The Silent Revolution in America's State Economies

Latino workers are quietly transforming economies across the U.S.
Financial & Economics
3 mins
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In Brief:

  • Latino populations have grown substantially in states across the country, bringing increased economic contributions.
  • Texas, California, Florida, and New York have seen massive expansions of their Latino economies.
  • However, some smaller states like South Dakota have experienced even faster growth rates recently.
  • Businesses must adapt to capitalize on this demographic shift in their customer base.

The New Economic Powerhouses Within U.S. States

Over the past decade, the composition of state economies across America has undergone a dramatic change. While coastal powerhouses like California, New York, and Florida have remained dominant forces, a silent revolution has also been taking place further inland. Fueled by surging Latino populations, states like Texas, Georgia, and even South Dakota have seen their economies transform seemingly overnight.

For businesses operating in these areas, failing to recognize and adapt to this demographic shift risks irrelevance. However, those that successfully tailor their products and services to this evolving consumer base stand to profit enormously. As the Latino workforce integrates further into the socioeconomic fabric of more states, understanding the nuances between these populations will become a competitive necessity.

The Lone Star Shining Bright

With a gross domestic product of $1.9 trillion, Texas would have the world's 9th largest economy if it were an independent nation. The state has successfully diversified its economy away from oil, with thriving industries today in technology, finance, manufacturing, healthcare, construction, and agriculture. However, the silent engine that has powered much of this growth is the state's booming Latino population.

Numbering over 11 million and accounting for 39% of the state's population, Latinos contributed a staggering $166 billion to Texas' economy from 2011-2021. This amounts to 38.9% of the state's total economic expansion during the decade. On an annualized basis, Texas' Latino economy grew at 4.5% per year after adjusting for inflation. This is over double the pace of growth in the U.S. as a whole.

Businesses in Texas have benefited from this demographic tailwind, but also face several unique challenges. With Mexico bordering the state, over one-third of Texas' Latinos are immigrants. This means Spanish will often be their first language, and cultural sensitivities around assimilation may exist. However, their children who grow up in Texas public schools will likely assimilate into American culture at large.

California Dreaming of Continued Prosperity

As the largest state economy in the U.S., California is a primary driver of the nation's growth. Its $3.4 trillion GDP would be the 5th largest in the world if California was a country. The state has successfully built globally leading positions in technology, entertainment, agriculture, aerospace, tourism, logistics, and more. However, among the pillars supporting California's economic prowess, the contribution of its Latino population cannot be overstated.

Now numbering over 15 million and making up 39% of the state's population, Latinos contributed an incredible $250 billion to California's economy from 2011-2021. This amounts to 27.1% of the state's total GDI growth during the period. On an annualized basis, California's Latino economy grew at 4.7% per year after adjusting for inflation. The sheer scale of this $682 billion Latino economy alone makes it comparable to the entire country of Switzerland in size.

For businesses in California, Spanish language accommodation and cultural awareness will be paramount in connecting with this cohort. Fortunately, the state also boasts a highly diverse Latino population, with origins ranging from Mexico and Central America to the Caribbean and South America. This provides a rich tapestry for companies to engage different cultural backgrounds.

The Sunshine State's Overlooked Driver

With no state income tax and a subtropical climate, Florida has long been a retirement haven and tourist destination. But its $1.1 trillion economy also boasts strong healthcare, construction, logistics, and agricultural industries. Underpinning the rise across these sectors has been a surging Latino population that now numbers over 5 million and comprises 26% of the state's population.

From 2011-2021, Florida's Latinos contributed an impressive $104 billion to the state's economic expansion. This amounted to 30.6% of its total GDI growth for the period. On an annualized basis, the state's Latino economy grew at 5.9% per year after adjusting for inflation. Already totaling $240 billion in size, a growth rate nearly double the national average will see Florida's Latino economy continue to expand rapidly.

For businesses selling to Florida's Latinos, understanding the different origins is critical. Cuban Americans have a distinct cultural identity from Puerto Ricans or immigrants from Central and South America. Companies that cast too wide a net risk missing important sensibilities.

The Empire State's Untold Story

As the financial capital of the world and home to over 8 million residents, New York holds major global significance. With a GDP of $1.8 trillion, it accounts for 9% of total U.S. economic output. The state's diverse industries range from financial services and real estate to tech, healthcare, education, transportation, and more. Underpinning this large and complex economy has been a growing Latino population.

Numbering over 3.5 million and making up 19% of the state's residents, New York's Latinos contributed $51.5 billion to its economy from 2011 to 2021. This amounted to 13.2% of the state's GDI expansion during this period. On an annualized basis, New York's Latino economy grew by 3.3% per year after adjusting for inflation. With the overall Latino economy already totaling $186 billion, even growth rates below the national average yield substantial economic impacts.

Operating in America's largest city provides unique opportunities to connect with Latinos, but also challenges in properly segmenting this diverse demographic. Companies must distinguish between longtime residents and recent immigrants when deploying targeted marketing campaigns.

The Winds of Change

While the raw scale of Latino economic contributions in megastates like California and Texas is staggering, even more eye-opening growth is happening elsewhere. States like Georgia, Washington, Ohio, and Pennsylvania have seen their Latino populations transform seemingly overnight. But it is within America's heartland that this silent revolution is making itself felt most dramatically.

South Dakota provides a prime example of this phenomenon. With under 900,000 residents, it is far from an economic powerhouse at first glance. However, its Latino population has recently exploded to over 37,000 and 5% of state residents. From 2011-2021, South Dakota's Latino economy soared at an astounding 11.8% annual growth rate after adjusting for inflation. This far outpaces even rapidly growing Southeast Asian economies.

For companies operating in South Dakota and similar states, this presents an enormous opportunity if the demographic shift is recognized and accounted for. Hiring Spanish-speaking staff, creating culturally relevant marketing, and tailoring products and services accordingly can unlock massive new markets. Conversely, failure to adapt risks losing relevance amidst changing consumer preferences.

The message for businesses across the country is clear. While past economic prowess provides no assurances for future growth, shifting demographics can rapidly transform a state's prospects. The silent revolution occurring across our Latino populations represents one of the greatest economic opportunities in generations. Businesses that open their eyes to it stand to profit handsomely. Those that keep them shut risk being left behind.

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