The Economic Impact of Latinos in South Carolina

Douglas Woodward, Professor of Economics at the Moore School of Business at the University of South Carolina is studying the economic impact of Mexican immigrants in the state of South Carolina.  Below on this page is reproduced the Executive Summary of his report.  To view the entire report, click here.

Mexican Immigrants: The New Face of the South Carolina Labor Force
Division of Research, IMBA Globalization Project

Directed by Douglas Woodward, Professor of Economics and Director, Division of Research, Moore School of Business
March 2006 

Executive Summary 

This study examines the economic and financial characteristics of Mexican immigrants in South Carolina. Workers from Mexico are the new face of the South Carolina labor force.  Yet no one has tracked this growing segment of the employment base. South Carolina

(like most other states) is surprisingly uninformed about the Latino population trend, even though it is a highly visible demographic shift in many communities—from the Lowcountry to the Upstate. To learn more about this phenomenon and help devise better policy responses to address the challenges posed by Spanish-speaking workers and their families, Moore School of Business researchers surveyed Mexican immigrants during 2005. This report presents the preliminary results from this effort. 

South Carolina is a relatively new receiving area for Mexican immigrants. In 1990, only a few thousand immigrants worked in the state, mostly in seasonal agriculture.  Since the mid-1990s, that is no longer the case. The new residents, whether temporary or permanent, are pulled by job availability and the opportunity for a better life. Throughout the state, more and more industries seek to hire them. They form a pool of readily available, low-cost, high-productivity workers. In turn, South Carolina is developing informal sister-state economic relationships with communities south of the border.  Mexican workers in South Carolina send money to their home communities. In Mexico, many new communities are now the migrant-sending areas. Increasingly, they depend on the United States for income. It can be expected that family ties would wither as immigrants work thousands of miles from their home.

 In South Carolina, there are both promising and disquieting implications related to the rapid growth of the Mexican immigrants. One promising feature is that such growth creates new income and buying power—it adds to the burgeoning Latino market of the

Southeast. Immigrant labor also provides labor power for numerous industries, particularly construction, business services (including restaurants), and manufacturing.  These workers add economic output to the state’s economy that might not otherwise be there. The disquieting implications are that state and local governments are not prepared for the challenges and additional costs of serving this new Spanish-speaking population.  Moreover, it is conceivable that immigrant workers may lower the wages of workers in some occupations. One unproven allegation is that immigration in the Southeast will displace parts of the existing labor force. 

The immediate problem we face is simply a lack of knowledge. This new immigrant labor is not tracked accurately, if at all. So, to better understand the phenomenon, researchers from the Moore School of Business interviewed 381 Mexican immigrants from across the state. The surveys covered all regions of South Carolina, from the lowcountry to the Midlands and the Upstate.

Among the key findings of the survey are the following:

• About one-third of the Mexican immigrants worked in the construction industry. The rest were spread across landscaping, manufacturing, restaurants, trade, and other industries.

• The average Mexican immigrant surveyed earned approximately $21,000 annually. This compares with an annual mean wage of $31,940 for all South Carolina workers at the end of 2004.

• 87 percent of the immigrants say they rent, with 78 percent saying they live in an apartment or mobile home.

• On average, the workers send about 16 percent of their earnings back to their home communities in Mexico.

• The highest percent of respondents came from the state of Veracruz, followed by Guerrero and Hidalgo in Central and Southern Mexico.

• Approximately 34 percent of the respondents claimed that they planned to remain in South Carolina, while some 61 percent said that they plan to return to Mexico.

• 58 percent reported having minors living with them.

 With the rise of Mexican immigrant labor, labor costs are potentially lower in the state for the industries that hire significant numbers of workers. Yet economic output in these industries may be higher than it would have been without immigration. With more output and lower wages, it can be assumed that significant economic benefits go to private-sector South Carolina employers in the form of higher profits. In other words, it is profitable to hire Mexican workers. Thus, the trend is likely to continue.

Yet it is not clear what the long-term implications may be. Inevitably, it can be expected that the public sector will bear additional costs associated with importing labor from Mexico. As more families follow immigrant workers and settle in the state, the public sector will have to fund education, health care, and other services. As the complexion of the population changes, the Palmetto State must continue to monitor and assess the implications of Mexican (and Latino) immigrants. Ultimately, it must devise appropriate public policies and fund the necessary programs that will enable the private sector economy to prosper from immigration.