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Latinos: A Growing Economic Force In L.A. County

So many companies told us that opening a location in our city would never pencil out, recalled South Gate Mayor Jorge Morales. “Now they are calling us back looking for a way to get in,” he said last week during a news conference to unveil the findings of a new study detailing the positive impact of Latinos on the economy of Los Angeles County.

Morales was referring to the financial success of the Azalea Shopping Center, which he said ultimately attracted a number of national retail stores and restaurants to the predominately Latino populated southeast city with very positive results: $2.5 million in added annual revenue to the city and over 1,400 new jobs.

Robust population growth and higher educational attainment are contributing to a surge in income growth and spending among Latinos, according to the findings of  “An Analysis of Latino Household Consumer Spending in Los Angeles County,” a study from Los Angeles-based economic research company Beacon Economics commissioned by the Los Angeles Latino Chamber of Commerce.

“Latino population growth in recent decades, particularly among children and teens, along with increases in education and income levels, is helping to drive Latino spending in the county making Latino Los Angeles even more appealing to Madison Avenue and Wall Street,” said Gilbert Vasquez, chairman of the Los Angeles Latino Chamber of Commerce and CEO of the L.A.-based accounting firm Vasquez & Co.

From 2000 to 2014, the Latino population in the County grew by 15.5%, to 4,9 million, while there was a 1.1% decline in the rest of the population. At the same time, the aggregate income in households headed by a Latino grew from $45.9 billion to $72.4 billion in 2014, the study found.

Enough can’t be made of the fact that the numbers are being driven by the higher number of Latinos getting a college degree, Barrio Planners executive and Chamber Board Member Frank Villalobos told EGP during the press conference at the Latino-owned LA Baking Co. in Lincoln Heights.

With higher education comes higher incomes, said Villalobos, pointing to Beacon’s data showing the number of Latinos over the age of 25 with a bachelor’s degree was up 134.6 percent between 2000 and 2014.

According to Vasquez, the number of Latinos in college nationwide is outpacing Asians in college by a three to one margin. Closer to home, the freshman class at Cal State Los Angeles is 70% Latino, Vasquez said.

While the middle class is shrinking in other groups, that’s not the case among Latinos, said EGP Associate Publisher and Chamber Board Member Jonathan Sanchez. (EGP is the parent company of this newspaper).

“Company’s that hold on to outdated views of Latinos as strictly low-income, with little disposable income are being foolhardy, especially when it comes to the L.A. market where Latinos are just now reaching their prime spending years,” Sanchez said.

Members of the Los Angeles Latino Chamber of commerce discuss the spending power of Latinos during a meeting in Lincoln Heights last week.  (Los Angeles Latino Chamber of Commerce) [1]

Members of the Los Angeles Latino Chamber of commerce discuss the spending power of Latinos during a meeting in Lincoln Heights last week. (Los Angeles Latino Chamber of Commerce)

The study concluded that growth in the Latino middle class is trending faster than in the rest of the population. The proportion of Latino households earning between $50,000 and $200,000 per year in Los Angeles County grew from 44.0% in 2000 to 65.1% in 2014.

South Gate’s mayor, Morales, told EGP what too many companies fail to understand is that Latinos spend differently than other groups. Latinos spend a higher proportion of their income, on everything from clothes, to food to entertainment, he said.

Morales acknowledges that the success of the Azalea shopping center is in at least partly due to its regional appeal and prime location along the SR-710 corridor, but he points out that like South Gate, residents in the other cities along the corridor, including Bell Gardens and Commerce, are also predominately Latino and working class.

“When we first approved the project we asked for a 30% local hiring set aside, but today 70% of the people employed there live in the city,” Morales added. “They work and spend their incomes in South Gate,” he said.

Locally, according to Beacon’s analysis, in 2014, Latino households spent $639 on clothes for children from birth to age 15, more than any other race or ethnic group.

Vasquez said the numbers bode well for any company willing to invest in the Latino market, not only in retail industries, but also in the manufacturing, construction and financial services sectors. Government should also look to increasing spending with Latinos through contracting with local Latino-owned businesses, Vasquez said. “It only makes sense that the county start to invest in its future,” he said.

Latinos are now 48% of the county population and spending on housing by Latinos in the county totaled $29 billion in 2014. Latinos are the majority in 33 of L.A. County’s 88 cities and 80% or more in 15 cities.

Among the studies other key findings: Latinos spent $10.9 billion on food in 2014, while Black, Asian, and other non-White households spent a combined $8.5 billion on food that year. Approximately $11.8 billion in Transportation spending in 2014 came from Latino households in the County, including purchases of new and used automobiles.

“The growing Latino market has benefited my business directly and indirectly, said Rudy Gutierrez, CEO & President, of Shell Roofing Solutions. “ My business and client base has grown rapidly to include a number of Vallarta and Northgate Markets, which have grown exponentially as a direct result of increased Hispanic incomes and significant spending in food and beverages, Gutierrez said.

“There is no doubt that I wouldn’t be successful if it weren’t for the Latino market.”