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Tess Vigeland: Arizona is on the front lines in the debate over immigration. The state attracted intense controversy with its new law police to check the ID of anyone suspected of being in the country illegally. Small business owners across Arizona are already paying a price -- especially the ones that have catered to Hispanic customers.
Marketplace's Jeff Tyler reports.
Jeff Tyler: El Guero Canelo is a popular restaurant with Hispanics in Tucson. But since Arizona passed its tough new immigration law, business is down.
Arturo Contreras: Twenty percent, you know. And with 70 employees, it's big.
That's general manager Arturo Contreras. He says many clients are leaving town.
Contreras: Some of them say they're going to Canada. And some of them say they're going to Texas.
Some of his employees are moving, too. When they're hired, Contreras gives each employee a uniform. Some workers abandon the job and the state because they have a relative who is undocumented. They fear the new law could result in the family being split up.
Tyler: So they don't give the uniform back?
So, when a worker leaves, Contreras needs to find a replacement. And shell out around $50 for a new uniform. The situation is even worse for some business owners in Phoenix. Joesphina Saldana owns the Zacatecas Beauty Salon.
Joesphina Saldana: Right now, it's empty. But before, we make like 40 or 50 customers each day. But right now, we have one customer a day, or two customers.
Rent on the salon runs about $1,500 a month. Plus utilities.
Saldana: I can't pay my rent. I can't pay my bills and everything. I need customers. I need money.
Her long-time clients have left town. She says even Hispanic with the proper papers feel unwelcome in the state. What will she do?
Saldana: Maybe gonna close. I don't know.
Saldana is trying to sell her beauty salon. She's asking $20,000, but willing to negotiate. No one wants to buy, she says, not in this environment. Even though she's a U.S. citizen, Saldana may have to relocate to another state.
Saldana: Citizen or not citizen, we have to leave because we don't have work. So we don't have nothing to do over here.
Next door, a national chain store called Gen-X specializes in hip-hop fashion and accessories. Kay Kim is district manager. She says the retailer used to cater to Hispanics. Now she's searching for a new clientele.
Kay Kim: We do have more African-American peoples here right now. That's why we need to bring some different size and different type of clothes and merchandise.
She's nervous because sales were down about $20,000 last month. Business is slow, she says, with one exception. She's sold a lot of luggage lately.
Kim: Not only Mexican people.
She says immigrants from Africa and Asia are moving too -- afraid they'll be targeted under the new law. Kay Kim also worries. She's here legally from South Korea.
Kim: Even I'm an Asian. But when I driving, I'm not comfortable. I don't want to go anywhere. So I stopped the shopping.
She says many Koreans came to Arizona and opened businesses. But now they are having second thoughts.
Kim: We got a lot of people decide to go back to California right now. So, a lot of places are going to be closed.
Kim wouldn't mind being district manager someplace else.
Kim: If my company don't want to transfer me to other states, I might quit. Ha ha. I'm not sure. I'm joking.
Business owners face a similar dilemma. Do they wait and hope their Hispanic customers return? Or do they transfer to another business model or another state?
In Phoenix, I'm Jeff Tyler for Marketplace Money.