Latinos and the Pay Gap

In Texas, they earn 35 percent less than their Anglo counterparts — a disparity that's bigger here than elsewhere. Is it because of education, age, discrimination, or some combination of the above?

In 1996, José became the most popular name for newborn males in the state, reflecting population increases and the inroads Hispanics have made as legitimate contributors to Texas culture. But most Latinos haven't seen the same progress in their bank accounts.

Latinos, who account for more than a third of Texas’ workforce, on average earn about 35 percent less than their white counterparts, according to a report from the Federal Reserve Bank of Dallas. On average, they earn about $11.50 per hour, compared to $17.90 for non-Hispanic whites. The gap is larger here than in the rest of the country: Outside of Texas, Latinos earn $12.42, while their Anglo counterparts earn about $17.55.

Regardless of skill, Latinos were responsible for most of the expansion in the state's labor pool since the mid-1990s and have been a boon to the state's economy. “The Latino population’s increase transformed Texas’ labor force and led to faster economic growth,” the report says. “Latinos accounted for 76 percent of the state’s labor force growth between 1994 and 2008.”

At the same time, the wage gap is credited mainly to Latinos in Texas being less educated, younger, and having a higher rate of unemployment than non-Hispanic whites. “They are younger than the state’s non-Hispanic whites, which suggests fewer years of work experience,” according to the report. “Texas Latinos age 25 and over also have considerably less education.”

The education gap could shrink once the average age of the Latino population increases — with each day lived come more opportunities to learn. But steady dropout rates among Latinos work against that. Forty percent of Latinos age 25 or older didn’t graduate from high school, compared to 5 percent of non-Hispanic whites. Only 11 percent of Latinos in the same category graduated college, while 38 percent of Anglos got diplomas.

Educators say it’s not as easy as playing a simple blame game. Cultural and economic factors sometimes trump the importance of education for Latinos. “Family responsibility has an impact on (dropout rates),” said Dianna Stone, a professor of management at the University of Texas at San Antonio. “People have to quit high school to help their families — especially to help their single mothers.”

The fact that so many blue-collar jobs are filled by Latinos contributes to the size of the pay gap. Some of that is attributable to education. Stone says discrimination also plays a part. “Minorities in our country are segregated into those low-skilled, dead-end jobs,” she said. “You have the construction jobs, service jobs, and gardening jobs that a lot of Mexican Americans (do) and that can in part, not totally, be caused by stereotyping and unfair discrimination.”

Stone said some of her research as an industrial psychologist suggests that Latinos are more prone to discrimination than other minorities, including blacks. A recent study on race relations by the Pew Research Center lends weight to her claim. “Among whites, some 21% say that Hispanics face a lot of discrimination,” the study says. “As a result, Hispanics have not only passed blacks as the nation's biggest minority group, they are also now seen by slightly more Americans as frequent targets of discrimination (23% vs. 18% for African Americans). This was not the case in 2001.”

Geography is another factor: Businesses pay lower wages in border communities, and about a quarter of the state’s Latinos, roughly 2 million people, live along the Texas-Mexico border. According to the Fed's report, “they earn lower wages than Hispanics in the state’s interior, depressing average earnings for Latinos in the state.”

“The bottom line is that when you look at the areas in Texas with the highest concentration of Latinos, South Texas and the border, the gross domestic product and the per capita income of those regions is substantially lower,” said Teofilo Tijernia, executive director of EDCO Ventures, an Austin-based non-profit that works raising the standard of living along the border and in other economically distressed areas. “There is just no way that the enterprises that exist in those communities generate the type of wealth (like the) enterprises that exist in other areas of Texas.”

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