Weekly Report – January 30, 2017
Significant Reports
Making America Rich Again: The Latino Effect on Economic Growth by Jeffrey A. Eisenach, Ph.D. (December 2016)
Full report: http://www.nera.com/content/dam/nera/publications/2016/PUB_LDC_Prosperity_1216.pdf
This study commissioned by Royal Bank of Canada and the Latino Donor Collaborative, presents a comprehensive analysis of the contribution made by Latino Americans1 to the US economy, based on data from a wide variety of government and private sources. The findings are striking: To an extent few appreciate, the US Latino population is growing, young, increasingly educated, employed, connected, entrepreneurial, and upwardly mobile in terms of income as well as consumption. Consider the following:
- While much of the developed world is facing stagnant population growth and an increasingly elderly age distribution, growth in the Latino population is keeping America both young and growing.
- Between 1990 and 2015, the Latino population grew from 22 million to 57 million, roughly five times as fast as the population overall. To illustrate this rapid growth, consider that if the Latino population had grown at the same rate as the rest of the US, there would be 30 million fewer Americans today.
- At 28 years old, the median Latino is nine years younger than the population at large and 15 years younger than the median white. Millenials make up 26 percent of the Hispanic population, compared to 22 percent for the US population. Economic research suggests that the youthful demographic profile of the Latino population enhances productivity and increases growth in per capita incomes.
- Latinos are responsible for 29 percent of the growth in real income since 2005. They account for roughly 10 cents of every dollar of US national income, and that proportion is rising both due to growth in the Latino population and rising per capita earnings.
- Latinos play a critical role in the labor force, both as employees and, especially, as job creators and entrepreneurs. They are more likely to participate in the labor force (65.9 percent vs. 62.7 percent) and to be employed (61.6 percent vs. 59.3 percent) than the overall US population. While Latinos account for 17 percent of all workers, they account for 21 percent of new entrepreneurs. Latinos accounted for nearly half—46 percent—of the growth in employment from 2011 to 2015.
The Hispanic poverty rate is falling more rapidly than for the rest of the population:
- Hispanic poverty fell by 2.2 points from 2014 to 2015 (from 23.6 percent to 21.4 percent in 2015) while the national average rate fell by 1.3 points—and Hispanics are the only major ethnic group with a lower poverty rate today than in 2007.
- As consumers, Latinos wield more than $1.3 trillion in buying power, and the number of affluent Hispanic households is growing much faster than for the overall population: In 2015, there were approximately 370,000 US Latino households with incomes over $200,000, an increase of 187 percent since 2005.
- The Latino population is also becoming more geographically dispersed across the US. The final section of this study presents data on the 25 Metropolitan Statistical Areas (MSAs) with the largest Latino economies, as measured by aggregate personal income. These communities are located in every region of the US, from Atlanta to Denver, Chicago to Miami, Los Angeles to Washington, DC, and together account for more than 36 million Latinos with combined incomes of over $650 billion. Over the last decade, Latinos accounted for 22 percent of the growth in personal income in these MSAs.
“America’s 21st Century Manufacturing Relies on 20th Century Infrastructure,” was penned by Fran Inman, senior vice president of Majestic Realty Co., and Elaine Nessle, CAGTC executive director.
The white paper focuses on how the manufacturing landscape is evolving, and, in turn, requiring improvements of the domestic freight network. And it explained that today’s current infrastructure, which is “designed to accommodate large shipments for smaller populations consuming fewer goods, does not meet the needs of today’s consumers.” What’s more, the authors explained how manufacturing and the transportation of materials are interwoven, but as the private sector has shifted to meet new demands, the U.S. national infrastructure network has stalled out, due to years of underinvestment that is challenging economic growth potential.
They also explained that major investments are required to alleviate chokepoints, address first and last mile connectors and fund projects of national and regional significance, noting how infrastructure investment is required in order to support domestic goods production. Citing data from the National Association of Manufacturers, the white paper said that since 2010 more than 800,000 domestic manufacturing jobs have been created, with the sector’s growth occurring nearly double the pace of the general economy, while U.S. manufacturers sold $4.4 billion in “Made in the U.S.A” goods in 2014. A large reason for this is partly due to supply chains adapting to changing consumer demands, given how manufacturing and supply chains are intrinsically linked, the authors said.
Another key theme of the white paper focused on how “Building to order is replacing “building to stock,” with the demand for customized products forcing companies to re-evaluate high-volume supply chains and the practice of mass producing products. This proliferation, it noted, leads to smaller portions of total markets being dominated by a single product and leads to manufacturers being unable to rely on high-volume and steady demand when building out supply chains and storing products and leading to companies needing to “splinter their supply chain and respond immediately when demand decreases to avoid needlessly storing excess inventory.”
Another factor raised in the white paper is how intersection of e-commerce and logistics continues to gain traction and subsequently changing the way goods are delivered and adding stress to existing infrastructure. This development has led to consumers demanding precise and immediate deliveries, with logistics services providers facilitating the hiring of third-party delivery services to drop off single item deliveries at residential addresses in suburban or urban settings, the authors said. And they added that increases in e-commerce and on-demand delivery are putting increasing pressure on fast-growing cities to rethink how they manage traffic congestion, as last miles can be costly and congested, with major challenges related to urban delivery