January 3, 2006
North Carolina's Hispanic immigrants contribute more than $9 billion to the economy, cost state budget a net $102 per Hispanic resident, a new study shows
Raleigh, N.C. -- North Carolina's rapidly growing Hispanic population contributes more than $9 billion to the
state's economy through its purchases, taxes and labor, while costing the state budget a net $102 per Hispanic
resident in health care, education and correctional services, according to a new study by researchers at the
University of North Carolina at Chapel Hill.
If recent migration trends continue, the total economic impact of Hispanic spending in the state could increase
to $18 billion by 2009.
These were among the key findings and conclusions of the first major comprehensive study of the state's Hispanic
population and its economic impact conducted by the Frank Hawkins Kenan Institute of Private Enterprise at
UNC-Chapel Hill for the North Carolina Bankers Association (NCBA), in cooperation with the Mexican Consulate
of Raleigh, N.C. The study assessed the economic impact of the state's growing Hispanic population and identified
potential business opportunities provided by this fast-growing market.
"This study quantifies for the first time the enormous economic contributions made by our state's Hispanic
population, as well as pointing to a wide range of public policy issues and business opportunities to be
explored," said NCBA President and CEO Thad Woodard. "North Carolina policymakers and business leaders now have a
wealth of data and information on which to make decisions about both challenges and opportunities offered by this
increasingly significant segment of our state's population and economy."
Results of the study were released Jan. 3 at the 2006 Economic Forecast Forum sponsored by NCBA and North Carolina
Citizens for Business and Industry.
"Immigrants from Latin America, authorized and unauthorized, are dramatically changing North Carolina's demographic
and economic landscape," reported study authors John D. Kasarda, director of the Kenan Institute, and James H.
Johnson Jr., director of the institute's Urban Investment Strategies Center. Both are professors at UNC's
Kenan-Flagler Business School. "Hispanics live in every one of the state's 100 counties and contribute to all
sectors of the economy."
Among the study's findings:
- North Carolina's Hispanic population totaled 600,913, or 7 percent of the state's total population, in
2004. The average Hispanic household contains 3.7 people (compared to 2.4 people in the average
non-Hispanic household) and earns about $32,000 annually (compared to $45,700 for non-Hispanics).
- Hispanics accounted for 27.5 percent of the state's population growth from 1990 to 2004 and 57 percent of
the total enrollment growth in North Carolina Public Schools between school years 2000-2001
and 2004-2005.
- Hispanics filled one in three new jobs created in North Carolina between 1995 and 2005, with significant
concentrations in the construction industry (29 percent of the labor force).
- North Carolina Hispanics' after-tax income totaled an estimated $8.3 billion in 2004. With about 20
percent of that total sent home to Latin America, saved or used for interest payments, the remaining spending
had a total economic impact of $9.2 billion on the state. Much of that spending occurs in the major
metropolitan areas along the Interstate 40/Interstate 85 corridor, but it also supports businesses in every
part of the state.
- Hispanics annually contribute about $756 million in taxes (direct and indirect) while costing the state budget
about $817 million annually for K-12 education ($467 million), health care ($299 million) and
corrections ($51 million) — for a net cost to the state of about $61 million, or $102 per Hispanic resident.
"The net cost to the state budget must be seen in the broader context of the aggregate benefits Hispanics bring
to the state's economy," researchers said. "Above and beyond their direct and indirect impacts on North Carolina
business revenues, Hispanic workers contribute immensely to the state's economic output and cost competitiveness
in a number of key industries."
For example, without Hispanic participation in the construction industry, economic output of this important sector
would be significantly lower and annual labor costs nearly $1 billion higher.
Looking ahead, researchers concluded, clear opportunities exist to capitalize on the presence of the Hispanic
market, including:
- Tapping this growing consumer market by increasing the availability of goods and services that local businesses
offer Hispanic consumers, particularly in rural areas, where Hispanic purchasing power is only partially tapped
due to the lack of products and services they seek.
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- Supporting the growth of Hispanic-owned businesses, which face many of the same challenges to startup and
growth as do native entrepreneurs plus additional barriers of language, lack of credit histories and limited
financial backing.
- Leveraging the state's growing Hispanic network to increase export trade to Latin America and attract inward
investment by Latin American companies in North Carolina.
For more information, contact the North Carolina Bankers Association at (919) 781-7979 or the Kenan Institute of
Private Enterprise at (919) 962-8201.
The North Carolina Bankers Association provides educational and training programs, media relations, legislative
liaison services, insurance benefits programs, regulatory and compliance assistance and other services to member
financial institutions. It also operates as a wholly owned subsidiary the Community Investment Corporation of
North Carolina, which provides long-term low-cost financing for low- to moderate-income multi-family developments in
the state. For more information, visit www.ncbankers.org.
The Frank Hawkins Kenan Institute of Private Enterprise pursues cutting-edge programming and research in the
areas of economic development, entrepreneurship and globalization. It is part of Kenan-Flagler Business
School at the University of North Carolina at Chapel Hill. For more information,
visit www.kenaninstitute.unc.edu.
Contacts:
Sam Atkins, Community Affairs Coordinator
North Carolina Bankers Association
(919) 781-7979
John D. Kasarda, Director
Frank Hawkins Kenan Institute of Private Enterprise
(919) 962-8201
James H. Johnson Jr., Director
Urban Investment Strategies Center, Kenan Institute of Private Enterprise
(919) 962-8201