The Peterson Institute for International Economics (PIIE) corroborated in a study a trend that is showing since before Donald Trump assumed the presidency of the United States: the Hispanic community has contributed and will continue to contribute “significantly”, over the next 10 to 20 years, to the economic growth of the country, to the point of surpassing the non-Hispanic population.
The study “The Economic Benefits of Latino Immigration: How the Migrant Hispanic Population’s Demographic Characteristics Contribute to U.S. Growth” estimates that the increase in the Latino labor force could contribute 0.21% to the annual Gross Domestic Product over the next three decades, “if the Hispanic community catches up on labor productivity”. “By 2025, the increase in employed Hispanic labor could contribute more to US GDP growth than non-Hispanic labor.”
“The outsized contribution of Hispanic immigrants to US economic growth also results from the quality of the workforce, not just quantity,” add the researchers, quoted by Forbes.
According to the U.S. Department of Labor’s Bureau of Labor Statistics, Hispanics are the second labor force, right after the white population: that is 17.3% of the people employed in the country.
On the other hand, data from the civil organization Unidos US show that Hispanics will represent more than 75% of the labor force in the next eight years. By 2024, one in five workers will be Latino.
These indicators are due to several factors, mainly the demographics, according to the PIIE research: Latinos are the largest and youngest minority in the United States, their share of the nation’s labor force is growing, they have higher fertility rates, and the net immigration data is changing.
“A decline in the historical gap between the Hispanic unemployment rate and the national average, would also contribute positively to this trend,” points out the study carried out by analysts Gonzalo Huertas and Jacob Funk Kirkegaard.
“We do not expect Hispanic LFPR [labor force participation rates] to drop all the way to the average US level (…), but even if it did, we would still expect Hispanics to contribute close to half of the growth in employed labor in the United States by 2048,” the study concludes.
The work paper mentions that Hispanic business leadership has grown, particularly since the Great Recession of 2008, which has made them, along with another foreign population, “the engines of U.S. entrepreneurship”. For the past two years, this has been ratio: one in five companies are foreign-born-owned.
Mayra Rodriguez, the author of the Forbes’ article, spoke with financial advisors who confirmed there has been a greater demand for wealth management services from Hispanic professionals and entrepreneurs. ” They have the same aspirations as the rest of the population and they need the same sophisticated financial planning to manage, conserve and grow their wealth.”
Huertas and Funk Kirkegaard’s findings on demographics show that Hispanic immigration, particularly from Mexico, has declined compared to other groups. “The data suggests that in the United States the ‘Hispanic peak of immigration’ has already passed, “,” while Asia and Africa are becoming more important sources of migrants to the United States.” Because of this, and the declining fertility rate in this community, the researchers say the Latino population will be smaller than projected by the U.S. Census: 71.5 million instead of 77.5 million by 2030, and 103 million instead of 119 million by 2060. In fact, the Census has already lowered its own projections.
On the other hand, Huertas and Funk Kirkegaard found that the high school graduation rate for Hispanic youth has risen from 60% to 90% over the last 20 years, “just below the national rate”, which is 93%. Still, they warn, “Hispanics also have ground to cover to catch up with the US average in attaining higher education degrees.”
On the other hand, the Forbes piece states, “higher levels of Hispanic opportunity-driven entrepreneurship than among the rest of the US population, emphasizes the importance in securing the community full access to financing and other business support crucial to grow start-up businesses to scale.”
The author of the article adds that, according to the study, the life expectancy of Latinos is higher than other demographic groups, which would increase the demand for more financial services such as retirement plans and insurances.