Latinos are becoming key players in the United States economy through their important contributions to several national industrial sectors such as agriculture, construction, business development, and the creation of jobs, among others. In the last few decades, the steady growth of the Latino population has reached close to a 20% of the U.S population, which means that one in five inhabitants of the country are Latino. Mexicans represented 58.3% of the Latino population in 2023, followed by Puerto Ricans (9%) and Cubans (3.9%). Another important characteristic of this ethnic group is a growing trend toward obtaining the U.S. citizenship through naturalization. In 2010, 28.7% of the Latino population were naturalized citizens, reaching 40% in 2021, an increase of 11.3% in only 11 years. Considering the ratio of naturalized Latinos to noncitizen Latinos, in 2010 it was equal to 40.3%, though in 2021 this ratio was equal to 66.6%, a net increase of 26.3%.

Education plays an important role in facilitating higher socioeconomic status. Since 1970 the educational attainment of Latinos, both at the high school and college levels, has been steadily increasing, although it remains among the lowest among racial/ethnic groups in the country. In 1970, Asians had the highest rates of high school graduation with 62.2%, while only 32% of Latinos completed high school, a difference of 30.1%.  At the college level, Asians also had the highest graduation rates with 20.4%, while Latinos had a low rate equal to 4.5%, a net difference 15.9%.

The educational attainment rates for Latinos experienced considerable growth between 1970 and 2023, with high school graduation rates reaching 73.4%, an increase of 41.3%. At the college level, Latinos reached a 20.8% graduate rate, a net growth of 16.3%. Despite considerable growth in their educational attainment rates, Latinos still have the lowest rates among all racial/ethnic groups (see Table 2). It remains imperative that Latinos keep improving their educational attainment rates, which points to a need to develop a support system to facilitate their participation in the education system.

Latino men had the highest labor participation rates among men of all racial groups from 2003 to 2023, a trend projected to continue through 2033. In contrast, Latino women had the lowest labor participation rates in 2003, but they experienced continued growth during the considered period, 2003–2023, and their rate is projected to reach 59.8% in 2033. That will bring their labor participation rate close to that of Black women, who are projected to have the highest participation rates in 2033 (see Table 3).

A report from the New American Economy indicates that Hispanic Americans are filling critical workforce gaps in labor-short industries. Hispanics have a strong commitment to work. Their work ethic makes them an invaluable force in the sectors in which they work, especially those that require substantial physical effort. They are highly involved in several critical U.S. industrial sectors, such as agriculture, construction, and administrative support. During the COVID-19 pandemic many Latinos were essential workers, performing necessary tasks in vital sectors: health, transportation, agriculture, retail, and construction.

Furthermore, the number of workers at Latino-owned businesses (LOBs) has increased by 55% since 2007, compared to 8% job growth among white-owned businesses (State of Latino Entrepreneurship Report). This report also states that the number of Latino-owned employer firms has grown by 35% in the last 10 years. More than 12% of all immigrant workers run their own business, and immigrants are 30.6% more likely to operate their own business than the overall U.S. population (New American Economy Report).

Latino Purchasing Power and Primary Expenditures

According to data from the U.S. Bureau of the Census, close to 50% of Latino households reported owning a house in 2023, while the remaining 50% of households are renters. The percentage of Latinos who own homes has been growing over the past two decades, increasing from 46% in 2000 to 49.1% in 2020.

Housing and childcare are the largest expenditures for Latino households. They accounted for 37% of the budget for Hispanic households in 2020, compared to 15% for food and 18% for transportation. Other expenditures are insurance costs (13%), health care (8%), entertainment (5%), and other expenses that include travel, education, and clothing (4%).

According to 2024 report from the Bureau of Labor Statistics, Latino purchasing power reached $3.4 trillion in 2023, with a total income of $2.5 trillion. It is important to note that both measures grew 2.1 to 2.4 times faster than the corresponding measures for non-Latinos. The BLS report also states that Latinos, when they have disposable income, are more likely to support family members living in the United States and abroad. Among Latinos, 44% report using extra money to help a family member. Some 32% of Latinos report sending money to their families abroad; of that number, more than 66% send up to 30% of their income.

 

Latinos Total Economic Output: 2010–2022

 

The total economic output or gross domestic product (GDP) of Latinos in 2022 was $3.7 trillion, which makes them important contributors to the national economy. More importantly, Latino contributions to the national economy have been steadily increasing, from $1.7 trillion in 2010 to $3.7 trillion in 2022 with a net increase of $2 trillion in only 10 years (see Table 4).

Latinas’ contributions to the national economy have seen notable growth. A Bank of America report states that Latinas at the national level contributed $1.3 billion to the GDP in 2022, which is comparable to the total contribution of the state of Florida. The economic growth of Latinas was almost three times higher than that of non-Latinas between 2010 and 2021.

 

The wealth of Latinos has also been growing; recent publications show a median increase of 47% between 2019 and 2022. As a result, the gap between Latino and non-Latino white households has been narrowing. A report from the Hispanic Wealth Project indicates that Hispanic household wealth has tripled over the past decade. The median Latino household wealth in 2022 was $61,620, which is close to one-fifth of the median White household wealth of $285,010.

 

A report from the Latino Donor Collaborative in partnership with Wells Fargo Bank indicates that the U.S. Latino economy grew to $3.6 trillion in 2022, up from $3.2 trillion the prior year. Another report by Stanford University states, if Latinos were an independent country, they would have the second fastest-growing economy, and their GDP would rank fifth in the world.

The Impact of Hispanic-Owned Businesses on the U.S. Economy

Data from the U.S. Bureau of Labor Statistics show that there are more than 5 million Latino-owned businesses (LOBs) operating in the country, employing more than 3.5 million workers. LOBs contribute over $800 billion per year to the U.S. economy through sales trade (see Table 5). The number of LOBs grew by close to 1 million new businesses from 2018 to 2024. Latino businesses with employees are concentrated in six important industrial sectors: i) construction, ii) accommodation and food services, iii) professional, scientific, and technical services, iv) administrative and support services, v) health care and social assistance, and vi) retail.

A special category of businesses includes those that are family-owned with less than nine employees. The employees are usually family members, since they are “Mom and Pop”-style businesses with their operations mainly managed within the family network. On the other hand, Latino-owned businesses with employees could be of any size and operation at any of the industrial sectors (see Table 6) mentioned above.

Taxes Paid by Latino Households

A study from the New American Economy states that during the past 10 years, Latino households paid an average of $139 billion in federal taxes and $76 billion in state taxes, a total of $215 billion per year. If these figures remain steady, in the next decade the total amount of taxes paid by Latino households could amount to over $2.2 trillion.

A study by the Institute of Taxation and Economic Policy estimated that undocumented immigrants paid $8,889 per person in 2022, resulting in a total of $59.4 billion paid in taxes to the federal government and $37.3 billion paid to state and local governments, with a total tax paid of $96.7 billion in a year and close to $1 trillion in a decade (see Table 7).

The total tax paid by Latino residents and Latino undocumented immigrants reached $288 billion. They paid $184 billion in federal taxes and $104 billion in state and local taxes. A deep analysis shows that the tax contributions of undocumented immigrants without work authorization was equal to $73 billion in 2022. If these immigrants would have a work authorization, their total tax contribution would be equal to $136.9 billion, a 41.6% increase.

Conclusion

In the past five to six decades, Latinos have become important contributors to the United States economy. Their impact is felt in several areas, such as the labor market, business formation, and job creation, and in the amount of taxes they pay at the federal, state, and local levels. Since 1970, the Latino population has experienced a steady and rapid growth in numbers due mainly to a high birth rate among one of the youngest populations in the country and the influx of immigrants from Latin America in the early 2020s. Today Hispanics comprise 19.5% of the total U.S. population. An increasing number of Latinos participate in the market, contributing to demand for many products and services.

Latinos have realized the importance of higher educational levels as a path to better, well-paying jobs with benefits that can lead to higher socioeconomic status. Since the 1970s, Latino males and females have been achieving higher educational attainment levels both at the high school and college levels, which this study shows are very positive and promising for the Latino community.

Latino males have the highest labor participation rates among all racial groups, while Latinas’ participation rates in the labor market keep growing. Both contribute to key industrial sectors such as construction, agriculture, and service, and they are recognized for their hard work and work ethic. Their increasing educational levels and work ethic are contributing in part to the retention of better jobs.

Latinos have created more than 5 million new businesses across the country, creating close to 3.9 million new jobs and generating $800 billion in sales per year. At the national level, Latinos are becoming key players in the consumer market. Their purchasing power in 2023 was equal to $3.4 trillion, while their total income reached $2.54 trillion. These two measures grew between 2.1 to 2.4 times faster than for non-Latinos. Their higher disposable income is allocated mainly to housing, transportation, food, personal insurance/pensions, and health care. Reports from the federal government indicate that their housing ownership rates have been growing in the last decades, from 46% in 2000 to 49.5% in 2023.

Their most important contribution to the national economy is their total economic output or Gross Domestic Product (GDP). It is estimated that in 2022 Latinos’ contribution to the United States GDP was equal to $3.7 trillion, representing a 117.6% increase over the last 12 years.

Finally, another important contribution made by Latinos to the national economy is through the payment of federal, state, and local taxes. During the past 10 years, they have paid an average of $139 billion in federal taxes and $76 billion in state taxes, resulting in a total tax paid equal to $215 billion. It is also important to consider the taxes paid by undocumented immigrants which, according to a study by the Institute of Taxation and Economic Policy, amounted to $45 billion in federal taxes and $28 billion in state and local taxes, for a total of $73 billion. Adding all these tax payments, Latinos in general paid a total of $288 billion in taxes in 2022. Considering these payments remain constant, Latinos are paying close to $3 trillion in a decade.

Lastly it is important to emphasize that the total amount of taxes paid by undocumented immigrants could experience an increase of 41.6% if the federal government provides work authorization to these immigrants. To conclude, undocumented immigrants paid additional taxes to Social Security ($25.7 billion), Medicare ($6.4 billion), and unemployment insurance ($1.6 billion), but in most cases these immigrants do not have access to the benefits that these programs offer.

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