The Latino Market (Jeff Hankins Commentary)

For two days in early October, speakers at a forum presented by Winrock International and Regions Bank convinced me that Arkansas has changed far more than I realized, and we haven’t handled it particularly well.

The upside is that we can recover and capitalize on new opportunities as we embrace the rapidly growing Latino population in the state.

It’s no secret that the number of Latinos in Arkansas has been on the rise for a decade. But it’s more eye opening to understand we’ve had the second-fastest growth in Hispanic population in the country during the past 15 years.

The U.S. Census Bureau says we had about 110,000 Hispanics in Arkansas in 2004, and that doesn’t include an estimated 20,000-35,000 illegal immigrants. The Mexican government estimates we have 200,000 documented and illegal Hispanics.

These are staggering numbers and will continue to climb. We would be foolish to ignore the facts.

Infrastructure pressures, particularly for schools, will continue to grow. Northwest Arkansas, the first area of the state to face a major influx of Hispanics, has embraced change in recent years after initially struggling. The school districts have integrated students remarkably well, and local chambers of commerce have reached out to Hispanic-owned businesses.

In the long run, Hispanics will grow as key contributors to the economy — they already have $800 million in purchasing power in Arkansas alone. When we consider that 80 percent of all construction jobs in the U.S. are filled by Hispanics — just look around any job site in Arkansas and you’ll see the evidence — it’s clear they are an important factor in the building boom.

But they are also starting up businesses that fill in the gaps avoided by Americans and meet demand for services and products catering to other Hispanics.

Banking Needs

A fundamental challenge from both the consumer and business angles is fulfilling banking and finance needs for Latinos.

Here’s the dilemma for banks: Most Hispanics have no credit history, no collateral and little or no English-speaking ability. They mostly want the ability to cash paychecks and wire money. Those aren’t profitable bank activities.

A growing number are ready to seek loans for business startups and obtain mortgage loans. But typically the loans are for small amounts and require a lot of time due to language barriers, so loan officers aren’t anxious to service them.

How many financial institutions will take a leap of faith and develop loyal Hispanic bank customers?

Bank market research is showing Hispanics to have excellent payment track records and strong loyalty to the institutions that initially support them. I heard estimates of “unbanked” Hispanics ranging from 20 percent to 80 percent, so there’s plenty of market share to be had.

About one-third of the money earned by Mexican immigrants is currently sent to family members in Mexico, and that equates to about $113 million each year being wired from Arkansas residents alone. The total cash inflow from the U.S. is Mexico’s second-largest industry.

I’m beginning to think that the resentment toward undocumented Hispanics in terms of their not paying taxes and taking jobs from Americans is out of line. With the generally low-paying jobs they fill, odds are that they wouldn’t be paying income tax anyway, yet they are paying sales tax on all the consumables they purchase.

Speaking of the legal immigrants issue, Archie Schaffer, the longtime external affairs executive for Tyson Foods Inc. of Springdale, explained how even the best documentation practices aren’t fail-safe. Fake IDs are rampant, and Tyson has joined others in trying to build and share a database of legal immigrants.

Most the CEOs who attended the events, both in Little Rock and Northwest Arkansas, said they employ Hispanics and bilingual employees, and they are searching for more. The trend is actually the development of bicultural employees who can not only speak English and Spanish but also understand cultural issues.

The influx of Hispanics has generated racial issues and tension, as well as debate over immigration policy. During the last legislative session, we saw it in the debate over accepting undocumented Hispanics into our colleges.

We can’t send all the illegals back to Mexico, and current U.S. policy and border-control efforts have failed miserably. It’s time for Arkansas and the rest of the country to reevaluate policies and develop a plan of acceptance and integration. And it’s time for more Arkansas businesses to wake up to the opportunities presented by the Latino market.

(Jeff Hankins is president of Arkansas Business Publishing Group in Little Rock. You can e-mail him here.)