Businesses with large Hispanic clienteles say many of their customers are anxious about losing their jobs in the slowing economy and are worried about a new state law, which goes into effect on Jan. 1, that punishes employers who knowingly hire undocumented workers.
Phoenix used-car dealer Manuel Siguenza is selling two or three cars a week, down from 30 a week a year ago.
Beauty-shop owner Carmen Andrade has laid off nine of her 15 hair dressers because customers have stopped coming in.
And business is so slow at Botas El Jibaro, a Western-clothing store in central Phoenix, the owner is thinking of closing the doors.
"My sales are down 65 to 70 percent," said Rafael Hernandez, who has owned the business for 14 years. "It's terrible. You can stand here all day and you won't see any customers."
The huge drop in sales at Botas El Jibaro and other immigrant-oriented businesses are more severe than business declines in general.
Overall, auto sales have fallen only about 7 percent this year. Clothing sales, meanwhile, are up 1.7 percent overall.
Economic effects
The foreign-born population of Arizona was 843,296
in 2005, according to the U.S. Census Bureau. Of the foreign-born, 69
percent were non- citizens, which include immigrants in the country
undocumented. The Pew Hispanic Center estimates there are 500,000
undocumented immigrants in Arizona, or about 9 percent of the population.
Analysts estimate the state's budget shortfall this year could hit $525
million to $675 million because revenues from sales taxes, individual income
taxes and corporate income taxes have failed to keep up with forecasts. Some
lawmakers say the shortfall could hit $800 million.
State Rep. John Kavanagh, R-Fountain Hills, however, believes the sanctions
law will help if, come January, large numbers of undocumented immigrants
decide to leave.
"It's actually going to help us ease the shortfall by reducing the number of
undocumented in the state, which will reduce the cost of educating their
children, providing medical care, and paying for crime-associated costs such
as arrests and incarceration," Kavanagh said.
There is no hard data on the effect a decline in spending by immigrants is
having on the state budget, but economists believe the decrease is driven
more by economic factors than immigration crackdowns.
"Immigrants are responding to the same economic factors that everyone else
is responding to, among them slower job growth, a major decline in housing
construction and rising gas prices," Valley economist Elliott Pollack said.
Don Wehbey, a senior economist at the state Department of Economic Security,
agreed.
"Most of it I can assure you is due to the slowdown in the economy," Wehbey
said.
He said immigrants have been hit especially hard by a sharp decline in the
state's housing-construction industry, which had been booming for years. The
industry, which depends heavily on immigrant labor, both legal and
undocumented, has cut nearly 13,000 jobs in the past year, according to
state figures. More than 2,200 of those job losses came in the first quarter
of this fiscal year, which began July 1.
Even so, both Pollack and Wehbey believe the impending sanctions law and
other immigration crackdowns are factors, creating economic insecurity among
immigrants that is causing them to hold on to their money. That is
compounding the state's economic slowdown.
"I know there is an effect," Wehbey said. "I just don't know how much."
What businesses see
Meanwhile, businesses that cater to immigrants continue to struggle.
"Look how empty the store is," said Hernandez, the owner of Botas El Jibaro.
He pointed at stacks of cowboy hats, jeans and leather cowboy boots that no
one is buying. "I have a lot of merchandise, as you can see, but no
customers."
Hernandez said many of his customers already have left Arizona. "A lot of
people have moved to Colorado, New Mexico, and Utah. A lot of them even went
to Mexico."
If the downward trend continues, Hernandez said he will be forced to close.
Next door, at the El y Ella Beauty Salon, business was just as slow.
"This place used to be packed all the time," said Andrade, the owner. "I
don't know if it's just this area, but I've talked to a lot of people and
they say it's the same everywhere."
Andrade said immigrants are saving their money, either because their hours
have been cut back due to the slow down or because they are afraid they
could lose their jobs once the sanctions law goes into effect.
In contrast, Crystal Moorehead, who cuts hair at Marbles Hair Salon on
Indian School Road near 36th Street, said she hasn't really noticed a
decrease in business. She is still doing about 30 cuts a week. None of her
clients are immigrants.
"It's pretty much been steady-as-she-goes," Moorehead said. "If there has
been a decrease, it's been small."
Over on East Van Buren Street in central Phoenix, the owner of Manuel Jr.
Used Auto Sales said the drop in sales over the past six months is the worst
he has seen since he started his business 15 years ago.
What's more, Manuel Siguenza said, many customers who have already bought
cars are falling behind on their payments. The number of cars he has had to
repossess has skyrocketed. Ninety percent of his customers are
Spanish-speaking immigrants.
"Ups and downs are normal in the car business," Siguenza said. "But this
doesn't have any up. It's only down."
Siguenza said if he doesn't sell cars, he doesn't pay sales taxes, which
means less money for the government. During the first 10 months of last
year, he paid $303,520 in sales taxes. He has paid $162,565 through the
first 10 months of this year, or $140,954 less than last year.
"When Governor Napolitano signed the law, everyone got scared. They
panicked, the undocumented people. But this is affecting everyone," Siguenza
said. "What I don't understand, didn't the governor realize all these people
contribute all this money to the economy?"
