The Latino economic story is two-sided. One end tells the story of contributions, growth, and strength, and the other tells the story of struggles and financial instability.
Latinos Are Making Significant Economic Contributions
The Latino economy in the U.S. is strong and growing, so says the Latino Donor Collaborative, a California-based think tank that focuses on economic issues. It points out that annualized income growth for Latinos has outpaced four times what it is for non-Latinos. The LDC also notes that if the Latino economy in the U.S. were treated as a separate country, its GDP of $3.6 trillion would be the fifth-largest economy in the world: bigger than India, the U.K., or France and just behind the economic powerhouses of the U.S., China, Germany, and Japan.
When it comes to the labor force, Latino workers appear to have everyone beat, accounting for 80% of the U.S.’ growth. According to the U.S. Bureau of Labor Statistics, in 2023, the Latino labor force participation rate was 66.9%, 5.2 percentage points higher than non-Latinos.
The 2024 U.S. Latino GDP Report by the Center for Economic Research and Forecasting and UCLA’s Center for Latino Health and Culture notes that between 2010 and 2023, the U.S. Latino labor force grew nearly eight times faster than the non-Latino labor force. At the same time, Latinos’ real income growth was almost three times greater than that of non-Latinos. While Latinos make up about 19% of the U.S. population, since 2019, they have been responsible for a staggering 41% of the real GDP growth in the U.S.
The economic contributions of Latinos to the U.S. and global economies are undoubtedly critical to the financial benefits hundreds of millions of people experience. However, while they contribute to the economic stability and well-being of others, far too many Latinos are not experiencing that same economic stability and well-being for themselves.
Latinos’ Wealth Gap And Economic Fragility
Research has shown significant wealth differences between Latinos and whites. According to the Federal Reserve, the typical white family is five times wealthier than the typical Latino family.
A key measure of economic well-being is per capita income. According to the most recent U.S. Census Bureau American Community Survey, Latinos have a per capita income of $26,124, the second lowest among all racial/ethnic groups and 43.4% lower than whites.
A recent report by Oxfam notes that 33% of Latino workers earn less than $17 per hour. This means that a third of Latinos in the labor market work 40 hours a week for 52 weeks a year and earn about $35,000 annually. In examining where Latinos are concentrated in the workforce, they make up 17% of the overall workforce but represent 24% of tipped workers. This is important because 51% of tipped workers earn less than $17 per hour. In short, Latinos are earning low wages and disproportionately work in some of the lowest-paid jobs.
Workers And Their Families
Middle-aged Latino Laborer
gn8/Vecteezy
I recently interviewed a laborer in Chicago whose circumstances vividly illustrate the personal economic story of Latinos living in a state of economic instability and teetering on the edge. He did not share his name to protect his family’s privacy.
The worker lives with his partner, brother, sister-in-law, mother, and four nieces and nephews in a home four of them purchased together. Four adults are employed full-time, and their annual household income is $131,000. This means that, on average, each worker earns less than $33,000 a year.
When asked how he and his family could buy and maintain a house, he said, “It is good as long as the four of us keep working full-time. If one of us loses our job or has hours cut, we would lose the house.”
He explained that they put a little money away to pay for things like materials for a new roof, which he and his brother installed. He says they can go out to eat, “but nowhere fancy, two or three times a year. In the past two years, we have gone to a couple of concerts, but not expensive ones.”
The indicators of owning and maintaining a home and a yearly household income of $131,000 tell a surface story of economic security and a narrowing Latino wealth gap. But living paycheck to paycheck, with no single worker or even two workers earning enough to own or maintain a property, and being one job layoff away from losing everything, is not economic stability, nor is it evidence of a narrowing wealth gap. Instead, it vividly illustrates economic fragility and the wealth gap.
Closing The Latino Wealth Gap
Policies and programs to close the Latino wealth gap must support and bolster Latinos’ continued significant economic contributions to the overall economy. At the same time, they must address the economic fragility that far too many Latinos experience. These include aligning the minimum wage with actual housing, transportation, and food costs and ensuring an annual cost-of-living adjustment to wages. In addition, a set of policies needs to be targeted at significantly increasing the supply of affordable housing.
The Latino community’s size and economic contributions mean it will shape the U.S. economy for decades. Mitigating the Latino wealth gap, particularly their economically fragile circumstances, is necessary for their and the nation’s economic futures to be prosperous.