Want to grow your business? Championing Latinos is a must

Latinos in the United States represent the third-fastest-growing economy in the world, with a $3.2 trillion gross domestic product (GDP) as measured by expenditures and a purchasing power of $3.4 trillion. In fact, based on this cohort’s GDP, if Latinos in the U.S. were a country, they would be the fifth largest economy, ranking only behind the U.S., China, Japan and Germany. 

Not only are U.S. Latinos responsible for remarkable economic growth and purchasing power, but as the youngest and fastest growing cohort in the country—with the largest portion of Latinos being between ages 10 and 14, compared to 60 to 64 years among non-Latinos—this cohort will be essential to solving many challenges facing our nation, including the persistent labor shortage and aging labor force.

In recognition of Latinos’ cultural and historical contributions to the United States, Americans observe National Hispanic Heritage Month each year from Sept. 15 to Oct. 15. While this annual event provides a special occasion to celebrate Latinos and their growing influence on the U.S. economy, it’s also an opportune time for organizations to further acknowledge their importance by considering how to appropriately align business strategies to embrace this segment of the country, both within and outside of the business.

What is driving the growth?

Behind the extraordinary productivity growth of Latinos in the U.S. are three primary factors: population growth, a high degree of workforce participation and increased educational attainment.

From 2010 to 2021, Latinos represented 52% of the total U.S. population growth, a 24.1% increase for Latinos, compared to 4.3% for non-Latinos, according to data from the Census Bureau. The fast population growth among this cohort has led to a significantly younger demographic than other groups, with the majority of Latinos in the U.S. being under age 25. As a result, this group comprised nearly all net-new additions to the labor force in 2021. In addition, labor force participation for Latinos in the U.S. was 5.4% higher than that of non-Latinos.

The number of Latinos in the United States holding a bachelor’s degree or higher increased at a rate nearly 2.5 times that of non-Latinos over the past decade, increasing 6.8% annually between 2011 and 2021, compared to 2.8% for non-Latinos. However, the total number of Latinos in the country with advanced degrees remains below the national mean, indicating there is still substantial room for improvement and opportunity for increased productivity.

Opportunities

While the U.S. Latino cohort has been and will continue to be crucial to the U.S. economy, this cohort continues to face many challenges, including under-representation of Latinos in C-suite positions and public company boards. Only 4.1% of Fortune 500 board seats are occupied by Latinos, according to Latino Board Monitor. Another issue is under-investment in Latino-owned businesses, with total investment making up less than 1% (approximately $680 million) of the $487 billion invested in venture capital and private equity deals in 2020, based on data from Bain & Company.

A business approach that embraces and prioritizes Latinos is not merely a moral or ethical choice. It is a strategic move to drive business growth, enhance competitive advantage and ensure longevity in an increasingly diverse and dynamic market landscape. Businesses that recognize and act on this will be positioned to leverage the myriad opportunities presented by the thriving and increasingly influential Latino community in the U.S.

Here are a few key actions business leaders can take:

1. Foster inclusive workplaces: Businesses should foster environments that value diversity and where Latino talent can thrive. Implementing diversity training and creating inclusive workplace policies are crucial to ensure all employees feel valued and respected. Leaders should actively seek to fill gaps in representation at all levels, particularly in leadership and decision-making roles.

2. Expand investment in Latino-owned businesses: Directing investments toward Latino-owned businesses and startups is critical. Venture capitalists, financial institutions and policymakers can develop frameworks and policies that facilitate access to capital for Latino entrepreneurs, supporting the growth of businesses that contribute to economic diversification and job creation.

3. Support education and skills development: Businesses and educational institutions should collaborate to enhance access to education and skills development for the Latino community. Support for scholarships, vocational training and mentorship programs can empower Latinos with the necessary skills and knowledge to navigate and excel professionally.

4. Champion Latino representation: Companies should proactively ensure Latino representation on their boards and in executive roles. This requires a commitment to equitable recruitment, promotion and retention practices and the creation of pathways for professional advancement for Latino employees.

5. Build partnerships with Latino organizations: Engaging with organizations and communities serving Latinos can help businesses understand this demographic's unique needs, preferences and challenges. Such partnerships can inform more culturally sensitive and effective business strategies, products and services.

6. Improve market outreach: Businesses should refine their market strategies to appeal to Latino consumers, acknowledging their growing purchasing power. This involves culturally resonant advertising, bilingual customer service, and products and services catering to the Latino community's wants and needs.

7. Engage in advocacy and policy reform: Leaders and policymakers must advocate for policies that address disparities and barriers faced by the Latino community. Reforms in education, immigration and labor laws can significantly optimize Latino contributions to the U.S. economy.

By implementing these actions, businesses, leaders and policymakers can integrate and empower the Latino community more effectively and stimulate economic growth, innovation and prosperity for the entire nation.