The Impact of the Non-Native Hispanic Community
On the Economy of Clark County (Nevada)




Mary Riddel, Ph.D.
R. Keith Schwer, Ph.D.
February 2003






In collaboration with:

Reynaldo L. Martinez Institute for Research and Leadership, Las Vegas, Nevada
Univision – Las Vegas, Nevada
Center for Business and Economic Research of
The University of Nevada Las Vegas
The Mexican Consulate – Las Vegas, Nevada




Partial funding provided by Harrah’s, Las Vegas, Nevada
 

Executive Summary

This study was undertaken through a collaborative effort of several sectors of the Nevada community. These included business, government and non profit and were Univision (a communications company serving Clark County, the Mexican Consulate providing for the needs and services of Mexican nationals in Nevada, the Reynaldo L. Martinez Institute for Research and Leadership, and the Center for Business research at UNLV. This study is reflective of the need for better information by public and private entities working together to provide such information to the general public.
Many pundits including television commentators, talk show hosts, correspondents, government officials, political office holders and those seeking political office discuss weekly the impact of immigrants-particularly Latino immigrants on the economy and society of the United States. Often these comments have little foundation in fact or a basis in any studies of the real impact of this population. Those studies that have been undertaken have focused either on other areas of the United States or are very general in their scope. This study hopes to provide concrete and specific information on the actual impact of non native Hispanics (Latinos) in Clark County to serve as foundation for future policy initiatives and informed commentary and decisions.
The 2000 Census of Population estimated that 22 percent of the population of Clark County considered themselves of Hispanic descent. Of those, almost 80 percent are recent immigrants to the United States. These recent immigrants work in a variety of fields throughout Clark County and their spending, undoubtedly, has a large and measurable impact on the economy of Clark County and tax collections at the federal, state, and local level. The purpose of this study is to estimate the economic impact, in terms of employment, output, and tax revenues of the non-native Hispanic residents of Clark County.
Using Census data and data from an in-person survey of over 600 non-native Hispanics in the county, information was compiled about employment, wages, household income, age, and other demographic variables. According to the 2000 Census, there are 156,083 non-native Hispanic residents over 18 in Clark County. Using the survey results, we estimate that annual wages for non-native-born Hispanics in Clark County total $2,619,547,511. After feeding this and other data into the Implan economic impact model, we estimate that the total value of the output impact (both directly and indirectly) attributable to the non-native Hispanic community is over $15.6 billion. Industries that are particularly sustained are services ($5.3 billion), construction ($4.7 billion), and retail and wholesale trade ($3 billion). For an initial spending impact of just over $10 billion, output multiplier of the non-native Hispanic population is 1.55.
Direct and indirect employment impacts of the non-native Hispanic population are large as well. The industry most affected by the non-native Hispanic presence is services, where 81,287 nonnative Hispanics are either directly or indirectly attributable to nonnative Hispanic residents. Other important industries are retail and wholesale trade, accounting for 47,883 additional jobs, and the construction sector, accounting for another 47,853 jobs. The total employment impact is 204,885, accounting for over one-fourth of the total employment in Clark County. With 204,885 jobs created from an initial impact of 131,444 implies an employment multiplier of 1.6. This means that every job filled by a non-native Hispanic helps create 0.6 additional jobs in the Clark County economy.
The significant output and employment impacts resulting from the earning and spending of non-native Hispanics mean that state and local revenues reap benefits. In a state such as Nevada where there is no income tax and where budgets are very dependent on sales taxes and direct purchase taxes, the impact of Hispanics in adding to state revenues is very significant. State and local government budgets are also winners. Revenues are spilt between many sources. The main public beneficiaries of the spending are the sales and use taxes ($270 million), property taxes ($182 million), and gaming revenue ($103 million). Summing these large items with the list of smaller revenue sources indicates that state and local budgets are enriched by $829 million arising from the direct, indirect, and induced production of non-native Hispanics.



I. Introduction
The 2000 Census estimated that 22 percent of the population of Clark County consider themselves of Hispanic descent. Of those, almost 80 percent are immigrants to the United States. These recent immigrants work in a variety of fields throughout Clark County and their spending, undoubtedly, has a large and measurable impact on the economy of Clark County and tax collections at the federal, state, and local level. Despite the importance of the non-native Hispanic community to the economy of southern Nevada, there are no recent studies that examine the economic impacts, in terms of output employment, and contribution to tax revenues of this diverse group.
This report presents an economic portrait of the non-native Hispanic population in Clark County and estimates their total economic impact on Clark County. Using data from an in-person survey of over 600 non-native Hispanics in the county, we question respondents about their employment, wages, household income, age, and other demographic variables. Using these data and the economic impact model Implan, we are able to estimate the total economic impact of immigrant Hispanics in Clark County.
II. Survey Results and Model Assumptions
To estimate the total economic impact of Hispanic immigrants on the economy of southern Nevada, it is necessary to have key information relating to their income and spending patterns. To obtain this information, the Center for Business and Economic Research, in conjunction with the Reynaldo L. Martinez Institute for Research and Leadership, designed a 21-question survey, administered in Spanish and English, that queried non-native Hispanic residents of Clark County about their employment, wages, spending habits, and household characteristics. The survey also contained questions about English fluency, age, education level, and ownership of an automobile or home. We also asked respondents to report any abuse they felt they may have suffered, in general terms, because of their Hispanic origin.
The in-person survey was administered at a variety of local sites by the Reynaldo L Martinez Institute for Leadership and Research including recreation centers, neighborhoods, and the 2002 Cinco de Mayo celebration in Lorenzi Park. Surveyors were asked to only question Spanish-speaking Clark County residents born outside of the U.S. In all, 605 people were surveyed. Table 1 gives a breakdown of their country of origin. Almost three-fourths of the respondents were born in Mexico. The Central American countries, Guatemala and Honduras, accounted for another 8 percent of those surveyed and the remaining came from other Central and South American countries.
The data revealed that many of those surveyed lacked advanced English-language skills although some English proficiency was demonstrated (see Table 2). Of those surveyed, 21 percent could not speak, read, or understand English. About half of the respondents reported they could understand English but not speak it. Thirteen percent were conversation fluent but lacked reading skills, whereas the remaining 17 percent were fluent in reading, writing, and conversation.
Table 3 gives the distribution of education for the survey respondents. The education level of the respondents was limited. Half of the respondents have not finished high school and 20 percent have less than a 6th grade education. Twenty-nine percent of females and 32 percent of males have completed high school. About 7 percent have completed college degrees.
Table 4 gives personal consumption and household characteristics of the sample respondents. Fifty-eight percent of the respondents are married. According to the survey, they are less likely to own their own homes than the average Clark County resident. The 2000 Census revealed that over 59.1 percent of Clark County households own their own home, whereas only 26.4 percent of those surveyed could make that claim. Fifty-nine percent own an automobile and 52 percent report they have a driver’s license.
Incomes for the group were also below average, in part, because of low wages in the occupations were they found employment. Table 5 gives a breakdown of employment for the group by industry and Table 6 provides the breakdown for females and males, respectively. The dominant industries for female Hispanics are non-hotel services (24.6 percent) and hotel services (13.8 percent). This percentage suggests a higher percent of hotel employment for female Hispanics than males. Wholesale and retail trade account for another 8.5 percent of women employed. Men are primarily employed by the construction sector (34.3 percent) and the hotel sector (22.4 percent). Nonhotel services and landscape/gardening also employ significant percentages of Hispanic males, accounting for 9.7 and 5.2 percent, respectively. Notably, the reported unemployment rate, at 1.5 percent, for men is very low. In contrast, 39.2 percent of women reported they were unemployed. This figure may be somewhat misleading because we did not have a specific category available for homemaker. Some of the women that were categorized as “unemployed” may not be in the labor market and, as such, do not fit the official definition of unemployed.
Table 7 gives the income distribution of the survey respondents. At less than $35,000, the median household income is well below the median household income for all households in Clark County of $44,616. This is due, at least in part, to the predominance of employment in relatively low-wage service sectors. However, the respondent wages tended to be below the mean wage for the industry $30,709 annually. Table 8 compares annual wages, by industry, as reported by the survey respondents and the industry average wage for Clark County. Hispanics in the survey earned considerably less in almost every industry than the average industry wage for that industry. Only in education and finance, insurance, and real estate did the survey respondents exceed the average annual income. However, only 9 people work in finance, insurance, and real estate and 8 in education, so it is likely that the sample size is too small to make statistical comparisons. However, for industries including construction, hotel, nonhotel services, landscape and gardening, trade, and restaurants we can infer that Hispanic wages are lower than the county average.
The wage disparity may be attributed to several underlying factors. First, immigrant Hispanics with poor English skills and limited education may be less productive than their more educated counterparts and are, therefore, limited to lower-paying employment within each industry. Second, those working without documentation may be willing to accept lower wages than documented aliens. Finally, discrimination could be a factor. Indeed, according to Table 12, many of the respondents reported suffering wage and salary discrimination. Of those surveyed, 13.6 percent reported they had been discriminated against at work, 13.4 percent said they had suffered salary discrimination, and 6.6 percent said they had had wages withheld or not paid altogether.
Tables 9, 10, and 11 give distributions for the total number of people in the household, the total number of workers in the household, and the total number of children in the household, respectively. Non-native Hispanics in southern Nevada tend to form larger households than the county average. The average household size for all households in Clark County is 2.65 compared to 3.23 for the survey respondents. Seventy-six percent of the households have three or fewer workers. About one-half have one child or none. A relatively large proportion, 12 percent, have four or more children in the household.
Near the end of the survey, we queried respondents about whether they thought they have suffered discrimination or abuse because of their ethnicity and, if so, what type of abuse. The results are reported in Table 12. Thirty percent reported that they felt they have been abused or discriminated against because of their Hispanic ethnicity. Verbal abuse was the most common, with over 17 percent reporting instances of verbal abuse. Work and salary discrimination took second place with 27 percent reporting they have suffered this type of discrimination. Less prevalent were salaries or wages not paid (6.6 percent), physical abuse, (5.6 percent), and other not listed (1.5 percent).
Finally, we asked respondents whether they had completed all of the paperwork requirements for U.S. citizenship (see Table 13). About 41 percent of women and 36 percent of men had completed all of the requirements for citizenship by the time they were surveyed. Overall, 40 percent of the non-native Hispanics that answered the question had obtained their citizenship.
Given the information on wages, occupation, and total population counts, we now turn to estimating the economic impact of the non-native Hispanic community on the economy of southern Nevada. The next section describes the assumptions, data, and modeling techniques used. Following that, we give the economic impacts, in terms of output, employment, and tax revenues.
III. Economic Impact
To estimate the total economic impact of non-native born Hispanics on the Clark County economy, we use the Implan model of economic impact. ( For the model, we need information on the total number of non-native Hispanics in the county, by age and gender, their income, occupation, and spending habits. We use this information to estimate the spending and employment characteristics of the nonnative Hispanic population. Some of this information was collected in the survey and some we estimate using Census statistics for Clark County.
According to the U.S. census, 301,830 Hispanics lived in Clark County in March 2000. This accounted for 22 percent of the county population. Of those, 18 percent where born in the U.S., 52 percent were naturalized citizens, and the remaining were noncitizens (see Table 14). For our analysis, we are interested in the impact of non-native Hispanics on the local economy, a total of 247,751. Using the Census age distribution, we estimate that 63 percent of these people are over 18, for a total of 156,083 people.
We allocate the people to industry categories according to the percentages from the survey information. We assume that each worker makes the average industry wage reported in the survey. By assumption, unemployed and housewives do not earn wages. The Implan model does not distinguish between wages for male and female workers, so each worker is assigned wages according to the overall sample industry wage. Using this method, we estimate that annual wages for non-native-born Hispanics in Clark County total $2,619,547,511.
We estimate the economic impact using the Implan model. The total number of jobs, by industry category, enter the wages through the appropriate employment sector.
Model Results. Given the assumptions about employment and wages, we estimate the economic impact of the non-native Hispanic community. The final impact may be broken down into three components: 1) the direct impact accounts for the employment of and wages paid to non-native Hispanics in Clark County 2) indirect impacts, created by the multiplier effect, whereby direct spending re-circulates through the economy creating expenditures over and above those directly attributable to Hispanic employment and wages. Indirect impacts may be best explained by an example. New residents in Clark County mean increased demand for education, food, housing, entertainment, and other spending that would not have taken place. Therefore, one of the indirect impacts of the non-native Hispanic population will be new jobs in the construction sector as additional housing is added to meet increased demand. Although the wages for non-native Hispanics are considered as direct impacts, new construction employment, new teachers, and new retail employment for those serving the Hispanic community are considered indirect impacts. The multiplier describes the proportional increase in indirect economic activity generated by direct expenditures. An economic multiplier of 2 means that for each dollar of expenditure directly attributable to non-native Hispanics, an additional dollar’s worth of economic activity is created in the economy.
The third category of impacts is induced impacts. Induced impacts, or forward linkages, are a result of a “third round” multiplier effect. They represent the response from local industries caused by new household income expenditures arising from the indirect effects.
The total economic impact is the sum of the direct, indirect, and induced effects. It can be expressed in two forms. The output form accounts for all the goods and services produced in the economy because of the non-Hispanic population directly, indirectly, or induced. We can also express the economic impact in terms of employment also using direct, indirect, and induced employment. Finally, we can calculate the taxes that accrue because of the additional production and wages paid to the non-native Hispanic population. These fiscal impacts are estimated at the federal, state, and local level.
Our estimates, reported in tables 15 through 17 reveal that the non-native Hispanic population is critical to the economy of Southern Nevada as measured by the value of output. The total value of the output impact is over $15.6 billion. Industries that are particularly sustained are nonhotel services ($5.3 billion), construction ($4.7 billion), and retail and wholesale trade ($3 billion). For an initial spending impact of just over $10 billion, output multiplier is 1.55.
Employment impacts of the non-native Hispanic population are large as well. The survey results combined with the Census data infer that there are an estimated 131,444 non-native Hispanic employed wage-earning adults in Clark County. This direct employment impact causes induced and indirect employment totaling an additional 73,441 jobs. The industries most affected by the non-native Hispanic presence are the services industry, where 81,287 jobs are created, retail and wholesale trade, accounting for 47,883, and the construction industry, giving another 47,853 jobs. The total employment impact is 204,885, accounting for over one-fourth of the total employment in Clark County.
With such large employment and output effects, it is clear that the fiscal impact of the non-native employment and output effects must be quite large. According to the model, the federal government gains $1.4 billion in taxes from the total employment and output effects (including all production and employment whether direct, indirect, or induced) (See Table 17). Much of that comes in the form of federal income taxes, and social security tax collected from employers and employees. Corporate profits and excise taxes each help put more than $100 million in the federal coffers.
State and local government budgets are also winners. Revenues are spilt between many sources. The main public beneficiaries of the spending are the sales and use taxes ($270 million), property taxes ($182 million), and gaming revenue ($103 million). Summing these large items with the list of smaller revenue sources indicates that state and local budgets are enriched by $829 million arising from the direct, indirect, and induced production of non-native Hispanics.
IV. Conclusion
The survey results reveal a diverse group of people that make up the southern Nevada Hispanic community. They come from Mexico, Guatemala, and other countries in Central and South America. Many have either no or very basic English skills and less than high school education. They work a variety of jobs, from construction to education. Their wages and household incomes are generally lower than the Clark County average. To be sure, reflective of educational and work experience backgrounds, non-native Hispanic men are less likely to be unemployed than the average Clark County resident.
According to the Implan model, non-native Hispanics are an essential part of the local economy, helping to create over 200,000 jobs, $15.5 billion in output, and supporting state and local revenues by $829 million. These are large numbers, but the results are certainly not surprising. The Hispanic community accounts for 22 percent of the Clark County population and the majority of these people are recent immigrants. They work, earn wages, and purchase food, automobiles, and homes. By doing so, they contribute significantly to the total economic activity in Clark County.


Tables and Charts
Table 1. Country of Origin for Survey Respondents

Table 2. Self-Reported Fluency in English

 

Table 3. Level of Education: Females and Males

 

Table 4. Personal Consumption and Household Characteristics of the Sample Respondents

 

Table 5. Percent of Survey Respondents Employed in Selected Industries

 

Table 6. Percent of Survey Respondents Employed in Selected Industries: Males and Females

 

Table 7. Distribution of Household Income for Survey Respondents

 

Table 8. Annual Income by Industry: Hispanic Survey Respondents vs Clark County Annual Average

I

Table 9. Household Size Distribution of Survey Respondents

Number of People in Household
Number of People in Household Frequency Percent Cum.

Table 10. Household Size Distribution: Number of Workers per Household