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The Economic Urgency of Latino Higher Education

As published in the San Diego Daily Transcript

by Vince Vasquez

Wednesday, July 8, 2009

Two key papers released last month highlight how shifting demographics will place Latinos front and center in the discussion about our state and nation’s economic future. Preparing for the challenges ahead will require not only that Latino teens hit the books, but will also require their parents to advance their own education.

The first of these reports, “50+ Hispanic Workers” from the American Association of Retired Persons (AARP) revealed unique characteristics of the older Latino workforce. AARP found that Hispanics, on the whole, work longer hours, miss fewer work days and have higher job satisfaction than their non-Latino peers. However, 58% of Latinos work in mostly physically-demanding, low skilled occupations such as construction trades, manufacturing and the service sector, and will find it physically difficult to continue working into their 60s. Few have attained management or professional positions in their later years, resulting in lower earnings potential and a notable retirement security gap.

Older Hispanic workers also receive less wages and benefits than their non-Hispanic counterparts. The median annual earnings for senior Latino males in the workforce was approximately $30,400, far less than the $50,600 and $36,400 made by Caucasian and African-American men, respectively. Fewer than half (49%) receive healthcare benefits, and only 38% had access to an employer-sponsored retirement plan, while more than 60% of Caucasian and African-American workers had access to both. Over a lifetime, this allows for limited opportunities to accumulate wealth; a previous 2007 study found that older Hispanics have a $100,000 shortfall in net worth compared to non-Hispanics.

A lifetime of low pay and benefits also results in the absence of a retirement security net for Hispanic households, leaving them unnecessarily vulnerable to involuntary job separations via layoffs, health problems, and family needs. In fact, the AARP report found that Hispanics were the only subset of older American workers who were mostly separated from their job due to layoffs or medical reasons (32% and 22%, respectively) – only about a third (35%) actually left the workplace to retire. This stands in strong contrast to the majority of American seniors, of which 47% leave to retire willingly, while 40% received pink slips or had health issues. The reasons behind the Latino retirement security gap are wide-ranging and complex, but some important patterns do emerge that indicate the advanced skill sets lacking among Latino immigrants have economic consequences.

The AARP study found a strong correlation between non-U.S. origins, low education levels and poor English skills, revealing that economic equality is elusive among the 57% of older Latino workers who are foreign-born, who principally arrive to America lacking high school diplomas and little mastery of the English language. Overall, 41% of senior Hispanics do not hold a high school diploma, and only 12% earned a Bachelor’s degree, all to ruinous results; as the report highlighted, “lifetime earnings are about 20% higher for high school graduates than those who did not complete high school and about twice as high for college graduated as high school dropouts.”

Most troubling is that lower educational achievement is persisting past first generation immigration. A June 2009 report from the Public Policy Institute of California (PPIC) found that 1 out of 3 Latinos fail to graduate high school while among the overall population the drop out rate is only 25%. With Latinos comprising 49% of all students enrolled in the state’s K-12 system, addressing the drop out epidemic is critical to our state’s economic future. As the PPIC authors noted, absent better graduation rates, there “will not be enough young adults with a college education to meet the increase demand for highly educated workers after the baby boomers retire.”

Dealing with this challenge does not just require policy changes in the classroom. While a sensitive subject, the use of Spanish at home is also having a detrimental impact on Latino achievement. According to a 2004 paper, “What Holds Back the Second Generation? The Intergenerational Transmission of Language Human Capital Among Immigrants” by Dr. Hoyt Bleakley and Dr. Aimee Chin, “parental English-language skills can account for 60% of the difference in dropout rates between non-Hispanic whites and U.S.-born Hispanic children of immigrants.” AARP researchers found that the 20% of older U.S. born Latino workers who didn’t complete high school also did not speak English well. For the next generation to succeed, foreign-born Latino parents must do their part and attain greater fluency in English.

Low-skill work dries up faster than other occupations; according to May 2009 data from the U.S. Bureau of Labor Statistics, the unemployment rate of Americans lacking a high school diploma was more than three times greater than the rate for those with Bachelor’s degrees and advanced degrees. The future for California Latinos will be through academic achievement and English fluency. Though the message is often repeated, the maxim is never worn - with higher education come higher earnings and greater job security, particularly in these difficult economic times.