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Entertainment THE ECONOMIST: The importance of the Hispanic workforce

THE ECONOMIST: The importance of the Hispanic workforce

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More than 40 million people in the United States identify themselves as Hispanic or Latino, up from fewer than 28 million in 2003 according to data from the U.S. Bureau of Labor Statistics (BLS). Hispanics may be of any race and include Mexicans, Puerto Ricans, Cubans, Central and South Americans and others.

Hispanics are a large and growing component of the workforce, a pattern that will become more pronounced in the future. Since 2000, Hispanics (and other Latinos) accounted for almost two-thirds of the increase in the workforce (10.1 million out of a total gain of 16.6 million over the period). The pattern was not at all prevalent in the past; if you add in prior decades and look at a longer period from 1973 to 2016, Hispanics made up only one-third of the total labor force gain.

Hispanics have a higher labor force participation rate (nearly 66 percent) than non-Hispanics (just over 62 percent). Part of the explanation for this divergence is that the US Hispanic population is younger, with more people in key working age groups. However, even in the prime age range of 25-54, Hispanic men were more likely to participate in the labor force than were non-Hispanic men (nearly 91 percent compared with 88 percent). Non-Hispanic men had higher levels of labor force participation in the teenage years (36 percent compared with 32 percent), although labor force participation rates were about the same for men age 65 and older.

For women, however, the situation is quite different, with cultural and social norms leading to lower rates of participation for Hispanic women. In fact, the proportion of Hispanic women in the labor force (almost 56 percent in 2016) was about 20 percentage points below that of Hispanic men. While there is also a gender disparity in participation for non-Hispanics, it is much smaller (less than 11 percentage points). In addition, Hispanic women of all age groups have lower labor force participation rates than non-Hispanic women. For example, the difference in labor force participation rates between Hispanic and non-Hispanic women ages 25 to 54 was more than nine percentage points. These variations are relevant to anticipating the size of the workforce in the future.

The types of jobs held vary significantly between Hispanics and non-Hispanics. Employed Hispanics were much less likely to work in management, professional and related occupations; only about 22 percent of Hispanics were employed in these occupations, compared with 43 percent of non-Hispanics. Hispanics and non-Hispanics were about equally likely to work in sales and office occupations, while Hispanics were more likely to work in service occupations (particularly building and grounds cleaning and maintenance) and construction and extraction occupations than non-Hispanics. Part of the reason for differences in occupations is education level.

Hispanics in the workforce have made some strides in educational attainment, but more progress is needed. The proportion of Hispanics in the labor force who are high school graduates but have no college experience has remained at about 30 percent for decades. However, those with less than a high school diploma now make up 26 percent of the Hispanic labor force, down substantially from nearly 39 percent in 1992. The share of the labor force with a bachelor’s degree or more has almost doubled and now stands at about 20 percent.

Even with this improvement, educational attainment among Hispanics still lags other groups. In Texas, nearly 82 percent of the population age 25 and older has completed high school (93 percent of non-Hispanic whites), compared with 62 percent of Hispanics. In higher education, the disparity among groups is even more pronounced. As of 2015, 36 percent of non-Hispanic whites 25 and older in Texas had completed a bachelor’s degree or higher, compared with less than 13 percent of Hispanics.

Because the population of Texas is becoming increasingly Hispanic, particularly in younger age groups, improving overall educational attainment will depend on adding to the numbers of Hispanic youth who attend college. A major challenge is college affordability. While about half of the current school-age population in Texas is Hispanic, Hispanics hold less than 5 percent of household wealth in the state. The most common reason for quitting college or not attending in the first place is financial strain, and it is crucial to provide the resources to facilitate attendance among all groups. Otherwise, educational attainment in the state will trend downward and overall economic performance, opportunity and standards of living will be eroded over time.

Hispanics will become an ever more essential aspect of the United States and Texas workforce, accounting for most of the growth in the labor force in the future. In fact, while the non-Hispanic white population of Texas will remain about the same through 2050, the Hispanic population will more than double. This young and plentiful workforce can be a significant advantage, particularly if resources are provided to enhance and encourage education at all levels.

M. Ray Perryman is president and CEO of The Perryman Group (www.perrymangroup.com). He also is Institute Distinguished Professor of Economic Theory and Method at the International Institute for Advanced Studies.


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