Hispanics increase spending but also can hurt wages

Hispanics fill 1 in 3 new jobs in North Carolina and pump about $9 billion into the state's economy as consumers and taxpayers, a new study by researchers at UNC Chapel Hill reports.

But the study also shows that the influx of Hispanics to the state has held wages down by $1.9 billion.

The low wages help contain business labor costs and ultimately keep consumer prices down, the study says. For instance, the report estimates Hispanics provide $980 million in labor-cost savings to the state's construction industry alone.

But many Hispanic workers are illegal, and labor groups argue that those workers displace or hold down the wages of low-skilled American workers. That fact is conceded by John D. Kasarda, who co-wrote the report with James H. Johnson Jr., a fellow professor at UNC-Chapel Hill.

"There are obviously displacement costs and not everybody is a winner," Kasarda said. "But on the net, we think it's quite a positive effect on North Carolina's economy."

The study, commissioned by the N.C. Bankers Association and the Mexican Consulate of Raleigh, is billed as the first comprehensive attempt to gauge the impact of the Hispanic population on the state's economy. Results were released Tuesday at an economic forecast conference in Durham sponsored by the bankers association and N.C. Citizens for Business and Industry.

While the study did little to compare North Carolina Hispanics with other ethnic groups in the state or with Hispanics in other states, it did set a benchmark for future research.

"North Carolina policy-makers and business leaders now have a wealth of data and information on which to make decisions about both challenges and opportunities offered by this increasingly significant segment of our state's population and economy," said Thad Woodard, president and CEO of the bankers association.

Backers of the study hope it will help identify Hispanic-related business opportunities and influence public policy regarding legal and illegal Hispanic workers.

The study estimates the state's population of Hispanic residents has jumped roughly a third since 2000 to about 600,000 -- or 7 percent of the state's total population. About 45 percent of Hispanics in North Carolina are living in the United States illegally, the researchers say.

The study, which took almost three years, comes amid debate about immigration and border-control policies that could affect the ability of millions of immigrants to work. President Bush has said he wants a guest worker program that would allow undocumented immigrants to stay in the country temporarily to fill jobs not wanted by Americans.

Hispanics' contribution from spending and taxpaying alone was nearly 2.5 percent of the state's entire economic output, which factors in a much broader swath of activity.

After considering taxes paid by Hispanics, the study also estimates that state taxpayers spend $102 per Hispanic resident in education, health care and corrections bills. The study did not provide comparative data with other ethnic groups but Kasarda said that cost should be viewed in light of their contribution to the cost competitiveness of the state.

More importantly, Kasarda said, Hispanics spend billions of dollars in the state and increasingly contribute to the economy as consumers, not just low-wage workers.

"These workers might not buy $60,000 BMW M3s ... but they do buy $600 camcorders and $500 television sets," Kasarda said. "They have a major, major impact on this state, its businesses and its revenues."

Their expanding household incomes make Hispanics an increasingly attractive consumer and small business market.

"Hispanic workers are here, their families are in markets we're interested in, and we have a service they need," said Ken Thompson, president and CEO of Wachovia Bank, who attended Tuesday's forum.

"The numbers on their migration to the U.S. and on their ability to bootstrap themselves up the economic spectrum are staggering," Thompson added. "I expect them to become more, not less, important to all of our markets."

While North Carolina lost 340,000 manufacturing jobs to foreign competition in the past decade, it added 17,000 Hispanic manufacturing workers, many illegal workers in the states dying textile industry -- a sign local industries rely on the population to survive, Kasarda said.

Still, others see displacement of American workers.

"I'm not in favor of undocumented workers," said Federico C. van Gelderen, head of North Carolina business development for Latin television network Univision. "But this population is a reality in our state and this study gives us the hard data we need to have a productive discussion. It also shows people other than undocumented workers are benefitting."