“Business friendly” has become shorthand for economic success. States that claim that label emphasize their low taxes, permissive regulation, labor flexibility, and incentive packages designed to attract large employers and mobile investment. The label is commonly invoked to signal growth, competitiveness, and economic momentum (particularly in fast-growing regions), even when what those outcomes reflect, and for whom, are less clearly defined.
But this definition assumes a stability that is increasingly absent. In today’s environment of federal policy volatility—marked by intensified immigration enforcement, tariff uncertainty, and the retrenchment of public contracting and business-support programs—economic performance depends less on attracting firms to certain places and more on whether businesses can operate predictably once they are there. Under these conditions, stability is not merely an equity or inclusion concern—it is a condition for competition itself.
This is where Latino-owned businesses matter—not as a niche category, but as early indicators of how economic shocks move through local markets. Because Latino entrepreneurs are disproportionately concentrated in labor-intensive, place-based sectors with high exposure to policy shifts, their businesses can experience wider stresses earlier than others. When volatility intensifies, unevenly distributed stability begins to shape competition—quietly favoring larger, more insulated firms while placing greater strain on smaller firms.
Texas, Florida, and North Carolina are so-called “business-friendly” states worth watching because they sit at the intersection of rapid growth, demographic dependence, and policy volatility. All three states continue to attract major corporate relocations and investments, often supported by incentives, regulatory certainty, and direct engagement with state and local officials. At the same time, their recent growth depends heavily on Latino and immigrant communities as workers, consumers, and business owners, particularly in labor-intensive sectors and neighborhood corridors that sustain everyday economic activity.
What these states reveal is not whether Latino entrepreneurs face pressure (they do in many places), but that these pressures are now emerging even in states widely viewed as business friendly. As federal policy volatility disrupts labor markets, consumer demand, and small business cash flow, Latino-owned firms offer a window into a deeper shift documented in this report: Stability is unevenly distributed, and economic growth can coexist with declining competition in ways that headline growth narratives often obscure.
In an era of policy volatility, Latino entrepreneurs are bellwethers of economic stress
Latino-owned businesses often experience stress earlier because they are concentrated in sectors where volatility transmits fastest. Nationally, Latino-owned employer businesses (those that employ at least one person) have grown most rapidly in labor-intensive, place-based industries such as construction, accommodation and food services, transportation and warehousing, retail trade, personal services, and administrative support (see Figure 1). These are industries tied to housing growth, logistics expansion, population inflows, and everyday services.
This pattern is not new. During the COVID-19 pandemic, Black- and Latino-owned businesses experienced sharper early revenue declines and higher closure rates than white-owned firms, reflecting their concentration in high-contact, labor-dependent sectors and more limited access to liquidity. That experience underscored a recurring dynamic: Minority-owned businesses often register economic stress first—not because they are less productive, but because they operate where shocks arrive earliest and buffers are thinnest.
Still, Latino business growth is sometimes interpreted as evidence that fast-growing, low-tax states offer uniquely supportive environments for Latino entrepreneurship. Rankings and league tables reinforce that view by focusing on where Latino business formation is accelerating. But growth alone does not reveal whether those environments are stable, competitive, or durable once firms are operating.
The same sectors that have supported rapid Latino business formation are also uniquely exposed to today’s policy shocks. Immigration enforcement can destabilize labor supply while also suppressing consumer activity in immigrant-serving markets. Tariff uncertainty raises input costs and complicates planning for contractors, suppliers, and logistics firms operating with little margin for error. Changes to public contracting, procurement rules, and small business infrastructure remove some of the few sources of predictable demand and stabilization available to firms without large reserves.
In these sectors, even short disruptions can have decisive impacts. Labor-intensive, place-based workforces in states such as North Carolina, Texas, and Florida depend heavily on Latino immigrant labor. Latino immigrants account for roughly one-fifth of service occupations in large states such as Texas and Florida, and in North Carolina, their labor force participation rate exceeds the statewide average by roughly 10 percentage points. Construction is especially exposed: Over the past decade, growth in construction employment in states such as Florida and North Carolina has been driven disproportionately by the Latino immigrant workforce, which has expanded at roughly double the pace of the overall construction labor force.
At the firm level, these exposures are compounded by financial structure. Latino-owned businesses are disproportionately smaller, younger, and more reliant on personal credit and short-term financing, with less access to low-cost capital and fewer cash reserves than larger firms. When immigration enforcement activity disrupts labor supply, lost workers are difficult to replace, missed revenue cannot be recovered, and delayed projects cascade through subcontracting networks. Unlike larger firms, small enterprises rarely have diversified revenue streams or access to low-cost credit that allow them to absorb repeated shocks. Exposure—not inefficiency—determines who feels the impact first.
The case studies that follow show what this looks like on the ground. In parts of North Carolina, immigration enforcement has functioned like a localized economic shutdown by disrupting labor supply and neighborhood commerce, even as the state continues to attract new corporate headquarters. In Texas and Florida, multiple sources of volatility are layered together: intensified immigration enforcement, trade and tariff uncertainty, and the retrenchment of public contracting and small business support. Together, these pressures destabilize small and medium-sized businesses, while large firms are better positioned to continue relocating, expanding, and securing stability. Taken together, these cases show why volatility is no longer just a business risk, but a mechanism reshaping competition itself.
In North Carolina, immigration enforcement is functioning like an economic shutdown
North Carolina is not typically viewed as a historic Latino hub, yet it has experienced one of the fastest rates of Latino population growth in the country. Between 1990 and 2020, the state’s Latino population grew by more than 1,300%, which has reshaped labor markets, consumer demand, and economic participation across both large metro areas and smaller regional economies. Today, Latinos make up roughly 1 in 10 North Carolina residents, and Latino and immigrant residents have played a disproportionate role in labor force growth, helped offset population decline (particularly among younger cohorts), and become increasingly visible as business owners. This demographic shift has been central to North Carolina’s recent economic expansion, particularly through labor force growth, population stabilization, and new business formation.
That shift is visible in business formation. Between 2017 and 2022, Latino-owned employer businesses expanded sharply across much of the state, signaling the emergence of new Latino business markets in places not historically associated with Latino entrepreneurship (see Table 1). Growth was especially pronounced in smaller and midsized metro areas such as Mount Airy, Hickory–Lenoir–Morganton, Fayetteville, and Winston-Salem—places where absolute counts remain smaller than in long-established Latino metro areas, but where momentum is rapid and exposure is rising. In larger metro areas such as Charlotte, Raleigh–Cary, and Greensboro–High Point, growth has been steadier but more consequential in scale, reflecting deeper integration into the state’s core economic centers.
This business momentum mirrors the structure of North Carolina’s labor market and helps explain why the state is particularly exposed to immigration enforcement shocks. The state relies heavily on Latino immigrant labor across construction, services, and agriculture, and Latino immigrants participate in the labor force at a rate more than 10 percentage points higher than the statewide average. When enforcement surges, the effects are not marginal: Labor-dependent sectors and the corridor businesses that employ and serve workers can be disrupted simultaneously.
At the same time, North Carolina continues to attract major corporate investment, underscoring the strength of its top-of-market growth model. The Charlotte region illustrates this clearly: Large global firms have relocated or expanded headquarters operations in the area, drawn by infrastructure, workforce depth, and state and local incentives. Recent relocations and expansions—including Maersk, Scout Motors, SoFi Technologies, Pacific Life, and EG Group—reinforce the state’s reputation as a business-friendly destination for globally integrated firms.
That contrast is what makes the state revealing. In November 2025, federal immigration agents launched a highly publicized operation known as Operation Charlotte’s Web, which disrupted Latino and immigrant communities as well as local commerce. Business owners reported closing preemptively or shortening hours out of concern that employees and customers could be detained during routine activity. Corridor-level activity dropped abruptly; local leaders described one normally high-traffic area as a “ghost town,” while a survey sent to local business owners by CharlotteEAST, a nonprofit serving the area, documented widespread closures and sharp daily losses, averaging roughly $2,500 per business and reaching as high as $12,000 in harder-hit cases.
These effects were not confined to the margins. Latino residents account for roughly 15% of Charlotte’s population, and Latino-owned businesses number in the thousands, including at least 2,791 employer firms creating jobs across the metro area in 2022. A regional study published in 2023 estimated Latino economic output at $12.9 billion (about 7.3% of the metropolitan economy), with construction accounting for a disproportionate share of that activity.
Although enforcement activity was concentrated over a short period, its effects lingered. Foot traffic along immigrant-serving corridors remained depressed for weeks, not all businesses reopened, and school attendance recovered only gradually—prompting local leaders to deploy emergency funds more commonly used after natural disasters. As one official observed, “It was like a hurricane came through.”
The lesson from North Carolina is not that growth has stalled—it’s that stability is unevenly distributed. In a state whose recent expansion depends heavily on immigrant labor and Latino entrepreneurship, enforcement-driven shocks can function like targeted economic shutdowns: concentrated in specific corridors and sectors, but quickly radiating outward through supply chains, service industries, and regional labor markets. This divergence between continued corporate expansion and small business fragility becomes even more visible in Texas and Florida, where multiple sources of volatility are stacked together.
Texas and Florida show how stacked policy volatility destabilizes small firms
Texas and Florida are long-established Latino hubs where Latino-owned businesses function as core employers and growth drivers rather than peripheral market participants. Across both states, Latino-owned employer firms operate at scale in large metro areas, smaller cities, and labor-intensive industries, anchoring local labor markets and sustaining consumer demand.
Unlike North Carolina’s more recent demographic shift, Latino communities in Texas and Florida have been embedded in their economic ecosystems for decades. Texas alone is home to roughly 12.1 million Latino residents (nearly 40% of its population), while Florida’s Latino population exceeds 6 million and is concentrated across major metro regions. In both states, recent population growth, including the stabilization of working-age and youth cohorts, has been driven overwhelmingly by Latino and other immigration-linked communities. Latino workers, consumers, and entrepreneurs are not a marginal growth factor; they are a demographic foundation sustaining labor force expansion, household formation, and local demand.
Latino-owned businesses anchor growth across Florida and Texas
Florida is home to one of the largest and most economically consequential concentrations of Latino-owned businesses in the United States, as measured by the scale, growth, and employment footprint of Latino-owned employer firms across the state. Across Florida metro areas where Latino-owned employer businesses expanded between 2017 and 2022 (including Miami, Orlando, Tampa, and Jacksonville), there are more than 91,000 Latino-owned employer firms (see Table 2)—underscoring their central role in the state’s economic base.
Nowhere is this more visible than in the Miami–Fort Lauderdale–West Palm Beach metro area. In 2022, the region was home to nearly 60,000 Latino-owned employer businesses, representing roughly 33% of all employer firms. Between 2017 and 2022, Miami added 13,693 Latino-owned businesses—a 29.9% increase. During that same period, Latino-owned firms accounted for more than 93% of total net business growth in the metro area, meaning that overall business expansion would have been minimal without them.
This pattern extends beyond South Florida. Latino-owned employer businesses grew rapidly across a wide range of Florida metro areas, often at rates exceeding 70% or even 100%, including in Orlando, Lakeland, Ocala, Port St. Lucie, and Key West. Together, these figures highlight that Latino entrepreneurship in Florida is not confined to a single region or industry cluster; it is a statewide growth engine.
Texas reveals the same dynamic at even greater scale. Latino-owned businesses are not only numerous, but are core employers and job creators across both small and large metropolitan economies. In several small and midsized Texas metro areas, Latino-owned employer firms make up a majority of all businesses with paid workers. Of the 10 U.S. metro areas with the highest share of Latino-owned employer businesses, six are in Texas: Rio Grande City–Roma, Laredo, Eagle Pass, McAllen–Edinburg–Mission, El Paso, and Brownsville–Harlingen. In each of these metro areas, Latino-owned firms account for 50% or more of all employers, anchoring local labor markets rather than operating at the margins (see Table 3).
This role extends well beyond border-region economies. Across Texas metro areas where Latino-owned employer businesses expanded between 2017 and 2022—including Houston, Dallas–Fort Worth, Austin, and San Antonio—there were roughly 63,000 Latino-owned employer firms (see Table 4). These businesses support tens of thousands of jobs and supply essential services across construction, retail, logistics, and food service, forming a substantial share of the state’s employment base.
At the same time, both Texas and Florida are widely viewed as business friendly, and continue to attract high-profile corporate relocations that reinforce that reputation. Since 2020, Texas has recorded roughly 200 corporate relocations or reincorporations, including firms such as Tesla, Coinbase, and Yum! Brands, which often cite the state’s pro-business regulatory and legal environment. Florida has similarly remained a magnet for corporate headquarters and large-scale investment, drawing companies such as Galderma, ServiceNow, and FC Barcelona.
This coexistence is what makes Texas and Florida revealing. Latino-owned businesses are central employers embedded in labor-intensive sectors, local supply chains, and neighborhood commercial corridors, while the two states’ growth models increasingly privilege mobile, capital-rich firms that can absorb shocks, navigate regulatory shifts, and access policy levers. When policy volatility intensifies—across immigration enforcement, trade, and public contracting—it does not hit evenly. The following section of this report shows how stacked volatility turns growth engines into points of fragility—reshaping who can survive, who can grow, and who bears risk in Texas and Florida’s business ecosystems.
Stacked volatility turns growth engines into points of fragility
Texas and Florida combine deep exposure to immigration enforcement with growth models that depend heavily on immigrant labor and Latino entrepreneurship. They also lead the nation in the use of 287(g) agreements, which deputize local law enforcement to perform certain federal immigration enforcement functions, significantly expanding enforcement visibility and reach (see Map 1). As of December 2025, there were 1,275 active 287(g) agreements nationwide, with Florida and Texas alone accounting for roughly 47% of them.
Crucially, this expansion has occurred not in tension with state leadership, but with active cooperation. Both states’ governors have embraced partnerships with federal immigration authorities—scaling up 287(g) participation and joint operations even as their economies remain deeply reliant on Latino and immigrant workers, consumers, and business owners. This alignment between state leadership and enforcement policy amplifies the economic stakes of volatility rather than mitigating them.
As enforcement capacity expands under this model, its economic effects surface first in labor-dependent, place-based sectors. Florida illustrates how enforcement surges can reverberate rapidly through local economies. In May 2025, the state conducted Operation Tidal Wave, a six-day joint operation involving state and federal agencies that resulted in more than 1,100 arrests—the largest single-state, one-week immigration action in Immigration and Customs Enforcement’s (ICE) history, according to the agency. The sweep followed Florida’s statewide expansion of 287(g) agreements, effectively extending federal immigration enforcement authority across all counties. During and after this operation, agricultural nursery owners and farmworker advocates in Homestead and Redlands reported widespread absenteeism, delayed deliveries, and partially idle operations; some small farms suspended activity all together. In Central Florida, restaurant owners described similar effects. Local advocates and the Mexican Consulate in Orlando estimated revenue declines of roughly 40% at some establishments, as workers and customers stayed home.
Texas shows what happens when those pressures accumulate alongside trade and investment shocks. Survey evidence indicates that about 1 in 5 Texas businesses anticipate negative effects on their ability to hire and retain foreign-born workers this year due to immigration policy changes, even as a smaller but meaningful share of firms already report experiencing direct impacts. These pressures are already visible on the ground. Construction leaders in the Rio Grande Valley described a chilling effect from worksite immigration enforcement, with workers staying home and projects slowing amid rising arrests. Regional data from the Federal Reserve Bank of Dallas show construction employment in the Rio Grande Valley fell by roughly 5% in the third quarter of 2025—the steepest decline in jobs in the region.
These labor disruptions are occurring alongside heightened trade volatility. As the nation’s leading trading state (accounting for roughly 16% of total U.S. trade), Texas is highly sensitive to tariff swings. By spring 2025, business uncertainty had surged to near pandemic-era levels, with roughly half of surveyed firms citing tariffs as a top concern and reporting higher costs, weaker demand, and delayed investment. By mid-summer, those pressures had translated into contraction: Texas job growth turned negative in June, construction activity declined across all categories, and executives described the business environment as “impossible to plan” for. As inventories tightened and tariff costs flowed through supply chains, construction contract values fell sharply from early 2025 levels.
As labor, trade, and cost pressures accumulate in Texas, the ability to absorb disruptions increasingly depends on access to stabilizing institutions—making public contracting and procurement pathways especially consequential for smaller, place-based firms.
However, in Texas, recent changes to public contracting policy have narrowed these stable pathways precisely as volatility is rising. In October 2025, the state comptroller’s office issued guidance suspending new certifications under the state’s Historically Underutilized Business (HUB) program—effectively pausing a statutorily mandated system that has governed state contracting since 1995. While framed as a compliance measure, the suspension halted certification for minority-, women-, and veteran-owned firms, including many Latino-owned businesses that rely on public procurement as a source of predictable demand. The economic stakes are materially high: In Fiscal Year 2024, certified HUB firms received $4.1 billion in state contracts (over 11% of total procurement), which supported employment across construction and professional services. Legislative budget analysis shows that every $1 million in HUB contracting supported more than 10 jobs and roughly $580,000 in household income. In an environment already shaped by labor disruption, tariff uncertainty, and enforcement shocks, narrowing access to public contracting raises the effective cost of survival for smaller, minority-owned firms.
Florida shows a parallel contraction through a different pathway. In 2025, several local governments—including Orlando, Orange County, Tampa County, Hillsborough County, and Palm Beach County—suspended core elements of long-standing minority- and women-owned business enterprise (MWBE) programs in response to new federal grant conditions tied to anti-diversity, equity, and inclusion (DEI) executive orders. In each case, local officials emphasized that the decisions were driven by the risk of losing federal funding, ranging from tens of millions to hundreds of millions of dollars supporting disaster recovery, infrastructure, housing, education, and public health. The result was a rapid narrowing of access to public contracting for minority- and Latino-owned firms precisely as other sources of volatility were intensifying.
These state-level shifts mirror a broader federal retrenchment in the institutions that shape access to contracting, credit, and technical assistance for small firms. Alongside changes at the state and local level in Texas and Florida, recent administrative actions have narrowed access to federal contracting itself, including by canceling federal contracts for minority- and women-owned firms at a disproportionate rate. At the same time, programs that support navigation of federal procurement—such as the Small Business Administration’s 8(a) and Empower to Grow initiatives—and financing mechanisms such as the State Small Business Credit Initiative face heightened uncertainty amid staffing reductions and budget constraints. Disruptions to the Treasury Department’s Community Development Financial Institutions Fund have further constrained access to affordable capital for firms that already face barriers in conventional credit markets.
As tariffs and enforcement volatility raise operating risks, these policy shifts remove the mechanisms that help smaller firms remain competitive amid uncertainty. The result is not simply fewer supports, but a narrowing of competition itself—reshaping who can survive, who can grow, and who can compete in economies that continue to describe themselves as “business friendly.”
Policy volatility is becoming a competition problem—quietly reshaping markets in ways that disadvantage Latino-owned and other small, place-based businesses
The experiences of North Carolina, Texas, and Florida reveal a deeper shift in how competition may now be operating in local markets. Immigration enforcement surges, tariff instability, and abrupt retrenchment of contracting and support programs are no longer episodic disruptions that firms adapt to unevenly. Taken together, they are becoming market-structuring forces—determining which businesses can withstand uncertainty long enough to survive and compete.
Firms with scale, access to capital, and operational flexibility are better positioned to reprice, re-source inputs, delay investment, and absorb short-term losses in response to shocks. They also tend to have greater capacity to engage policymakers—seeking clarity, exemptions, or favorable timing as rules change. Smaller, labor-dependent, place-based firms typically lack these buffers and channels. For them, policy shifts often function as fixed constraints rather than manageable risks. The result is not only uneven hardship, but a systematic reallocation of risk toward firms least able to absorb it.
Recent national indicators suggest this divergence is already visible. Payroll data show that job losses in late 2025 were concentrated among the smallest firms, even as midsized and large firms continued adding workers. According to ADP, employers with fewer than 50 workers shed roughly 120,000 jobs in November alone, while larger firms remained net job creators. At the same time, corporate relocations and expansions into states such as Texas, Florida, and North Carolina have continued, often accompanied by public incentives, regulatory certainty, and long-term planning horizons unavailable to most small businesses.
Crucially, this restructuring may be unfolding in ways that do not register clearly in standard competition metrics. Rather than appearing primarily through visible mergers or acquisitions, competitive pressure may increasingly take the form of quiet attrition, as firms face heightened risk of exit following labor disruptions, cost spikes, or the loss of stabilizing demand driven by policy volatility. Because these pressures are dispersed across sectors, corridors, and firm sizes (and may operate through decisions not to expand, delayed entry, or eventual closure, rather than formal consolidation), competition may erode gradually without triggering the thresholds that typically draw regulatory scrutiny.
Over time, this dynamic begins to resemble the “K shape” economists have used to describe today’s economy—one in which higher-income households have seen wealth and opportunity rise while lower- and middle-income Americans face weaker income growth and persistent pressure from high prices. A similar pattern may be emerging among businesses. Larger, capital-rich firms are better positioned to expand, consolidate, and absorb disruption, while smaller, labor-dependent firms face mounting constraints that limit their ability to operate predictably or grow. Latino-owned businesses are disproportionately represented in this segment of the market: They are overwhelmingly small, operate with fewer employees on average, and are concentrated in labor-intensive industries with lower revenue per employee. Under the same macroeconomic conditions, outcomes increasingly reflect unequal exposure to volatility and unequal access to buffers rather than differences in productivity or service quality.
Seen through this lens, “business-friendly” strategies that prioritize business attraction, scale, and capital mobility without addressing stability risk misdiagnosing the problem. Growth can coexist with declining competition if the operating environment systematically favors firms that can absorb disruption while exposing smaller and Latino-owned businesses to repeated shocks. Stability in this context is not merely an equity or inclusion concern—it is a condition for competition itself.
‘Business friendly’ must mean ‘business stable’ and ‘competition capable’
Texas, Florida, and North Carolina are worth watching because they sit at the intersection of growth, demographic dependence, and policy volatility. Their recent expansion has relied heavily on Latino and immigrant communities as workers, consumers, and business owners, particularly in labor-dependent and place-based sectors. When enforcement surges, trade uncertainty, and contracting retrenchment disrupt those communities, the economic effects do not remain contained. They spread across local supply chains, commercial corridors, and regional labor markets, reshaping how everyday economies function. Latino entrepreneurs experience these dynamics first not because they are uniquely vulnerable, but because they operate where shocks propagate fastest and margins leave little room for error.
Left unaddressed, this pattern risks producing a business economy in which large, capital-rich firms remain insulated from volatility while smaller, place-based businesses absorb repeated shocks and eventually exit the market. In that environment, volatility becomes a competitive filter, quietly reallocating risk downward and advantage upward—reshaping who can survive, who can grow, and who can compete without triggering traditional markers of consolidation.
A more accurate definition of “business friendly” in this era should center stability and competition together: predictable rules, resilient small business ecosystems, and market conditions where success depends on productivity, service, and innovation—not on the ability to withstand continual policy disruption. Without that shift, growth may continue at the top even as competition erodes and the foundations of local economies quietly weaken beneath it.
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