Low Wage Hispanic Work Force has $800M Impact
.
Cincinnati, OH (By Lucy May, Business Courier of Cincinnati) September 9, 2010 — Low-wage Hispanic workers have a positive economic impact on the region, contributing millions of dollars in wages and helping to create hundreds of new jobs, according to a new study by the University of Cincinnati’s Applied Economics Research Institute.

In fact, the Hispanic Chamber Cincinnati USA estimates the region’s low-wage Hispanic workers could contribute as much as $800 million to the local economy each year.

That’s on top of the findings of a previous study done in 2006, which concluded that the region’s 31,000 Hispanic residents at the time had an economic impact of $2.3 billion on the local economy.

“People who do hard work that have strong work ethics are a positive impact on the economy,” said Alfonso Cornejo, president of the Hispanic chamber. “It’s not how much money you make an hour. It’s that you work the whole year.”

Cornejo commissioned the study after getting what he called a “yes, but” reaction to the first study. Skeptics charged that the 2006 figures were inflated because that study didn’t take into account the drain on the local economy presented by undocumented workers.

Cornejo said he expected this new study to present a negative result, meaning that he would have to subtract from the original $2.3 billion total. But he was surprised by the study’s findings, which found a positive economic impact.

The study did not distinguish between documented and undocumented workers. It took a hypothetical group of 1,000 low-wage workers who earned from $8 per hour to $12 per hour, working 48 hours a week for the entire year.

The study found that those adult workers would spend nearly $21.5 million in annual income locally.

That spending, in turn, would contribute $2.6 million in tax benefits. An additional 353 jobs would be created as a result of that spending, according to the study, and the workers’ spending would trigger as much as $21.9 million in additional spending locally.

Cornejo’s total of roughly $800 million comes from multiplying that impact by the greater number of Hispanics that live in the region now versus 2006. The Hispanic chamber estimates there are now roughly 70,000 Hispanics living here. New Census figures are not yet available. But Cornejo said the chamber’s figures are based on the number of Mexican restaurants in the region and the number of specialty grocers that caters to Hispanic customers. The region now has 34 such groceries, he said, and each business typically needs between 2,000 and 3,000 customers to support it.

The overall economic impact, determined by combining the results of both studies, could be lower than $3.1 billion if the second study inadvertently duplicates any of the economic impact from the first study, said Benjamin Passty, director of the institute that conducted the study.

Still, that overall total of $3.1 billion would represent about one-thirtieth of the local economy, and Hispanics represent about one-thirtieth of the region’s population, Passty said.

In other words, Cornejo said, the studies show that local Hispanics are pulling their weight.

The study took away 4 percent of total earnings, since other research has concluded that immigrants send an average of 4 percent of their income back to their home countries. It also subtracted contributions to health care plans, although Cornejo acknowledged that most of these low-wage immigrants probably don’t pay in to HMOs.

“We tried to make this study as bullet-proof as possible to have a real number,” he said.

And the findings agree with similar studies done by other university and research groups, Passty said.

“They’re all showing the same idea,” Passty said. “The basic employment relationship is a positive relationship. These workers are productive at their core.”

That should be welcome news for businesses that count on immigrant labor for jobs that others don’t want in such industries as agriculture or janitorial services, Cornejo said.

Still, he doesn’t expect many companies to come forward in support of policies that would loosen restrictions for immigrant employees.

“It’s so politicized,” he said, adding that any company that comes forward makes itself a target for audits. “And the laws are so grey, so vague and so without common sense, I don’t think a company could honestly resist an audit.”