U.S. Latinos are drivers of economic growth and a critical resource of resilience
Just a few weeks ago, the Center for Economic Research and Forecasting at California Lutheran University released the 2022 U.S. Latino GDP Report. The report generated national press coverage including by Barron’s, NBC News, CNBC and Yahoo Finance. The report shows that the total economic output of the Latinos living in the United States has grown from $1.7 trillion in 2010 to an astounding $2.8 trillion in 2020. To put this into perspective, if Latinos living in the U.S. were an independent country, their Gross Domestic Product (GDP) would be the fifth largest in the world, larger than the entire economy of countries such as the United Kingdom, France, or India. Even more impressive than its size is the Latino GDP’s extraordinary growth. Since 2010, U.S. Latino GDP has grown 2.6 times faster than non-Latino GDP.
The dramatic growth of Latino GDP is largely the result of Latinos’ hard work and rapid gains in educational attainment. In 2010, Latinos were 4.5% more likely to be working than non-Latinos. That labor force participation (LFP) premium grew every year from 2010 to 2020. Despite being only 19% of U.S. population, Latinos are responsible for 73% of the growth of the U.S. labor force since 2010. In addition, the number of Latinos earning a bachelor’s degree is growing nearly three times faster than non-Latinos.
Related research that we conducted for individual states and metro-areas indicates that Latinos are also a critical driver of the California and Los Angeles economies. The 2018 California Latino GDP is more than $700 billion. If California Latinos were an independent state, their GDP would be the 7th largest state GDP – larger than the entire economy of the state of Ohio. The 2018 Los Angeles Metro Latino GDP is nearly $300 billion, larger than the entire economy of states like Louisiana or Oregon.
Hearing of the extraordinary contribution of California and L.A. Latinos, one might be tempted to assume that Latinos’ impact is concentrated within a narrow geographic area of the country. Our state-level analysis reveals that this impact, in fact, touches every corner of the nation. In percentage terms, the states with the largest growth in Latino population and thus Latino GDP from 2015 to 2020 include Pennsylvania, Idaho and Tennessee.
According to the dominant narrative, Latinos as a demographic group should have been knocked down by the COVID-19 Pandemic. Examining the effect of COVID-19 through the lens of the Latino GDP reveals a very different story. In 2020, in the face of the pandemic, the strength of Latinos was sufficient for the U.S. Latino GDP to jump three spots, beginning the pandemic as the world’s eighth largest GDP and finishing 2020 as the fifth largest.
The performance of Latinos during the pandemic is exemplified by income data. From 2010 to 2020, Latinos enjoyed significantly higher wage and salary income growth than non-Latinos. During those years, Latino real income grew an average of 4.3% per year compared to only 2.1% for non-Latinos. 2020 was exceptional. Despite the extraordinary challenges of the pandemic, Latino real income surged 6.7%. Meanwhile, Non-Latino income shrank by 1.1%
Latino incomes surged due to Latinos’ tremendous work ethic.
In 2019, prior to the onset of COVID-19, Latino labor force participation was a record 6.1% higher than non-Latino. By April 2020, with the onset of government-mandated shutdowns, both Latino and Non-Latino LFP saw sharp declines. Yet, it was evident from the earliest months of the pandemic that Latinos would press through each subsequent wave of disease transmission and the re-imposition of lockdowns. In each case, they returned to work with urgency. In 2020, the Latino labor force participation premium hit a new all-time high, 6.5%.
None of this is to make light of the hardship that Latinos endured during the pandemic. Because of a historic lack of investment in health infrastructure for Latino communities, because of their strong work ethic and unique family structure, Latinos were among the groups hardest hit by COVID-19. This occurred despite Latinos’ superior health outcomes which prevailed prior to the pandemic. Coming out of nowhere, COVID-19 became the number one cause of death for Latinos, while only the number three cause of death nationally. Yet, we find that the economic data published in our report honor the sacrifices made by Latinos and illustrate just how remarkable Latino strength and resilience really are. It highlights just how much the broader U.S. economy benefited from that strength during the pandemic. Latinos have been drivers of economic growth in the U.S. for many years. Latinos held up the U.S. economy during the darkest days of the pandemic, proving to be a critical source of resilience, not just for their own families and communities, but for the U.S. economy as a whole.
Matthew Fienup is Executive Director of the Center for Economic Research and Forecasting at California Lutheran University’s School of Management; Dan Hamilton is Director of Economics at the Center for Economic Research and Forecasting; Gerhard Apfelthaler is Dean of the School of Management at California Lutheran University
The Center for Economic Research and Forecasting will hold its annual Ventura County Economic Forecast at 8:30 a.m. on Feb. 21 at the Scherr Forum Theater in Thousand Oaks.