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Getting to the Bottom of Texas’ Latino Pay Gap

January 23, 2010

By Pia Orrenius, Madeline Zavodny and Emily Kerr

Among Latinos, the U.S. born make up a majority in Texas but a minority in the rest of the country.[1] Because natives typically earn more than immigrants, a state with a large, established population of U.S.-born Latinos might be expected to have relatively high Latino wages.

That’s not the case in Texas. The Latino wage gap—the difference between the wages of Latinos and non-Hispanic whites—is significantly larger in Texas than in the rest of the nation.

What drives the gap in Texas? To find out, we look at Latinos’ recent contributions to the state’s labor force and trends in their wages in the state and nation. Then we consider a host of factors that may be keeping Latino wages relatively low in our region.

Key among these factors is education. Texas Latinos have fewer years of schooling than non-Hispanic whites in Texas and Latinos living in other parts of the U.S. This poses a critical challenge as the Texas economy moves forward—improving the educational attainment of an increasingly significant segment of its population.

The Latino Workforce
Texas is home to 8.9 million Latinos—second only to California among the states. Texas’ Latino population more than doubled between 1990 and 2008, increasing faster than any other major demographic group.

This rapid growth partly reflects international and domestic migration. The newcomers are largely attracted by Texas’ strong economy. State employment has increased an average of 2.3 percent a year since 1990, about a percentage point faster than in the nation.[2] A relatively low cost of living is another pull factor. Housing costs are much lower in Texas than in other large states, both in absolute terms and relative to income.

A high fertility rate also contributes to the growing Latino population. In 1996, José replaced Michael and Christopher as Texas’ most popular male baby name, and it has remained on top ever since, according to the Social Security Administration. Texas stands as the only state to have a predominantly Hispanic baby name ranked No. 1; no Latino baby names made it into the U.S. top 25 in 2008.[3]

The Latino population’s increase has transformed Texas’ labor force and led to faster economic growth. Latinos accounted for 76 percent of the state’s labor force growth between 1994 and 2008.

We can look at Latino wages and the makeup of the labor force through the Census Bureau’s Current Population Survey (CPS), a large-scale monthly poll of about 50,000 U.S. households.[4] It yields a wealth of individual-level data on wages, employment, household composition and demographic characteristics. Individuals identify themselves as being of Hispanic origin or descent. The CPS has included a question on country of birth since 1994.

The Latino share of the Texas labor force rose from 27 percent in 1994 to more than 38 percent in 2009 (Chart 1). In the rest of the country, Latinos were 8 percent of the labor force in 1994 and 12 percent in 2009.

One Comment leave one →
  1. February 12, 2010 12:38 am

    This is very interesting. I wonder if racial/ethnic discrimination is partly to blame, though I cannot see this being the sole factor. There has to be more to it.. What do Latinos in Texas lack that Latinos in other states have.

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