Mainstream media outlets reported recently that United States immigration officials have arrested almost 700 people after a series of raids in the state of Mississippi. The co-ordinated operations targeted workers at seven agricultural processing plants who allegedly did not have proper documentation. Videos and photos showed agents arriving in buses to question and arrest the people. Some children were taken to a local gym after they came home to find their parents gone.
The United States Immigration and Customs Enforcement (ICE) said “approximately 680 removable aliens” had been detained. President Donald Trump announced an immigration crackdown last June, saying “millions of illegal aliens who had found their way into the US” would be removed. According to media reports, the raids took place just hours before President Donald Trump arrived in the majority Latino city of El Paso to mark a mass shooting which left 22 people dead.
Hispanic (Latino) Americans say they are fearful and anxious in the wake of the mass shooting in El Paso, Texas, where a gunman opened fire inside a Walmart and killed 22 people last Saturday, 3 August. Most Latinos now say it’s gotten worse for them in the United States. A racist manifesto posted online before the shooting claimed, “This attack is a response to the Hispanic invasion of Texas.”
The nation’s Latino population has grown sixfold since 1970, reaching an estimated 59.9 million in 2018, 18 percent of the population, according to the United States Census Bureau. Their roots extend far back before the nation’s founding. They have fought in every American war. Their food, their language, and their culture have shaped every aspect of American life, going back centuries. And yet, many are seriously complained that the headlines in the United States largest papers and the cable-news chyrons omitted or downplayed the historic nature of the carnage in El Paso. Instead, they gave top billing to calls for unity by a president who has for years used angry rhetoric that dehumanises and maligns Latinos. In most places where the locals say a community “feels” different from what it did a generation ago, Latinos are the reason: They account for more of the nation’s demographic changes than any other group.
On the economic front, effects of the largest immigration raid in at least a decade are likely to ripple for years through six Mississippi small towns that host poultry plants. Store owners who caters to Latino poultry plant workers fears they will have to close. The CEO of a local bank says the effects are likely to touch every business in her town.
Research Analyst Gonzalo Huertas and Senior Fellow Jacob Funk Kirkegaard, in their recently published working paper, “The Economic Benefits of Latino Immigration: How the Migrant Hispanic Population’s Demographic Characteristics Contribute to United States Growth”, present an incredible diversity of quantitative analysis that proves that “The outsized contribution of Hispanic immigrants to United States economic growth results from the quality of the workforce, not just quantity.” Moreover, in what goes against numerous unfortunate, negative stereotypes “Hispanic arrivals have exceeded contemporary native-born Americans and some other migrant groups in their entrepreneurial capabilities and integration into economically relevant parts of the workforce.”
Given the growth of Hispanics in the United States workforce, they represent significant market opportunities for every type of financial institution, including banks, insurance companies, and asset managers. Unidos US, a non-partisan Latino civil rights and advocacy organization projects that in five years, Hispanics will account for about 20% of the United States workforce and over 30% by 2050.
In ground breaking research that has significant implications for United States policymakers and financial institutions, Peterson Institution for International Economics (PIIE) researchers found that “The Hispanic community in the United States has contributed significantly to United States economic growth in recent decades and will continue to do so over the next 10 to 20 years.”
Huertas’ and Kirkegaard’s research shows that “the increase in Hispanic labor could contribute around 0.21 percentage points to annual real GDP growth in the United States over the next three decades if the Hispanic community catches up to the rest of the country in labor productivity.” By 2025, the increase in employed Hispanic labor could contribute more to US GDP growth than non-Hispanic labor.
Huertas and Kirkegaard also found that Hispanics are the largest demographic group in new opportunity entrepreneurship. “While the US economy has exhibited gradually declining economic dynamism in recent decades, and the share of new firms being created each year has fallen in a trend accelerated after the Great Recession, foreign-born and Hispanic populations have become engines of US entrepreneurship, especially since the Great Recession.” The growth of the Hispanic population and the relatively younger composition of the Hispanic community are key factors driving entrepreneurship developments. Other factors, such as a decline in the historical gap between the Hispanic unemployment rate and the national average, would also contribute positively to this trend.
Unfortunately, Hispanics, often struggle to obtain credit. According to Sabrina Terry, Unidos US Senior Strategist of Economic Policy Project, Policy and Advocacy, “Entrepreneurs still struggle to access credit. They may end up at a predatory lender. If they cannot get a loan, they will end up with a non-bank with a loan with a much higher rate.” Part of the problem she explained, is that many Hispanics’ largest expenses, such as rents and mobile phone payments, often do not appear in a typical consumer credit report. “Financial institutions need to learn about other metrics, alternative data, to better understand the credit worthiness of Latinos and that show that they are responsible and can pay back their debt,” said Terry.
Of great importance not only to Hispanics, but also to the whole country, Huertas and Kirkegaard found that “Hispanic high school graduation rates have risen from just over 60 percent to almost 90 percent in the last 20 years, reaching levels just below the currently historically high US average high school graduation rate of 93 percent.” However, Hispanics “have ground to cover to catch up with the US average in attaining higher education degrees.” Curdumí stated that “A definite common thread is Hispanics’ healthy respect for education regardless of where they come from or whether they are immigrants or born in the United States. This is acquired from parents who are willing to forgo everything as long as the children have access to a good education. We see that this high value on education continues to be passed on to the next generations.”
Other important demographic factors for financial institutions are that Hispanics are having fewer children, which can mean, more disposable income for these individuals. According to PIIE, “even when the recent declining Hispanic fertility and net migration data is taken into account, the community will still account for the majority of the contribution to GDP growth from labor input in the future, a finding that underlines that it is important to continue fostering increased labor productivity among Hispanics. The continued numerical growth of the Hispanic community makes it imperative that their positive trend in educational attainment be sustained and strengthened to include the highest tertiary levels of education. Only then can the Hispanic community reap the full demographic dividend and convergence in wage levels be achieved.”
To be continued ….