Univision seems too slick a media company to
concern itself with “empowerment.” This April, the network
surpassed both NBC and CBS in weekly primetime ratings with
adults ages 18 to 34. Its steamy telenovelas regularly occupy the
top 10 rankings of the most popular primetime Spanish-language programs, according to the Nielsen ratings. And, in the
past two years, Univision’s digital team has created 70 websites
for local radio and TV affiliates while also experimenting with
new digital forms of entertainment, such as soap operas made
expressly to be viewed on mobile phones.
Conde’s ambitions for the network seem decidedly American: He hopes to increase revenue, grab more market share,
and crush his competitors. “We believe Univision can be the
top TV network regardless of language,” he explained while
sitting in his utilitarian office. His plans include a political role
for Univision in running public-service programs, sponsoring
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5/25/11 1:04 PM
voter-registration drives, and hosting presidential debates for
the 2012 election.
Yet Conde doesn’t envision Univision as simply another
American network, one that mimics CNN or CBS. He has a
defined audience in mind. There’s a certain diversity among
viewers born in Mexico, elsewhere in Central America, in
South America, or in the United States. But they’re united by
language and culture. The network has thrived by catering to
Spanish speakers rather than worrying about the broader society’s whims. “Our laser-like focus is U.S. Hispanics,” he declared.
“The census results show we are 50 million strong and exponentially growing.”
Get used to this: Univision’s success may presage America’s
economic future. The nation’s demographic future, for sure. By
2042, demographers at the Census Bureau predict, racial and
ethnic minorities will make up more than half of the U.S. population. Roughly 30 percent will consider themselves Hispanic,
nearly twice the 16 percent in 2010. The number of Asians living in the United States is also expected to double, while that
Jeffery A. Salter/redux
528supp-cover story.indd 5
n Awakening (Despierta) America to its majority-minority
future, on the set at Univision.
of people who identify themselves as multiracial more than
triples. Meantime, the non-Hispanic white demographic will
grow older on average, and its projected share of the population will decline from 64 percent in 2010 to 46 percent in 2050.
The proportion of non-Hispanic youngsters who are white is
expected to plunge from 54 percent to 38 percent.
William Frey, a Brookings Institution demographer, speaks
of the “pivotal decade” to come, as the definition of being a minority in this demographically evolving nation may drastically
change. In certain parts of the country, he said, such as Arizona
and the Southeast, demographers—and residents—may find it
hard even to identify the minority population. Will Caucasians
be considered the new minority, or will the term “minority” refer to socioeconomic class instead of to ethnicity or race? “At
some time in the future,” Frey suggested, “the term ‘minority’
could become obsolete.”
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BUYING POWER
Corporate America should have noticed a red flag in 1980. It was in preparing for that year’s census that government officials coined the
term “Hispanic” as a category for the burgeoning number of
U.S. residents who trace their roots to Spanish-speaking places.
Thirty years later, 50 million-plus Hispanics were living
in this nation of over 308 million souls—43 percent more than
just a decade before. The number of Asians also jumped by 43
percent, to nearly 15 million. The only major racial group to
see its share of the population decline was non-Hispanic
whites, from 69 percent to slightly less than 64 percent of all
U.S. residents.
Businesses that hadn’t been paying attention were caught off
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Jeffery A. Salter/redux
Welcome to the United States as a
“world nation.” Inevitably, these demographic shifts will influence the sensibility, color, and culture—indeed, what
constitutes the mainstream—of the
United States. “In the past, we thought
of assimilation as conforming to a core
of WASPs,” Frey noted. “There will be
assimilation to an American lifestyle,
but that lifestyle will not be the one we
thought of in the past.”
Instead, your tired, your poor, and
your huddled masses will represent a
culturally distinct and growing market—or series of submarkets—to which
businesses would be wise to pay heed.
“Companies have realized their bread
and butter—the traditional, white, Middle American household—has gone
away with Ozzie and Harriet,” said Rohit
Deshpandé, a marketing professor at the
Harvard Business School.
The challenge for businesses, of
course, is to figure out the best way to
cater to the growing numbers of Hispanics, Asians, Muslims, and the fastestgrowing group of young Americans, the
4.2 million under 18 who call themselves
multiracial. Even playing to the AfricanAmerican population—which demographers expect to remain fairly stagnant in
terms of its numbers over the next few
decades—will require corporations to
shift strategies, as blacks increasingly
leave cities for the suburbs and gain buying power.
No longer can American businesses
get away with chasing a single group
of consumers—that is, whites. Large or
small, white- or minority-owned, corporations will need to create new products and pursue segmented marketing
strategies. “The idea of the mass market,”
Deshpandé said, “has disappeared.”
n Cesar Conde, the wunderkind behind Univision’s preeminence.
guard. “The [2010] census numbers woke up a lot of folks,” said
Phil Colón, a former marketing executive at Coca-Cola North
America who’s now CEO of Project 2050, a multicultural marketing firm in New York. “It’s freaked out big brands.”
A handful of corporations, such as Procter & Gamble and
McDonald’s, have courted Hispanic customers for years. But
for the late bloomers, last year’s census provoked “a feeding
frenzy on marketing to Hispanics,” according to Jeanne Vaughn,
a former executive at GlobalHue, a multicultural advertising
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Maybe it’ll be a business like H
Mart. In 1982, an immigrant family in
the Queens borough of New York City
opened an Asian-influenced grocery
store. Now a chain with 34 superstores
in 10 states, H Mart sells Asian foods of
every description as well as fresh produce at prices cheaper
than Whole Foods. When the first New England branch
opened in Burlington, Mass., in 2009, The Boston Globe told
of customers who couldn’t wait to enter the 51,000-squarefoot store sporting “more than 20 kinds of the cabbage
dish kimchi. An entire aisle just for noodles. A refrigerated
section dedicated to the popular rice snack mochi ball.”
Or why not a business catering to a freshly self-conscious,
religious submarket—domestic Muslims? The U.S. population
includes roughly 1.4 million Muslims, the Pew Research Center reported in 2007, and many marketers see them as a small
yet promising commercial target. Saffron Road, based in Stamford, Conn., is selling its line of Halal (comporting with Islamic
law) frozen entrees in Whole Foods supermarkets. And Amana
Mutual Funds, which invests according to Islamic principles,
has drawn an increasing number of clients, only a fifth of them
Muslim American. The rest are attracted in the recession’s
wake by Amana’s less-risky financial products, deputy portfolio manager Monem Salam explained. Islamic law, he noted,
forbids investments in casinos, tobacco or liquor companies,
financial institutions, or companies that carry too much debt.
Let’s consider Carol’s Daughter, which started selling highend skin creams, hair products, and fragrances to black women
in the early 1980s. Entrepreneur Lisa
Price opened her first dedicated store
in the late 1990s in Fort Greene, a midThe Nation of Tomorrow
dle-class black neighborhood in BrookThe Latino population is driving the shift to
lyn. Now, Carol’s Daughter has nine
a majority-minority country.
stores in five states, sells its wares at
Asian
Black
Hispanic
White
Macy’s and Sephora, and employs actress Jada Pinkett Smith as the brand’s
Projected population change, 2010-50
spokeswoman.
250 million
And let’s not forget Black Entertainment Television, a pioneer in broadcast200
ing to a specific demographic market.
150
In the early 1980s, businessman Robert
100
Johnson proved the power of a racial
audience with a cable-television chan50
nel specializing in black-oriented news
0
shows, sitcom reruns, and music videos.
’10 ’15 ’20 ’25 ’30 ’35 ’40 ’45 ’50
Johnson sold BET to media giant Viacom in 2000 for $3 billion.
Projected share of the population, 2010-50
Far bigger and more powerful than
100%
any of these ethnic-based companies,
though, is Univision. Started 50 years
75
ago as a Spanish-language television
50
station in San Antonio, what is now
Univision Communications (held since
25
2007 by a consortium of private-equity
companies) owns one cable- and two
0
broadcast-TV networks, 62 television
’10 ’15 ’20 ’25 ’30 ’35 ’40 ’45 ’50
affiliates,
and 70 local radio stations—
Source: U.S. Census Bureau
reaching 95 percent of the nation’s
firm with offices in New York City and
Detroit. “Companies are all trying to suddenly rush in and do something.”
No wonder: There’s plenty of money
to be made. Last year, according to the
Selig Center for Economic Growth at the
University of Georgia, Hispanics controlled $1 trillion of the nation’s $11 trillion in buying power, a leap of 108 percent since
2000; they are expected to control $1.5 trillion by 2015. Much
of the wealth is concentrated in a few states—notably, California, Colorado, Florida, New Jersey, New Mexico, New York, and
Texas. The buying power of other racial and ethnic minorities
also rose dramatically during the past decade. The white majority’s buying power grew by 49 percent since 2000 (adjusted
for inflation), the Selig Center estimated—less than Asians’ 98
percent or African-Americans’ 60 percent.
This power, naturally, has prompted new consumer demands. Hispanics spend less of their money on alcohol, tobacco, health care, entertainment, and education than do
non-Hispanics, according to the Selig Center’s research; they
spend more instead on groceries, apparel, and phone services.
African-Americans, meanwhile, tend to spend a relatively large
share of their incomes on housing, gasoline, phones, footwear,
and children’s clothing. Hispanic families also tend to be larger,
with twice as many children under the age of 18 in the household than non-Hispanic families. Because of these differences
in demographics and taste, companies must adjust their product lines—and use their marketing savvy—to peddle their wares
in each disparate, ever-more-inviting submarket.
Univision’s future
faces an even deeper
threat: assimilation.
SEEKING AN ETHNIC MICROSOFT
In this nation of immigrants, demographic submarkets are nothing new.
The B. Manischewitz Co. began baking
its Passover matzo in Cincinnati in 1888,
and today’s company continues to corner the market on cloyingly sweet kosher wine. Then there’s Rao’s, another
ethnic business that’s gone national.
The Italian-American company started
out in the late 1800s as a New York City
neighborhood restaurant run by successive generations of a large immigrant
family. But in 1977, a gushing restaurant
review in The New York Times turned it
into one of the hottest reservations in
the Big Apple—and, shockingly in fickle and fast-moving Manhattan, it still is.
Rao’s has also opened a second restaurant in Las Vegas and has expanded its
business to shipping specialty foods—
extra-virgin olive oil, roasted eggplant
Siciliana sauce, and the like.
But how can we identify, here in the
early 21st century, the emerging Microsoft of a soon-to-be majority-minority
nation? Look for a company that, after
catering to a demographic submarket,
finds its consumer base broadening.
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Hispanic TV households. Univision
Network, the company’s most-watched
offering, boasts the most popular primetime lineup in Spanish-language shows
and consistently routs Telemundo, its
chief competitor, in ratings. Week to
week, Univision ranks anywhere from
third to fifth in the national television
ratings by making sure that its appeal is
broad. Edward Rincón, the president of
a multicultural market research firm in Texas, noted, “Univision offers a little something for most Spanish speakers, from
the telenovelas to soccer to news.”
lucrative broadcast deals for soap operas
and soccer, including acquiring exclusive
Spanish-language rights to the men’s
World Cup in 2010 and 2014. Univision
coproduces telenovelas—soaps that run
for several months and have a set end
date—to bring in 70 to 75 percent of the
network’s revenue. Next year, Univision
plans to launch separate channels for
sports and telenovelas and a documentary unit to produce more serious fare. The network’s strategists are also planning a 24-hour network to cover domestic
and international news for Spanish speakers who live in the
United States.
Univision has bulked up its roster of advertisers, adding
about 90 new brands. Conde has also established a staff to
assist Univision’s advertisers in tailoring their messages for
Latino viewers. This 50-person team works with advertisers
on everything from market research about the types of cars
that Hispanics favor to the actual production of TV ads for a
Spanish-speaking audience. Already, this in-house ad agency
has helped Univision land accounts such as Dr. Pepper, H&M,
Samsung, Starbucks, and Microsoft Kinect for Xbox 360. The
team has started to conduct 14 research projects on consumer
No longer can
American businesses
get away with
chasing a single
group of consumers—
that is, whites.
UNIVISION’S SECRETS TO SUCCESS
Cesar Conde exudes confidence. And why not? A native
Floridian, he’s from a family of overachievers—the son of a
cardiologist and a college educator—holds a bachelor’s degree
from Harvard and an M.B.A. from the University of Pennsylvania’s Wharton School, and was a White House fellow in
2002-03. And now, still a few years shy of 40, he serves as the
president of Univision Network.
And by all accounts, a successful one. He has raised the network’s profile through public-affairs programs and secured
n From India to Northern Virginia …
By Derek Thompson
M
cLEAN, Va.—“Think of a
Match-dot-com for networking events!” Zainab Zaki, an Indian M.B.A. in pearls and a gray pencil
skirt, explained with a pitchman’s giddiness sitting at her leased office desk.
“Entrepreneurs want to meet investors, developers, and mentors. So I’m
building an engine that matches people
with people, and people with events.”
She was delivering her spiel at TeqCorner, a Fairfax County rent-a-space
building with a drab brick facade and
sleek metal foyer that offers furnished
conference rooms and free help for
start-up companies. Zaki’s journey—
from Mumbai, India, to the University
of Texas (Austin) to Northern Virginia—might seem exotic.
But in these suburbs of Washington this circuit is familiar. She is one
of 40,000 Indian immigrants along
the so-called Dulles Corridor between
Fairfax and Loudoun counties, which
rank as the two richest counties (measured by median household income)
in the nation. Since the middle of the
last decade, Loudoun’s population has
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528supp-cover story.indd 8
grown faster than that of any other U.S.
county. And more than 5 percent of its
residents were born in India.
This is a classic case of “chain immigration”—the number of foreignborn Indians in the Dulles Corridor
has grown ninefold since 1980. But it is
also a case of chain entrepreneurship:
Many of these immigrants were drawn
to Northern Virginia out of a desire to
start companies of their own.
To understand the rise of this community of Indian entrepreneurs, you
have to understand what drew them.
A good place to start is 1983. The company that would become AOL was
born one block south of the newly
completed Dulles Toll Road. The
fledgling AOL came to represent the
democratization of the Internet and
other technologies made possible—or
affordable, at least—by government investment. The toll road carries traffic
between the nation’s capital and the
information-technology consultants
who can manage data and help the
federal government move from mainframes to personal computers.
Beneath the concrete lies another
traffic conduit: fiber-optic lines made
for moving information rather than
vehicles. Half of all U.S. Internet traffic flows through the Dulles Corridor.
Twenty years ago, this was exurbs. Today, it’s the Silicon Valley of the East,
which has become a magnet for immigrants from India.
If the Dulles Toll Road is the artery
that conveys technology to the government, it is social networks—trade organizations, mentors, and networking—
that help infuse the entrepreneurial
fresh blood.
One such catalyst is Sudhakar Shenoy. The founder and CEO of a hightech consulting firm and a past chairman of the Northern Virginia Tech
Council, Shenoy sees his greatest
impact—like many Indian entrepreneurs—as a mentor. He teaches a course
he calls “From Geeks to Gazillionaires”
at nearby George Mason University that
helps aspiring M.B.A.s and engineers
polish their business pitches. Students
are divided into teams, and the one
with the winning business plan receives
the semester salaries of Shenoy and
his co-teachers as a cash prize. He also
cofounded the Washington chapter
of the Indus Entrepreneurs, a global
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courtesy of Univision
preferences, proprietary information
demographics. In 2008-09, according
Univision intends to sell to advertisto the latest figures from the Assoers. The first study will examine how
ciation of Hispanic Advertising AgenHispanics differ from non-Hispanics
cies, more than half of the nation’s
in using medical products. In mid-May,
top 500 advertisers spent less than
the company announced plans to ex1 percent of their advertising budgets
pand this team into what Randy Falco,
on print, radio, and television ads
the chief operating officer at Univision
designed to reach Latino consumers.
Communications, described as the
Overall, the top 500 advertisers spent
company’s very own McKinsey & Co.
just 5.4 percent of their budgets on
Conde waxes optimistic that UniHispanic media in 2009. This is devision can keep its momentum as Laspite the fact that buying a commertinos’ population and buying power
cial on Univision has historically cost
continue to grow. “When you look
less than on a major English-language
under the hood and you look at the n Giant Saturday: Don Francisco has hosted network, although the gap has shrunk.
younger demographic, Univision is al- Univision’s variety show since 1986.
“Not all companies have the desire
ready the No. 3 network in the country
to reach Hispanics,” multicultural reamong adults under the age of 34, regardless of language,” he searcher Rincón said, listing the banking, finance, and legal
said. “You’re beginning to see a foreshadowing of what you’ll communities among the least interested in pursuing minority
see down the road.”
consumers. In many large consumer companies, he said, the
multicultural marketing offices are little more than corporate
CORPORATE SLOWPOKES
backwaters; they’re typically poorly funded, lack support
Even with all of these efforts, much of corporate Amer- from the top, and work apart from the main advertising and
ica has still been slow to catch on to the nation’s shifting marketing staffs. “It’s not that they’re blind to the potential
… A Caravan of ‘Chain Entrepreneurs’
network of mostly Indian business owners, investors, and mentors. “When it
comes to helping entrepreneurs,” he
said, “Indians are always there.” If Indians are drawn to Northern Virginia for
the high-tech opportunities and stay
for the excellent public schools, Shenoy
explained, they succeed because of the
network of support from other Indians.
Perhaps no one embodies this culture of giving back more than Dolly
Oberoi, the president-elect of the Indus
Entrepreneurs. Her story parallels Shenoy’s. Oberoi immigrated to the United
States “with 200 bucks and a backpack”
to obtain a master’s degree, and then
landed a job with a Virginia consultancy. She, too, started her own technology firm, C2 Technologies; its annual
revenue has grown to $50 million. And
nowadays, she embraces mentorship as
a second career.
A company that recently benefited
from Oberoi’s assistance is the McKinley Group, a high-tech consulting firm
that Poonam Sharma started in Vienna,
Va. Sharma secured her first big contract from the federal government last
September, just months after seeking
advice from Oberoi—“a classmate of
mine from college days in India,” she
recounted. Now, with enough capital to hire full-time consultants, she
looks forward to the day when she is
sufficiently established in business
to pay forward the mentorship she
has received.
“It’s our responsibility to mentor
and coach the next generation,” Oberoi
said. “Starting a company in a foreign
country is a real uphill climb. Nobody
should have to jump through the same
hoops that we did.”
Fairfax County is home to a quarter of all immigrants in metropolitan
Washington and to 40 percent of the
area’s foreign-born Indians. It’s no wonder that on a recent Thursday night at
Worldgate Centre, a strip mall one block
north of the Dulles Toll Road, almost
20 South Asians—mostly young families or groups of young men—streamed
through the glass doors in just a matter
of minutes to catch a movie.
KiranTeja Chadalawada was with
friends on his way to see the Telugulanguage film 100 Percent Love. A
22-year-old immigrant from southern
India who is pursuing a master’s degree in telecommunications at George
Mason, he moved to Fairfax County in
2009 for school because a friend from
India recommended it. “A senior from
college was studying here and said it
was a great [place] to learn and get an
internship,” Chadalawada said. After
racking up a few years of experience in
Virginia, he hopes to start a company of
his own—but not in Virginia: He and his
pals “are looking to go back to India,”
he said.
Increasingly, the members of the
next generation of Indian entrepreneurs are looking to the East. They feel
pulled by India’s economic vigor and
also pushed out by the daunting rules
for U.S. visas. Advocates of immigration
find it foolish to force smart, ambitious
people to leave the United States simply
because they were born elsewhere, especially after American taxpayers have
invested so much in educating them.
“These guys create jobs,” said Michael McVicker, an immigration lawyer whose Reston, Va., office is near the
Dulles Toll Road. “They’ve created jobs
for thousands of people, the vast majority of whom are Americans.”
The author is an associate editor at The Atlantic.
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opportunity” Latino consumers present, Rincón said, but
“companies may feel like they can’t serve them properly, or
they might need to first develop new products.”
The trick for businesses may be to simultaneously play to
consumers’ roots while carving out a separate cultural identity
palatable to a broader audience. “How do I keep 80 percent
of my customers happy while speaking to emerging markets?
Companies will need to create a sub-brand that speaks to new
people,” former Coca-Cola executive Colón suggested. “No
one has that yet.”
Though Univision may, for it is poised to benefit from a
majority-minority America. Its desire, according to its COO
Falco, is that advertisers devote 15 percent of their budgets to
attracting Hispanic consumers and that big-box retailers set
aside 20 to 25 percent. Whether they will, of course, remains
to be seen.
Still, Univision is hardly alone in seeing dollar signs in
the growing Hispanic population. Success breeds competition—from Telemundo, English-language networks, and local Spanish-language stations. Just as Univision plots a possible cable news channel, Rupert Murdoch’s News Corp. has
unveiled plans for a joint venture with National Geographic
on a Spanish-language channel called Nat Geo Mundo. Other
companies may find ways to target minority customers online
and on smartphones.
“The new census is both a blessing and a curse for us,” Falco
said. “It will give us a bigger audience, but it’s a curse in that it
will finally wake up our competitors.”
Univision’s future faces an even deeper threat: assimilation. Traditionally, the network has appealed to native Spanish speakers and to recent immigrants, and its challenge is to
stay in touch with its viewers. More of the Hispanic population’s projected growth is expected to come through births
rather than immigration. This means that the network must
find ways to appeal to second-, third-, and fourth-generation
Spanish speakers, many of them bilingual and thus tempted by
other options for entertainment and news.
Yet Falco is hopeful that culture—and language—will
long continue to provide a route to Latinos’ hearts. “Our research shows that 75 percent of Hispanics still speak Spanish in their homes,” he said. “We’ll figure out the right way to
reach people.”
n These Modern-Day Marco Polos …
By Darren Dahl
I
t was love that drew Saskia Chiesa, a native of the Netherlands, to the
United States in 1998. But when her
relationship fell apart, the former model—she starred in Milli Vanilli’s “Blame
it on the Rain” music video—decided to
stay. To support herself and her child,
she managed a dude ranch in Topanga
Canyon, Calif., and worked odd jobs.
The idea of starting her own business
came later, after she noticed a pattern:
Her European friends kept phoning and
asking if she could send them shoes and
clothes from American retailers they
couldn’t patronize on their own. It seems
that retailers in Europe carry fewer colors and sizes of, say, Converse sneakers
than their American counterparts. But
many U.S. vendors won’t ship online
orders to foreign countries because of
customs rules and other hurdles.
Chiesa comes from a business-savvy
family: Her father ran several restaurants, and her mother owned a couple
of hair salons. So with her experience in
shipping to friends, she felt comfortable
launching a concierge-style business
based in Santa Monica, Calif., in 2002.
Her company, International Checkout,
ships products made by around 450 retailers—such as Jockey, Dr. Martens, and
10
summer 2011
528supp-cover story.indd 10
bebe.com—to Holland and just about
every other country in the world. The
business recorded more than $11 million
in sales last year and recently moved its
45 employees into a 16,000-square-foot
warehouse in Los Angeles.
“I’ve really leveraged my ties back
home to build this successful business,”
the 42-year-old entrepreneur said. “If I
had been an American, I would not have
started this company.”
For a nation built by immigrants,
of course, the economy has long profited from foreign-born entrepreneurs.
Contrary to a widespread belief, immigrant entrepreneurs “deliver more
than they take,” said Edward Rogoff,
a professor at Baruch College in New
York City who has extensively studied
these merchants. More than a fourth
of all U.S. technology firms, he pointed
out, boast at least one foreign-born
founder—think of Google cofounder
Sergey Brin, an immigrant from Russia.
According to the Kauffman Foundation,
American companies started by immigrants accounted for some $52 billion
in revenue in 2005 and employed more
than 450,000 workers.
Immigrants are starting businesses
at a faster rate than native-born Americans, the Small Business Administration reported last year. Immigrant-run
companies now account for nearly 4.6
million small companies, an estimated
16.7 percent of all U.S. businesses with
fewer than 500 employees.
Many immigrant entrepreneurs have
found success by exploiting one edge
they have over their U.S.-born counterparts: their connections to markets
back home. They have become what
Rogoff and others describe as “gateway” entrepreneurs. “Immigrants have
an advantage because they understand
global markets better than [native-born
Americans] do,” said Vivek Wadhwa, an
immigrant from India who started two
successful software companies and now
teaches business and engineering classes at Harvard and Duke universities and
the University of California (Berkeley).
“They help us compete.”
Consider the story of 39-year-old
David Kalsang, another gateway entrepreneur. His parents fled Tibet in 1959
for India, where he grew up, and he immigrated to the United States in 1996. In
2005, he started a company in New York
City called Malamal, reselling Apple’s
iPhones to American customers. But after checking with friends back in India,
he saw where his best prospects lay.
“My friends would call me up,” he recounted, “and tell me, ‘The party’s down
here in New Delhi and Mumbai. You’re
the next economy
5/26/11 5:08 PM
BY POLITICAL MEANS
One way in which Conde plans to
grab the attention of advertisers—and
of Univision’s competitors—is by building up the network’s political influence.
During the 2008 presidential campaign,
Univision hosted debates for Republicans and Democrats, and it plans to do
so again next year. Conde wants to add
more correspondents and resources to
cover the 2012 GOP presidential hopefuls. Part of the benefit will likely fall
right to the bottom line. The network took in $27 million in political advertising in the 2008 presidential campaign, according to Falco. He hopes to double that next year, when Latino
votes will prove crucial to the outcomes in California, Florida,
Nevada, New Mexico, and Texas.
Univision’s public-affairs campaigns in recent years have positioned the network as a force in mobilizing Spanish-speaking
voters. Since 2007, when it launched a voter-registration campaign, Univision has held naturalization workshops around
the country and helped more than 1.4
million immigrants apply for U.S. citizenship. Early last year, it ran public-service
announcements urging viewers to fill out
census forms.
This, then, is Conde’s vision: a network that combines popular television
shows with a political presence and
an internal marketing arm that finds a
competitive advantage by constantly
collecting data on Hispanic consumers.
If Conde succeeds, he’ll have created a
hugely profitable business with a loyal audience, an ethnic
company in an evolving economy that succeeds by keeping
its customers in mind even as they meld into American society—and thereby change it. This suggests a new model for U.S.
business, one that treats minority consumers as more than an
afterthought—even before they become a majority of Americans a few short decades hence. n
Your tired, your poor,
and your huddled
masses will represent
a culturally distinct
and growing market
to which businesses
would be wise to
pay heed.
Nancy Cook is a business writer and editor in New York City.
… Sell to the Lands They Left Behind
missing out!’ ” India is expected to surpass China, he noted, as the world’s largest market for smartphones and other
wireless devices by 2013 (the United
States currently ranks third). Another
immigrant-run business, Biz2Credit,
has helped Kalsang secure $300,000
in loans, which he spends on 3G smartphones in the United States that he resells into the burgeoning Indian retail
marketplace. His revenues total $1 million a year.
“We are seeing a growing trend
where immigrants from Asia and Latin
America are coming to us to get credit
so that they can tap into the markets
where they came from,” said Biz2Credit
founder Rohit Arora, a native of India. His New York City-based firm has
helped secure more than $400 million
in loans since 1997 for some 7,000 small
businesses—80 percent of them run by
immigrants. “Not only are they creating
jobs here,” he said, “they are growing
faster than those businesses that just focus on their local markets.”
The impact of immigrants on the U.S.
economy isn’t limited to small businesses, however. Many multinational corporations, such as Wal-Mart, General Motors, and Pepsi, hire immigrants to help
them develop strategies to peddle their
products and services in faraway places.
Nowadays, companies see value in foreign-born employees who understand
their “home market, such as what a consumer wants and how the supply chain
operates,” according to Scott Cooper,
an immigration attorney in the Michigan office of Fragomen, Del Rey, Bernsen & Loewy, a law firm with offices in
15 countries. “Companies need to have
that kind of knowledge here in their
headquarters to make smarter decisions
about markets around the world.”
Victoria Negrete is a case in point.
Since emigrating from Mexico in 1990,
she has built two San Antonio-based
marketing companies that help corporations sell into expanding markets
in Central and South America. “After
25 years of studying Latino consumers
from all backgrounds and economic levels in the U.S. and Latin America,” Negrete said, “it’s important to use what
I’ve learned to help those who want to
effectively reach the new marketplace,
which is dramatically changing the face
of America’s marketplace.”
There is an obstacle, however, that
constrains the economic boost that foreign-born entrepreneurs might bring to
their adopted homeland: U.S. immigration policy. Because of the strict limits on
the number of permanent-resident visas—or “green cards”—that Washington
hands out each year, thousands of foreigners who have attended American
universities and worked for U.S. corporations wind up taking the knowledge
they’ve gained back to their native lands.
“People that come here on temporary visas can’t start companies,” Wadhwa pointed out, noting that more than
1 million foreigners are currently waiting for green cards. “After a while, they
get frustrated and decide that there
are better opportunities for them back
home,” he said. “The people who could
be creating the next Google are becoming our competitors.”
The Dutch-born Chiesa, for one, possesses a green card. She recently married
an immigrant from Italy and plans to
apply for U.S. citizenship. In the meantime, she watches the political furor
over immigration, illegal and otherwise,
and wonders why a country built by immigrants would want to close its doors
to them now, when a flailing economy
could use them the most.
“Millions of immigrants like me have
come to see America as the land of opportunity,” she said. “I couldn’t do what
I’m doing anywhere else in the world.
I’m living the American Dream.”
The author is a contributing editor at Inc.
magazine.
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528supp-cover story.indd 11
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11
5/25/11 1:04 PM
The Big Picture
Minority Report
KEY (majority-minority counties)
In 2042, minorities will outnumber
non-Hispanic whites nationally for
the first time. In more than 300 of
the nation’s 3,000-plus counties,
they already do. These populations are the United States’ future:
younger, more diverse, and of
growing economic importance.
Height
represents
total minority
population
Color indicates largest minority group
Asian
Hispanic
Black
American Indian/
Alaska Native
By far the largest minority population in the nation is in Los Angeles
County at 7.1 million. Of that total,
Hispanics represent 66% of the
population, followed by Asians at
19% and blacks at 11%.
Orange
County
(Anaheim)
1.7 million
Santa Clara County
(San Jose)
1.2 million
Typically, American Indians are the largest minority group in counties with reservations. The most
populous in the Southwest is San Juan County,
New Mexico, where American Indians make up
62% of a minority population of 75,000.
Clark County
(Las Vegas)
1.0 million
Buying Power
Between 1990 and 2015, minorities’ share of
total income, after taxes, is projected to jump from
13.3% of the total in 1990 to 21.3% in 2015.
Non-Hispanic whites
$3.68 trillion
1990
Minorities
$0.56 trillion
$11.05
trillion
2015
$3.06 trillion
$1.5 trillion
Hispanic
Hispanics, who can be
of any race, make up the
largest minority market in
the United States. Their
total income, after taxes,
is projected to climb
to nearly $1.5 trillion
by 2015.
Projected
1.2
Black
San Diego
County
1.6 million
Hawai
127,00
Honolulu
County
772,000
0.9
0.6
Asian
0.3
Native American
0
’90
’95
’00
’05
’10
’15
Sources: 2010 census; Selig Center, University of Georgia;
U.S. Census Bureau National Population Projections (2008)
12
528supp-graphic.indd 12
summer 2011
*Hawaii County, Hawaii, is the only
majority-minority county in which
people of two or more races (34%)
make up the largest share of the
minority population.
NOTE: King County (Seattle)
is not a majority-minority county.
the next economy
5/24/11 6:41 PM
Chicago has been a black-population
center for decades—and for Hispanics
as well. African-Americans make up
43.4% of Cook County’s minority
population of 2.9 million. Latinos make
up another 42.7%.
New York City’s four majority-minority borough
counties—Kings (Brooklyn), Queens, the Bronx,
and New York (Manhattan)—have a combined
minority population of 5.3 million. Queens County
has the largest minority population, of 1.6 million,
which is 38% Latino. In Kings County, AfricanAmericans are the largest minority, with a 50%
share of the county’s 1.6 million minorities. Staten
Island’s Richmond County, the fifth borough,
has a non-Hispanic white majority of 64%.
Wayne County
(Detroit)
918,000
Montgomery County, Md., has a minority
population of 493,00, of which 34% is Hispanic.
Neighboring Prince George’s County has a
minority population of 735,000, of which 75%
is African-American. Both counties are adjacent
to Washington.
Shelby County
(Memphis)
569,000
Robeson County, N.C., is the home of the
Lumbee tribe. It has a minority population of
98,000, of which 52% are American Indians.
Orange County
(Orlando)
619,000
Dallas County
1.6 million
Miami-Dade County
(Miami)
2.1 million
Bexar County
(San Antonio)
1.2 million
Stretching from the Mississippi Delta to the
Carolinas is a swath of black-majority counties, anchored by Atlanta’s Fulton County,
with a minority population of 545,000 that
is 74% African-American.
Harris County
(Houston)
2.7 million
Hawaii County*
127,000
Graphic by
PETER BELL,
BRIAN McGILL,
and RYAN MORRIS
1990
A Majority
In the Making
The population tree diagrams
at right show the shift to
a majority-minority nation.
In 1990, no single year of
age—from less than 1 year old
to 100 years old—had more
minorities than non-Hispanic
whites. By 2040, minorities
will outnumber whites at
every age younger than 44.
2010
2040
Age 100+
75
Non-Hispanic
whites
50
Minorities
25
< 1 yr.
3
0
3
3
0
3
3
3
Women
Men
(in millions)
the next economy
528supp-graphic.indd 13
0
Summer 2011
13
5/26/11 3:16 PM
Essay
ap/Ross D. Franklin
n Pay-day lenders: The high cost of loans makes it harder for the poor to rise.
Left Behind
The nation’s blacks and Latinos have made economic strides in recent
decades, but getting into the middle class remains elusive.
By KAI WRIGHT
A
merica’s economic future
may be glimpsed on the
southwestern side of Houston,
in a gated subdivision of new
town houses. Julia DeLeon
is an undocumented immigrant from
Guatemala who owns a small business
and has raised two college-bound
daughters. She is sitting in the happy
clutter of her older daughter’s new
motherhood, glowing as her toddler
grandson rolls around on the floor.
But just a few miles away, too many
blacks and Latinos have remained
trapped in the lower class or emerged
from it just to slip back in. Not the
DeLeon family. Its three generations
represent the entrepreneurial spirit of
14
summer 2011
528supp-essay-Wright.indd 14
self-selected immigrants that has long
fueled the U.S. economy. Yet no one in
this family is clear on how, or even if,
they fit into American life.
DeLeon came from Guatemala
two decades ago—when daughter
Evelyn was a baby—and stayed when
her visa expired. Now Evelyn is 21
and juggles school and motherhood.
Julia’s teenage daughter, Sharon, was
born in Houston and is therefore a
citizen, as is Evelyn’s young son. Families can be unwieldy in that way; they
don’t conform neatly to pigeonholes
and borders.
Julia’s life story is an untidy example of the sort of self-made success about which so many Americans
dream. She came to the United States,
she recounted, as a stone-broke
young mother who spoke no English
and bunked with her daughter in the
corner of a friend’s apartment. She
cleaned houses for poverty wages.
But soon Julia realized that the
housecleaning agency was hoarding
the profits, and she concluded that
the arrangement made no sense. And
so she slowly built her own base of clients, offering whichever domestic services affluent Houstonians needed to
manage their busy lives. She watched
children, walked dogs, and house-sat
while investing her earnings in her
daughters’ future—Girl Scouts, art
classes, church, and volunteer work.
the next economy
5/24/11 6:42 PM
“She always found stuff for us to do,” America’s racial politics, past and pres- than for Latinos—roughly the same
Evelyn said. “I think that’s why we’ve ent, cloud the way.
disparities as in 1972. Measured by inbeen able to get as far as we have.” The
Consider the lessons of the would- come, the racial makeup of the middle
family isn’t wealthy, but Evelyn and be black middle class.
class hasn’t changed much.
her sister are living in a comfortable
In the lexicon of black America,
Worse, the improvement in income
town house and preparing to set out baby boomers are the civil-rights levels for blacks and Latinos may maton their own.
generation. They have witnessed an ter less than the measure regarded by
How far they make it as adults will impressive change in the lives of their some economists and sociologists as
matter a lot—to their family and to the children and, now, in their millennial a truer test of economic class: wealth.
country as a whole. The urban trian- grandchildren. College graduation It is wealth, they argue, that provides
gle in eastern Texas of Houston, Dal- rates for blacks have quadrupled since a feeling of security and a stake in
las, and San Antonio is bursting with the late 1960s. The number of African- the economy—the ability to finance a
young people of color such as Evelyn American workers in jobs that sociolo- child’s education, to seize an opportuand Sharon—not just Latin-American gists regard as middle class has leaped nity, to weather bad times.
immigrants but also domestic trans- nearly tenfold. Those are two of the
The black and Latino communiplants and the children of both. Mean- three traditional measures of middle- ties lag badly in wealth. A study by
while, largely rural—and white—West class status.
Brandeis University sociologist ThomTexas is rapidly aging, its communities
The third is income. Here, too, both as Shapiro traced a cohort of famidying. As a result, the state that saw black and Latino workers have seen a lies’ finances between 1984 and 2007.
the largest population gain in the past notable improvement since the civil- Among middle-income whites, the avdecade is one of four in which people rights generation stormed onto job erage household in 2007 held $74,000
of color constitute a majority of the sites to demand equal opportunity. in financial assets—bank deposits,
population (along with California, Ha- The median income for black house- home equity, stocks, and the like. That
waii, and New Mexico).
holds jumped from just under $25,000 was more than four times the $18,000
A similar surge is under way nation- in 1967 to more than $35,000 in 2007, in assets of blacks who earned high
wide. The 2010 census found that Lati- adjusted for inflation. For Latinos, the incomes. Another study, conducted by
nos accounted for 56 percent of the na- median household income climbed the Federal Reserve Board during the
tion’s growth in the past decade, which beyond $40,000. During the pros- housing boom, found that the median
was actually less than in previous de- perity of the 1990s, the proportion of white family in 2007 held assets totalcades, owing to the post-9/11 crack- black families below the poverty line ing just over $170,000, more than six
down on immigration and then to the declined from one-third to one-fifth.
times as much as the median nonwhite
economic recession. Members of raNonetheless, income levels of peo- family’s worth of less than $28,000.
cial and ethnic minorities accounted ple of color—and especially blacks—
This asymmetry has deep, historifor nearly 47 percent of Americans remain far behind that of whites. In cal roots. Notably, people of color were
younger than 18 years old. In 2009, 2009, according to census figures, the pretty much excluded from post-World
according to census officials, the me- median income among whites was War II policies that created a bulging
dian age among white Americans was more than three-quarters higher than middle class. Taxpayers helped to put
41; among African-Americans, it was for blacks and more than a third higher GI’s through college and raised home32; among Latinos, 27. In
ownership rates in whitesthe nation’s schools, in its
only neighborhoods, while
workforce, in its supermar- Minorities by State
collective bargaining inket checkout lines—and in- Four states and the District of Columbia have majority-minority
creased the pay for skilled
creasingly, in its electorate— populations.
jobs. And for decades, racial
people of color are, literally, Minorities as a percentage of the population in 2010
and ethnic minorities were
the future.
excluded from these goodLow:
ies by law and practice, and
Maine
10% 25% 50%
THE WEALTH GAP
the nation is still living with
6%
The pressing question,
the consequences.
however, is how many of
Contemporary factors
these young people will
have done even more damtruly join the middle class.
age. For one thing, today’s
Will they reap the benefits
wealth- creating incenD.C.
of their parents’ labor and
tives often require having
achieve an economic secusome wealth already. Ecority that enables them to buy
nomic policy aimed at the
homes, start businesses, and
middle class is dominated
High:
take road trips even with
by tax benefits for retireHawaii
gasoline at $4 a gallon? This
ment accounts, mortgage
77%
Source: U.S. Census Bureau
is where the complexities of
interest, college savings,
the next economy
528supp-essay-Wright.indd 15
summer 2011
15
5/24/11 6:42 PM
capital gains, and inheritances—all of their progeny slide down the econom- against paychecks, tax refunds, and
less benefit to people of color than to ic ladder to the bottom.
even household appliances. The relawhite Americans. The Fed found that
tively few black families that succeed
less than a tenth of nonwhite families AGAINST THE TIDE
in building up their assets must swim
This reversal of the American against the tide.
in 2008 owned stocks, savings bonds,
investment funds, or any financial as- Dream has many causes. Surely, one is
Blacks differ from Latinos in some
sets beyond bank accounts, retirement the fact that more than 15 percent of economic particulars. Latinos, for
accounts, and life insurance. Among black college graduates younger than instance, record lower rates of cripwhite families, one in four owned 25 were jobless last year—twice the pling consumer debt compared both
rate of whites. After the 2001 reces- to blacks and to Americans overall,
stocks; one in five held bonds.
Another problem is predatory lend- sion, it took until mid-decade before according to the Pew Hispanic Cening. Racial covenants and redlining are black unemployment slipped comfort- ter. Double-digit unemployment has
gone, but the housing market is still a ably into single digits; by this spring, it shown some sign of relenting for Ladangerous place for black and Latino had climbed to 16 percent.
tinos, Pew reports, although their new
Maybe the clearest way to un- jobs offer lower pay and flimsier secuborrowers. They were significantly
more likely, research has shown, to derstand such a backsliding among rity than before.
have been sold high-cost and subprime blacks is to think beyond the specific
Still, in the end, the reams of data
home loans during the housing boom measurements of economic health and that try to measure the economic progcompared with white borrowers with consider families as part of a larger nosis for Jim Crow’s survivors and for
similar incomes and credit ratings. Ac- community. By any measure, over gen- the emigrants from Latin America
cording to the Center for Responsible erations, black families in the aggre- point to a single, dramatic fact: In the
Lending, a research and consumer- gate have commanded fewer resources United States, roughly a quarter of
advocacy group, this was especially the at their disposal. They’ve had lower both blacks and Latinos live in poverty.
case for mortgage refinancings, which incomes, scarcer savings, and a rate of It is tempting to set the poor aside and
accounted for the bulk of subprime ac- property ownership that’s been tenu- to think of the young people of color
tivity. In Atlanta, considered a bastion ous at best. Nor has the government who are earning more money and
of the black middle class, subprime bro- or anyone else stepped in to counter higher degrees as a separate commukers swarmed church parking lots in these realities with public initiatives nity of middle-class strivers. But they
search of elderly black homeowners to on the scale of those that created the aren’t. Another instructive finding in
white middle class.
peddle unneeded, costly refinancings.
Brandeis sociologist Shapiro’s work
Instead, the financial industry has suggests that successful blacks are
Historically, the wealth of black
households has been disproportion- exploited hard-pressed black families, more likely to have family members
ately concentrated in their homes. whether by redlining or by peddling deeply in need, which places greater
This has magnified the destructive credit to subprime borrowers. Drive demands on their wealth.
impact of the housing bust. The through any heavily black neighThe same is undoubtedly true for
homeownership rate among blacks borhood and you’ll see what wonky Latino families, in which some memand Latinos is less than two-thirds that research doesn’t make plain—the bers may be U.S. citizens and others
of whites and has recently been de- multitude of lenders who jack up in- may not. American-born Latinos conclining more sharply. The foreclosure terest rates to customers who borrow sistently score better on measurements
rate among both blacks and Latinos is
of prosperity and economic opportutwice that among whites.
nity than the foreign-born do; which
A Dream Deferred
Combined, these factors go far in
suggests the likelihood that Sharon,
Minorities are still more likely than whites to
explaining perhaps the most bracing
Julia DeLeon’s Houston-born daughbe poor, despite past improvements.
statistic describing the economic road
ter, will have a brighter future than her
Percentage of families in poverty
that blacks have traveled since gaining
older, undocumented sister. She will
their full civil rights until the election
qualify for in-state college tuition and
35%
of the first black president. One way
financial aid and, statistically, will be
that economists measure class mobil- 30
more likely to land a white-collar job.
Black
ity is by dividing income earners into
Nonetheless, she’ll be part of a
25
five quintiles and seeing how many
community in which one in four of
20
people move from one to another over
her neighbors—and family members,
Hispanic
time. In 2008, according to the Eco- 15
potentially—is poor. In 21st-century
nomic Policy Institute, a stunning 45
America, where people of color conpercent of black Americans who be- 10
stitute the demographic future, a delonged to the middle-income group
fining
question is whether so many of
5
White
during their childhoods had slipped
them can continue to be left behind
0
into the bottom group as adults. That
without the society blowing apart. n
’74 ’80
’90
’00
’09
is, nearly half of the civil-rights generSource: U.S. Census Bureau
The author is the editorial director of Colorlines.com.
ation’s middle-class parents watched
16
summer 2011
528supp-essay-Wright.indd 16
the next economy
5/24/11 6:42 PM
Survival Guide
Associated press
How to Market to Minorities
Racial and ethnic markets are ballooning. But tapping them takes some sophistication.
By Alina Tugend
T
h e no t i o n o f marketing
to minorities and ethnic
groups has an unsavory undertone. Tobacco companies have
long used rappers and hip-hop
concerts to peddle cigarettes to young
African-Americans, and studies have
shown more liquor advertising around
universities popular among Hispanics.
This kind of targeting still occurs as
minority groups—mainly Hispanics,
blacks, and Asians—keep growing nationwide. But businesses increasingly find it
necessary to appeal to them in sophisticated ways that celebrate rather than
demean their culture.
“The big change is recognition of the
market,” said Raul Lopez, president of
Phoenix Multicultural, a marketing research company in Miami. “No one talked about multicultural marketing when I
first started doing this 32 years ago.”
But they’re talking now. And eyeing
big bucks.
“The Hispanic market alone, at $1
trillion [in 2010], is larger than the entire
economies of all but 14 countries in the
world,” said Jeff Humphreys, director of
the Selig Center for Economic Growth
at the University of Georgia’s business
school, which reports annually on minorities’ buying power. Despite the recession, he said, Hispanics’ buying power
is expected to grow by 50 percent in the
next five years. Asian-Americans’ buying
power (now at $544 billion) is forecast
to expand by 42 percent, and AfricanAmericans’ (currently at $957 billion) by
25 percent.
Which is to say, racial and ethnic markets are out there. The question is how to
tap them.
Advertisers have considered these
questions before. After the 1980 census
measured Hispanics at 6.4 percent of the
U.S. population, businesses started paying
attention, Lopez said. At the same time,
Spanish-speaking television networks
Univision and Telemundo were expanding coast to coast, offering a vehicle for
merchants to reach consumers in their
native tongue.
Much has changed in the 30 years
since. As the Hispanic population has exploded—to around 16 percent of the U.S.
population in 2010—it has also become
increasingly segmented.
“About 15 to 20 percent is fairly
[Americanized],” Lopez said. “You’re not
going to reach them on Univision and
Telemundo.” Then there are newer immigrants and others who haven’t learned
English and can be reached only in Spanish. Larger than either group, however,
are the Hispanics who bestride cultures.
“They live both ways,” Lopez said, “like
the ne x t ec o n o my
528supp-survival-Tugend.indd 17
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17
5/24/11 6:44 PM
adopting the Thanksgiving celebration.
They may make turkey, but instead of
sweet potatoes, they’ll do black beans
and rice.”
Adding to the complexity, each of
these segments is divided further by
country of origin—Mexican food isn’t the
same as Venezuelan or Colombian—and
by economic class. Companies must connect “with the consumer at the cultural
level, at their values and beliefs and way
of thinking,” advised Felipe Korzenny,
who runs the Center for Hispanic Marketing Communication at Florida State
University. An example: The importance
of family, including the extended variety
in Hispanic culture, means advertising
should picture the grandparents as well
as the parents and kids. Another crucial
value, Korzenny noted, is a sense of community and helping others. A truck commercial showed the vehicle coming to a
neighborhood’s aid instead of depicting a
macho driver behind the wheel.
“Most of the advertising that fails
tends to be condescending not just with
the advertising but with the approach,”
Korzenny said. He cited a business that
never took off: a Hispanic bank. “That was
a really bad idea. Hispanics are not stupid—that’s telling them that they’re second-class citizens,” Korzenny explained.
“When they have money, they want to go
to a bank with a big reputation.”
These distinctions can be subtle. When
the supermarket chain Publix opened a
few stores around Florida called Publix
Sabor—Spanish for flavorful—that sold
myriad Latin American foods, customers
flocked in. What is more appealing, after
all, than one’s own cuisine? The multicultural marketing company Translation says
on its website, “The difference between
ethnic stereotyping and cultural accuracy
is all in the details.”
This is certainly true with blacks, the
nation’s second-largest minority, with
13 percent of the population. Howard
Buford, president and CEO of Prime Access, a multicultural marketing and advertising company in New York City, finds
some truth to the stereotype that AfricanAmerican boys and young men are drawn
to expensive brand names. “When coming from a group that has been devalued,
they tend to embrace brand names more
highly,” he said. “The message is: I have
money and I do value myself.”
Buford recounted a black woman’s
18
summer 2 0 1 1
528supp-survival-Tugend.indd 18
story: “Her husband does very well; her
kids are in great schools. But she told us:
‘When I walk into an upscale department
store, the salespeople won’t approach me.
So I buy a very trendy handbag and then
when salespeople come up to me, they
treat me like royalty.’ ”
Respect—for yourself and others—is
an important message in the black community, Lopez said. But it’s a message best
conveyed indirectly, by showing respect
rather than by invoking the word. He likens the tactic to the understated American Express ads that “never told you that
its product is classy. It’s in the art direction, lighting, and portrayal. In marketing
to multicultural communities, it’s mastering multiple levels of communication and
understanding.”
Most of the
“advertising
that
fails tends to be
condescending.
”
If companies and advertisers hope
to understand the nuances of any culture, experts say, they first need to listen.
That can involve focus groups, in person
or online, or research panels composed
of hundreds or thousands of individuals thought to represent a market. Panel
members may answer questionnaires
about products and services, to guide a
company in the right direction, Buford
said. For greater depth, researchers may
visit the home of people deemed to personify the target consumer—for a few
hours or even a few days—to see how
they live.
“You can tell a lot just by what’s on
someone’s refrigerator,” Buford said. “Are
there pictures of the family or children’s
drawings? What events are they planning
to go to?”
Companies may also help themselves
by helping the target community, such
as by sponsoring or donating to its organizations, said Andrea Hoffman, founder
and CEO of Diversity Affluence, a marketing research company that helps
manufacturers of luxury goods sell to affluent African-Americans. “You can’t just
say, ‘Hey, come into our store and spend
money.’ You need to do something back,”
she said. “Customers say, ‘If you want my
money, you have to spend money.’ ” But
taking a table at a fundraiser isn’t enough.
“The company should be actively involved,” she counseled. “It has to be done
with trust and authenticity.”
Hoffman’s advice holds for other minority groups, too, even those that aren’t
racial or ethnic. Volvo, for example, ran
a campaign in 2003-04 in which car
buyers could mail in a sticker and the
Swedish automaker would donate to
the Human Rights Campaign, which
lobbies for gay and lesbian rights. The
response, Buford said, was far beyond
Volvo’s expectations.
A vital tool for reaching scattered
audiences has been, of course, the Internet. This is especially the case for AsianAmericans, who use YouTube and socialnetworking sites far more than other
groups, according to Nita Song, president
of IW Group, a marketing communications company in Los Angeles that specializes in the Asian-Pacific community.
Also, advertisers have become much less
naïve and patronizing. “Twenty years ago,
there had to be a dragon and sword in advertising to Asians,” she said. “Today, it’s
so much more sophisticated.”
A major hurdle in tackling the Asian
market, Song said, is its multiplicity of
subcultures. Wal-Mart, she said, is considered a value brand that is attractive to
South Asians, Vietnamese, and Chinese,
but less so to Koreans, who are more focused on brand names. The biggest problem Song sees now is that companies are
curious “but not operationally ready.” She
recalled advertising campaigns aimed at
Chinese-Americans, “but when they arrive [at the store], no one can help them
in their language and the products aren’t
applicable. And that first experience is
critical, because there is huge loyalty with
Asians. Once they have a place they trust,
they keep going back.”
That’s the holy grail—customer devotion that is passed down through generations. And the way to do that in the multicultural context, Buford said, is to “really
understand the level of conversation. It’s
like going to a party, and two people are
talking. You have to wait and listen and
come in when appropriate. It’s arrogant
for a marketer to come in and say, ‘I know
n
what they want.’ ”
The author writes the ShortCuts column for The
New York Times and recently published a book,
Better by Mistake. She’s at twitter.com/atugend.
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5/24/11 6:44 PM
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A throbbing real-time
Op-Ed page where
currency and popularity
are more important
metrics than policy or
political position.
–DAVID CARR, THE NEW YORK TIMES
FOLLOW THE HOTTEST OPINIONS AS THEY BREAK.
STAY ON TOP OF THE NATIONAL CONVERSATION.
THEATLANTICWIRE.COM
Q&A
chet susslin
A Hand Up
own experience and the feedback I get
from others. Yes, things have gotten better. Yes, we have more work to do. And
speaking in my role at the SBA, that’s
why I’m very focused on how our agency can be more connected to, and ensure
we are serving, underserved markets.
n How are you helping underserved
communities recover from the recession?
JOHNS: One thing that I am working
very hard to address is the learning gap.
Many small-business owners or entrepreneurs in underserved areas either
don’t know what the SBA does or don’t
know the full range of what services we
offer. Generally, small businesses in underserved communities aren’t looking
for millions of dollars in loans, but rather $40,000 working capital or $15,000
to buy a piece of equipment, etc.
SBA Deputy Administrator Marie Johns is trying to help
minority businesspeople get their start.
n What are the other really big things
you can help them with?
JOHNS: Access to markets, access to
mentors and people who can provide
that advice that is so critical. Because
if you’re a small-business owner, it’s a
very lonely road. Particularly if you’re
just starting out.
a Small Business Week conference in
Washington to discuss the changing
arie Johns seems born landscape for minority entrepreneurs n We still have an enormous gap in this
for the Small Business across the country and how the federal country between the African-American
Administration. Her grand- government can help them in tight bud- unemployment rate and unemployment
father started a landscaping getary times.
overall. What else needs to be done to
company that was one of
close it?
the first black-owned businesses to win n Over the course of your career, in busi- JOHNS: We can’t attack the issue of
a state contract in Indiana. Her uncle ness and government, what has changed getting more African-Americans into
ran his own pharmacy. Before running in the environment for minority busi- the economic mainstream by having
unsuccessfully for mayor of Washington nesspeople?
siloed approaches. You have to have a
in 2006, Johns became president of JOHNS: When I started my career in more comprehensive approach. Part of
Verizon’s D.C. branch, the first woman business, I had very few role models. my work at the agency, I feel, is trying
in that job. Now, as deputy administra- And so that certainly has changed, in to do that. That’s why I’ve met with the
tor at SBA, the 59-year-old Johns meets women as well as ethnic diversity. One Department of Labor, because I want to
regularly with entrepreneurs across the of the things I have definitely come see how we can figure out a way to work
country, particularly members of minor- to learn is that the role of mentors, the more closely—for example, the departity groups, and tries to connect them to role of seeing people who look like ment is working on a program to get
resources so they can write success sto- you do something, is one of the most young people into vocational training
helpful motivators [for businesspeople and apprenticeships.
ries of their own.
“I’m very optimistic, because I starting out].
I want to see us develop a pathway
really feel that we’re entering a new age of
from that to entrepreneurship. You’re
entrepreneurial fervor in the country,” n How have the barriers that minorities studying to be a plumber? You should
she said. “I think the economy is demand- face changed?
also be thinking about how to put out
ing it, and the interest and creativity is out JOHNS: There are fewer, but there your shingle. n
there across underserved communities.” are still challenges for women and for The author is economics correspondent for
Recently, Johns broke away from people of color. This is based on my National Journal.
By JIM TANKERSLEY
M
the next economy
528supp-Q&A.indd 21
summer 2011
21
5/24/11 3:00 PM
In Perspective
Brown Versus Gray
The demographic schism between minority youth and
elderly whites may polarize American politics for decades.
By Ronald Brownstein
T
he demographic wave reconciling the diverging interests of sional rout, the Republican tally among
reshaping the nation, like most these two giant generations—the brown white seniors swelled to 63 percent—
changes in American life, is and the gray.
one of the party’s best showings ever—
cresting among the young.
In the brown community, the domi- while 73 percent of voters from racial
The first cache of results nant view is that government invest- and ethnic minorities stuck with the
from the 2010 census found that minor- ments in education, health care, and Democrats.
ities now comprise almost 37 percent of social-welfare programs are indispensI don’t believe those contrasting
the nation’s overall population. But that able if the growing number of minority preferences are explained mostly by rafigure rises to nearly 47 percent among children are to ascend to the middle cial prejudices; rather, the evidence sugAmericans younger than 18. Hispan- class. But the graying white popula- gests they are driven more by historical
ics alone now account for nearly one- tion has grown increasingly skeptical of allegiances, attitudes toward governfourth of the kids in America.
government involvement and resistant ment, and perceptions about the parties’
This change isn’t confined to a few to paying the taxes needed to fund the stances on civil rights and related issues,
big cities that have long attracted im- public investments that most of those such as immigration.
migrants. Between 2000 and 2010, the minority families favor.
But whatever the causes, the effect is
minority share of the youth population
Neither the gray nor the brown is clear. American politics today presents
increased in all 50 states. Brookings a monolith. Polls suggest that support an escalating clash between a RepubliInstitution demographer William Frey
can Party that receives about 90 percent
projects that minorities will constitute
of its votes from whites and is commitan absolute majority of children by the
ted to retrenching government and a
end of this decade.
Democratic Party that relies heavily
on minority votes and is committed to
The rise of this diverse youth popudefending an activist government role.
lation is one of the two most important
demographic trends reconfiguring
Unless we reach a new social consensus,
our economy, society, and politics. The for activist government isn’t quite as those warring perspectives threaten desecond mirrors the first: As the baby widespread among Hispanics or Asian- cades of political polarization with an
boomers move into retirement, the Americans as it is among African-Amer- ominous racial and ethnic edge.
number of seniors is steadily increas- icans; and even seniors who march
The irony is that the gray need the
ing. The trustees of Social Security and in tricornered hats at tea party rallies brown more than they realize. The
Medicare recently projected that those are often fierce in their defense of Medi- minority kids filling the United States’
two giant programs for the elderly will care and Social Security. But on almost classrooms are the country’s next
be serving 80 million people in 2030, up any poll question that tests attitudes workforce. Unless the nation does a
toward government’s role in society, better job of providing them a quality
from 40 million today.
However, those seniors present a minority groups tilt toward support for education, they’re unlikely to find welldifferent face than the emerging youth activism while older whites increas- paying jobs—or to generate the payroll
taxes needed to fund Social Security
population does. Because the United ingly oppose it.
The two groups diverge as starkly and Medicare. As usual, our fates as
States sharply limited immigration from
1924 until 1965, fully four-fifths of to- in their voting behavior. In the 2008 Americans are more intertwined than
day’s seniors are white. Demographers presidential election, President Obama we recognize. If we don’t create more
like Frey don’t expect that proportion to won the support of two-thirds of those economic opportunity for the brown,
under 30 and four-fifths of minority we’ll never ensure financial security
change much for decades.
Of all the political challenges that the voters. Almost three-fifths of white for the gray. n
U.S. faces in the coming years, none may seniors, meanwhile, preferred John The author is the editorial director of National
be more pressing, or perplexing, than McCain. In the GOP’s 2010 congres- Journal.
The irony is that
the gray need the
brown more than
they realize.
22
summer 2011
528supp-perspective-Brownstein.indd 22
the next economy
5/24/11 3:12 PM