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Are Latinos the Future of State and Local Economic Growth?

If Hispanics in the U.S. were an independent country, they’d have the world’s seventh-largest economy. They will also account for the majority of new adults entering the workforce in coming years.

Thirty percent of Americans under 12 are Latino.
At the beginning of 2020, annual population growth was projected to be the lowest in U.S. history outside of wartime. Add in the pandemic and, by July 2021, some were wondering if the population would decrease for the first time on record before the year ended.

The prospect of not having enough workers to build local economies is more elemental than a skills gap. “It’s a competitiveness issue,” says James Johnson, a demographic expert and professor of strategy and entrepreneurship at the University of North Carolina at Chapel Hill. “We’re an aging nation — the most rapid growth is among 65 plus, and 85 plus is growing more rapidly than the 25- to 44-year-old population.”

Aside from its larger implications, this is not good news for the public sector. “Three quarters of the government workforce are old fuddy-duddies that are going to be gone pretty soon,” says Johnson.
From 2010-2019, the economic productivity of Latinos in the U.S. grew at a faster rate than the country as a whole.

A GDP Larger Than Most Countries

Within this context of general decline, one sector has outsized potential to contribute to local economies. The nation’s Latino population has emerged as a unique engine of growth, say the authors of the 2021 Latino GDP Report, published by the nonprofit Latino Donor Collaborative (LDC).

The top-line message of the report is striking: If Latinos in the U.S. were an independent country, their 2019 GDP would be tied with France as the world’s seventh-largest economy. If data from the 2020 census is taken into account, the Latino GDP would be larger than that of France.

Between 2010 and 2019, the total economic output of Latinos in the U.S. has grown at a faster rate than the U.S. GDP, and faster than the GDP of any country other than China and India. Over this period, Latino real consumption grew 123 percent faster than non-Latino consumption.

Latino workforce participation is 5.5 percentage points greater than that of non-Latinos. The significance of this is heightened by the fact that the Latino population grew by 46 million between 1980 and 2019, compared to 17 million for the non-Latino white population. Their contributions span multiple industries, with greater than average productivity in sectors as diverse as agriculture, mining, nondurables manufacturing, wholesale trade, retail trade, transportation and warehousing, education, health care, leisure and hospitality, and personal and maintenance services.

“The 2020 census revealed that almost 30 percent of all children under 12 years old are Latino, and in the next 10 years those children will be integrated into the workforce; you really cannot plan if you are missing 30 percent of the future population,” says Ana Valdez, the executive president of the LDC.
Among the ten states in which Latino population is growing the fastest, only one (Florida) already has a large numbers of Latino citizens. (LDC)

Geographic Diversity

Three quarters of America’s Latinos live in 10 states: Arizona, California, Colorado, Florida, Georgia, Illinois, New Jersey, New Mexico, New York and Texas. In 2018, their GDP in just these states was $2.1 trillion, and 80 percent of all consumption by Latinos takes place in these states.

While these states might have the largest Latino populations, the highest growth rates are occurring elsewhere, including North Dakota, Vermont, New Hampshire, Tennessee and Kentucky.

“With the exception of Florida, the major hot spots for the growth of Latino population and thus the Latino GDP are outside the 10 largest states by Latino population,” notes the report.

According to an analysis of Census Bureau data by the Pew Research Center, between 2010 and 2019 the Latino population has been growing faster in the South (26 percent), Midwest (18 percent) and Northeast (18 percent). The number of Latino noncitizens decreased by more than 10 percent over this period, in contrast to perceptions of a border crisis, according to the LDC report. Meanwhile, the number of Latinos who were naturalized went up almost 42 percent.

Although the overall rate of growth of the Latino population was lower during this period than it had been in previous decades, it was nearly twice that of Black Americans. The growth rate of the white population was slightly below zero, Pew reports. The Census Bureau has projected that it will decrease by nearly 19 million people by 2060, while the Hispanic population will increase more than 93 percent, to 56 million.

COVID-19 is a powerful (and hopefully rare) example of an unforeseen event with the potential to significantly alter long-term forecasts of population growth. Even so, there’s no doubt that Latinos will account for a larger share of new adults entering the workforce over coming decades.

“In many ways, the future is going to be indispensably tied to the Latino community,” says Valdez.

Changing the Narrative

UCLA professor David Hayes-Bautista, director of the Center for the Study of Latino Health and Culture at its School of Medicine, is one of the authors of the 2021 Latino GDP report. Decades ago, in his first book, he predicted that there would be 15.2 million Latinos in California by 2030, almost four times the 1980 number.

The negative reaction to his prediction (which has come true nine years early) surprised him. “People would tell me that if California is to be half full of Latinos, that means it will be half full of illegal immigrants, gang bangers and teenage pregnant moms on welfare.”

Hayes-Bautista, whose family has been in the U.S. for over three hundred years, didn’t see it this way at all. He wrote a second book to see what data from the 60 years between 1940 and 2000 might reveal.

He found that over that period, Latinos had the highest labor force participation of any group, used welfare less, were more likely to have households composed of couples with children and started more businesses. He found health data from 1982 to 2000 that also contradicted stereotypes, including less smoking, drinking and drug use and longer life spans.

Hayes-Bautista thought that the right summary statistic might get people’s attention and hit upon estimating Latino GDP, and the first iteration was published in 2017. Even though the current report finds that today’s Latino GDP is bigger than that of France “the popular image of Latinos is still illegal immigrants, gang bangers and teenage moms living on welfare,” he says.

This narrative is not sustained by data, however. Minority policy has often focused on the idea that there is some terribly wrong that needs to be fixed, says Hayes-Bautista. “But if you look at the data, when you have a group that has a very strong work ethic, strong family, doesn't use welfare, sets up businesses, what do you need to fix? What we do need to think of is investing.”
Latino home ownership is growing above national norms. (LDC)

Social Capital

Latino Americans have more than numbers to bring to the workforce, says Bill Emmons, assistant vice president and economist in the Supervision Division at the Federal Reserve Bank of St. Louis. The Latino GDP report highlights their economic gains, but they also have various forms of what he calls “social capital” that are sources of resilience.

There is the ability of Latinos to emerge in a “V” shape from previous economic downturns. Treasury Secretary Janet Yellen referenced this during a virtual summit convened by the U.S. Hispanic Chamber of Commerce. "Hispanic entrepreneurs can lead us out of a crisis again," she said. "I know Hispanic workers can power our recovery, potentially in an even bigger way than a decade ago, so long as we remove the long-standing barriers that have been in your way."

The factors Emmons sees behind this resilience include higher marriage rates and households with multiple adults, often multigenerational, that can provide support and a 35 percent increase in college graduation in the last five years.

Latinos also have higher rates of self-reported good health. The fact that they experienced higher rates of hospitalization and death from COVID-19 than whites did doesn’t necessarily contradict self-reported good health, says Emmons. Recent research attributes these outcomes to the fact that their jobs and housing arrangements involve disproportionate risk.

The combination of increased risk and increased support found in multigenerational households is a paradox of sorts in the COVID-19 era. “It provides lots of resilience and strength in some respects, but it also increased vulnerability,” says Emmons. “That’s an issue that state and local governments may want to take up as part of housing discussions.”
Historicaly, immigration has been correlated with GDP growth. Pandemic impacts have disrupted this pattern. (LDC)

The GDP Ecosystem

Sol Trujillo, whose business experience includes serving as CEO of three $50 billion-dollar market cap companies, co-founded the LDC with former HUD Secretary Henry Cisneros. He was a trade policy adviser to the Clinton and Bush administrations and has served on numerous state economic development boards.

“In the last decade, Latinos supplied almost 80 percent of all net new workers in the country,” he says. “Part of that was because of immigration in the earlier part of the decade and part of it was by birth rates of the prior immigrants.”

“We’ve got anywhere between eight and 11 unfilled jobs,” says Trujillo. “And right now we have a deficit of opportunity to fill jobs, which ultimately will have to go somewhere else if we can't fill up because the work needs to be done.”

The single most-important correlating variable is labor force growth rate, not unemployment rate and not labor force participation, according to Trujillo.

Immigration has been part of the “magic formula” for growth over the past 40 to 50 years he says, pointing to high rates of growth in both consumer spending and GDP during administrations in which large numbers of immigrants were admitted to the country.

Businesses, communities and government operations all depend on talent, and Trujillo’s experience running businesses on continents around the world taught him the value of looking everywhere for it.

“We’re an immigrant nation, and those who want to close it off don't understand the competitive, innovative capabilities that come with people that don't look at things the same way — we can create more wealth per capita than anybody else if we continue what has been our strength.”
Latino students have been attaining post-secondary degrees at a higher rate than other population segments for a decade. (LDC)

Perception, Reality and Progress

The LDC conducts perception polls every four years, says Ana Valdez. “In 2012, most Americans thought Latinos were takers; in 2021, most Americans think Latinos are contributors, but they are invisible.”

Schools can help change wrong perceptions by starting with an assumption that Latinos have the same native abilities as other students and treat them as talented individuals who can learn, says Trujillo. Post-secondary education can include programs developed in partnership with industry, such as programs at community colleges that give students 21st-century skills.

It’s Public Policy 1A that if you want your state to grow, you need to grow the economy, says David Hayes Bautista. “All it takes is shifting the priority and understanding how we will all be better off by investing in this population, and it’s not for affirmative action: If you want economic growth, here’s a population that can do it.”
Carl Smith is a senior staff writer for Governing and covers a broad range of issues affecting states and localities. He can be reached at or on Twitter at @governingwriter.
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