Latino Immigrants in Memphis: Assessing the Economic Impact

Latino Immigrants in Memphis: Assessing the Economic Impact

By Marcela Mendoza, David H. Ciscel, and Barbara Ellen Smith

Vol. 23, No. 3-4, 2001 pp. 24-26

Immigrants now play a critical part in the labor force across the country, and the same is increasingly true for Memphis. In 1999, according to the Bureau of Labor Statistics, Latinos made up 12 percent of the U.S. workforce. Whereas in the past Latino immigrants in the South tended to concentrate in agriculture, today they often work in the “new economy”-services, distribution and even construction. Although some have significant job skills and/or professional training, undocumented immigration status and/or limited English proficiency narrow the employment options of many Latinos to low-wage work.

Still, the social, economic, and demographic impact of the Latino population in Memphis is substantial. Preliminary data from a study by The University of Memphis Center for Research on Women (CROW) highlights some important findings.

Over the past decade, the Latino population has at least doubled in nine Southern states: Alabama, Arkansas, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, Tennessee, and Virginia. Tight labor markets (at least until quite recently) have been magnets for Latino migration. According to a report by the Selig Center for Economic Growth, North Carolina, Georgia, and Tennessee are among the top ten emerging states, as ranked by the rate of growth of Hispanic buying power during 1990-2001.

By far the most common reason why Latinos come to the U. S. is employment opportunity. Latino immigrants tend to be of prime working age, both younger and healthier than the general population. Although some come to unite with their families, the driving force behind their migration to and within the U. S. is the search for jobs. In this, new Latino immigrants have much in common with generations of Southerners who migrated from the rural to urban South, or from the South to the North in search of greater economic opportunity.

Today the impact of Latinos as workers is being felt throughout the United States and their share of buying power is rising in every state. In 2000 the Census Bureau counted a total of 35.3 million Hispanics/Latinos in the U.S., which represents a 58 percent increase compared to 1990, 3 million more than the Bureau anticipated. Such high growth in the Latino population is driven both by immigration and by high birth rates among young Latino families. Given the buoyant labor market in the U.S., Latino immigrant workers have tended not to displace local workers, but rather to fuel economic growth in most regional economies.

Latino Immigration to Memphis

In 1990, the largest number of Latinos in the state of Tennessee was concentrated in the Nashville-Davidson metropolitan area. One in three Latinos in the state lived there or in the counties bordering this area. Three other metropolitan areas of Tennessee had also received significant Latino immigration: Memphis, Clarksville, and Chattanooga. Since then, there has been growth of the Latino population in cities across the state. For example, according to the Nashville Chamber of Commerce, the current population estimate in Davidson County is 45,550 Hispanics-as compared with about 8,000 in 1990. (The 2000 Census counted 26,091 Hispanics in Davidson County.) In addition, certain rural areas, such as the counties surrounding Morristown in east Tennessee, have drawn

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an increasing population of Latinos. Even though their numbers may not be large, the presence of Latinos in such relatively sparsely populated rural areas is especially noticeable.

The new Latino immigrants are younger, more skilled, and more highly educated than those who arrived in previous decades. More women and children have joined the immigration flow each year, suggesting that these new Latino families might become permanent settlers. In the early 1990s, almost 70 percent of Latinos in Tennessee were under the age of thirty-five (compared to one of two non-Latinos). Latinos initially found employment in agriculture, in the fast growing service and distribution sectors, and in the construction industry. In 1990, according to the U. S. Census Bureau estimate, 90 percent of all the Hispanics in Tennessee were U.S. citizens. Today, most are not citizens, and many have an undocumented immigration status. Because of their consequent desire for invisibility, population counts of Latinos-including those of the Census Bureau-are likely underestimates.

In 1990, the U. S. Census Bureau counted 8,116 Hispanics-largely of Cuban, Puerto Rican, and Mexican descent-in the Memphis Metropolitan Statistical Area (MSA). Many migrants of Mexican descent who settled in Memphis in those years arrived from the U. S. Southwest. In 2000, the census counted 27,520 Hispanics in the Memphis MSA, a 239 per cent increase over 1990. Others place the figure even higher. A study by The University of Memphis Regional Economic Development Center (REDC) estimates a current community of 53,628 individuals of Hispanic heritage in the Memphis MSA.

Frequently, the new immigrants settle in working-class neighborhoods, along with more established residents. Contrary to a commonly held belief that Latinos are seasonally mobile, these groups already constitute a stable, permanent population in these areas. The majority of recent Latino immigrants arrived in Memphis in the company of family and friends.

Enrollment of Hispanic children in the public and private schools of Memphis and Shelby County is clearly on the rise. There was a total of 2,581 Hispanic students at the end of the academic year 1999-2000, up from 572 in 1992-1993.

Homeownership is a good measure of immigrants’ assimilation to the urban context. Latino communities with Spanish-language newspapers and bilingual real estate agents, as is the case in Memphis, have social networks that provide a flow of information about housing opportunities. CROW’s analysis of public records available through the local Tax Assessor’s Office identified 1,584 Memphis homeowners with Spanish surnames. Of these, we estimate that 828 homeowners-based on their Spanish first name and surname, and the location and value of their property-may be first-generation Latino immigrants.

The Impact of Latinos on the Memphis Economy

Latino workers in the Memphis area have a total economic impact of $1,020,000,000 and 35,972 jobs. That impact is made up of the work they do in the Memphis economy and the jobs they create through their consumer expenditures in Memphis businesses.

Most Latinos came to the Memphis area since the mid-1990s in search of jobs in the vast and growing industries of trade, distribution, and construction. In general, these immigrants have found their job expectations fulfilled. Low unemployment rates in the region made it relatively easy to find employment even if they did not speak English. In addition, it appears that Latinos did not displace local workers. From 1995 to 1999, the number of jobs in the Memphis economy grew from 531,600 to 586,300. While the number of jobs grew by 54,700, the number of workers in the labor force grew by only 35,100, so there were jobs available for new workers.

This analysis of the economic impact of Latino workers on the Memphis regional economy uses traditional

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multipliers to estimate not only the work that Latinos do, but also the jobs that their consumer expenditures create. When a new Latino worker accepts a job in, e.g., the Memphis construction industry, he or she helps the regional economy grow both by earning an income and by spending a portion of that income on housing, food, and other locally purchased goods and services. These expenditures help create even more jobs.

The University of Memphis REDC projected a Memphis Hispanic population of 53,628 in 2000. Assuming a distribution of children, men, and women that is based on the U.S. Census Bureau’s analysis of the national Hispanic population in 1999, there are currently 27,429 Latino workers in the Memphis economy. The gender breakdown for Latino workers in Memphis is 9,470 women and 17,959 men.

These 27,429 Latino workers hold jobs throughout the Memphis economy. However, they tend to be concentrated in three economic sectors: construction, distribution, and retail trade. While some workers in managerial and supervisory jobs may earn as much as $18.00 per hour, most Latinos in the Memphis economy are employed in semi-skilled jobs where wages vary between $7.00 and $10.00 per hour. Although most Latino workers earn less than $20,000 per year, they have one unusual characteristic for low-wage workers: they tend to have very high savings rates. We estimate that the typical Latino worker saves almost 30 percent of his/her income, sending over two-thirds of the savings back to a family in Mexico or another Latin American country.

Latino workers earned $570.8 million dollars in wages and salaries in the Memphis area in 2000. As noted above, most are employed as semi-skilled workers in the construction firms, warehouses and retail trade establishments of the Memphis economy. Often speaking only Spanish, these workers use temporary employment agencies or small firms with Spanish-speaking supervisors to gain employment.

Of the $570.8 million that they earned in 2000, we estimate that Latino workers paid at least $85.6 million in payroll/income taxes and sent $125.6 million home to their families in Mexico or other parts of Latin America. In addition, Latinos generated, through their consumer expenditures, approximately $12.3 million in local and state sales taxes. Perhaps most surprising, Latinos spent $359.6 million in the local economy.

The multiplier impact of these expenditures of $359.6 million by Memphis Latino workers is impressive. These expenditures result in another $664.0 million spent locally by workers and businesses that benefit from Latino workers in the Memphis economy. Consumer expenditures by the Latino community also result in the creation of 8,544 additional local jobs in Memphis. These local expenditures and additional workers increase the regional payroll by $570.8 million for Latino workers and $176.5 million for workers in the other 8,544 new jobs.

In sum, Latino immigrants play an increasingly important role in the social life and regional economy of Memphis. They contribute a new element of cultural diversity to the city’s schools, churches, and neighborhoods. In their search for economic opportunity, Latinos recall prior generations of Southerners who migrated for similar reasons. Just as earlier migrants fueled Memphis’s growth as a major distribution center, so too do contemporary Latino immigrants contribute to regional economic development.

Marcela Mendoza is a senior researcher at the University of Memphis. David H. Ciscel is professor of economics at the University of Memphis. Barbara Ellen Smith is director of the University of Memphis Center for Research on Women. The research for this report, was supported by grants from the Ford, Rockefeller, and Charles Stewart Mott Foundations, in a collaboration with Southern Regional Council and the Highlander Research and Education Center. The full report can be ordered from CROW for $5 plus 8.25 percent Tennessee tax ($3 for bulk orders of five or more). All orders must be prepaid. Please make checks payable to The University of Memphis and remit to Center for Research on Women, 339 Clement Hall, Memphis, TN 38152. For more information, call: 901-678-2770 or email: