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Immigration Reform Could Equal Millions of New Consumers

February 20, 2013

Hispanic, latino, jose monterrosaThe demographic shift from Hispanic growth was obvious in the last presidential election. This tectonic shift has policy makers now debating and negotiating an immigration reform. Granting legal status to immigrants in the country can open a new market with rippling effects into many industries. It could potentially create millions of new consumers that are young and hopeful like the past parents of baby boomers.

Politics aside, I asked three community experts what a change of status could mean to the “undocumented consumer” and the implications this will have for businesses. For years, companies have catered to this segment of the market indirectly but an immigration reform could mean a more focused marketing approach, especially for those in industries such as travel, legal services, financial planning, banking, insurance, auto and homes. Why? Think of the undocumented consumer as someone that is hopeful but lives in uncertainty. Without a legal status, long-term planning doesn’t come to mind to the undocumented consumer because he does not know what his day will be like tomorrow. There are many “ifs.”

Ana Mac Naught, an Immigration Program manager at Neighborhood Centers Inc., sees it this way, “The institutionalized stigma of an undocumented status prevents people from accomplishing certain objectives as simple as opening bank account, purchasing a car or in some extreme cases like in Alabama, taking your child to school or being able to rent an apartment.” Ana adds, “Without that fear present, people will have the chance to invest in their futures.”

A stable life under a legal status will provide a promising environment to the undocumented consumer but assimilating into the “legal world” can be full of hurdles too. Some situations will make it difficult, the most noticeable one: getting credit. That is what Edgardo de la Garza, a marketing research professional with deep knowledge of the Hispanic consumer, thinks. According to Edgardo, the new Americans will go through the growing pains of learning basic daily items such as credit and how to manage it. Currently, he points out, “Many start with the furniture store to gain that credit history so they can later buy electronics or tools for their daily jobs.” Furniture is the usual starting point perhaps because of the low financial risk but once established, the undocumented consumer will upgrade to other more expensive items such as a new car and home, Edgardo said.

Maria Baños Jordan, a sociologist heading the Texas Familias Council, has a similar take on the potential change on the status of the undocumented consumer. She refers to them as the “shadow population.” The shadow population includes the “dreamer” youth, skilled and unskilled laborers, professionals, mixed status families and aging residents that, according to Maria, “have made up our American fabric for decades.” This reminds me of the Immigration Reform and Control Act (IRCA) of 1986, the last significant effort made to legalize the undocumented Latinos. The bad news is that after IRCA, immigrants were back in an expensive, long and bureaucratic immigration process.

According to Maria, the undocumented immigrants have been the opportunity waiting to happen. Maria cites numbers from the U.S. Census Bureau which state that three fourths of immigrant households are family based. This means that Hispanics immigrants usually live large family groups. In fact, they remain that way for years, according to some studies. Therefore, it’s safe to conclude that a change of status will create a cascade effect in the immediate family group of the undocumented consumer. A stable family will mean a change in attitude toward the environment. A friendlier perception of the environment will bring more confidence and a proactive buying behavior.

Despite the suggested changes in the behavior of the undocumented consumer, Maria suggests the contributions of this segment of the market have already impacted our economy for years. She cites data from the Pew Hispanic Center which estimates that “48 percent of undocumented residents living in the U.S. for more than 10 years were homeowners in 2008. Their buying power and labor force contributions are highly significant in an aging America.” Maria adds, “With young families, strong entrepreneurial spirit and increased earning power, these residents have great potential to increase our economic base as they purchase new homes, educate their children and learn to invest in the land that is now truly their home.”

Marketing to Latinos overall is already a trillion dollar not so niche market. Bringing the undocumented consumer out of the shadows will widen this market, expanding the opportunities of new and existing businesses that are capable to understand the needs of this community and tailoring their messages properly.

By Jose Monterrosa. Imagina Communications

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