Latin American GDP jumped, boosting CA’s economy to 4th largest

By David Hayes-Bautista, especially for CalMatters

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California has a third of Japan’s population — 39.4 million versus 122.8 million — but has a larger gross domestic product than Japan. If California were her country, it would have the fourth largest economy in the world; Japan will be fifth.

What’s California’s GDP Secret Sauce? In three words: Latin American GDP growth.

Gross domestic product measures the final value of goods and services produced by a country. It describes the size and productivity of the economy.

There are 15.1 million Latinos living in the state of California generated more than $1 trillion of economic activity in 2023. Latino GDP grew more than twice as fast as non-Latino state GDP — before, during, and after COVID-19 — as the Latino labor force grew 15 times faster than the non-Latino labor force.

It also works harder. Following a decades-long trend, in 2023 Latin Americans labor force participation was 5.5 percentage points higher than non-Latino participation. Hispanics are also more likely to work in the private sector than non-Hispanics.

With more people working harder and in the private sector, Latinos’ energetic work ethic has lifted California’s economy above Japan’s.

Latin Americans they are too more enterprising than non-Hispanic demographics, creating businesses and growing them at a faster rate. While it might be easy to assume that these businesses would be in construction and agriculture, in 2023 the largest sectors of California’s Hispanic GDP were finance, insurance, business services and real estate.

One of the large, fast-growing economic sectors is healthcare. Interestingly, for 175 years, California hasn’t done a bad job of producing Latino healthcare providers, such as doctorsdentists, nurses, etc. How did health care become a large sector of California’s Latino GDP when major providers avoided Latino areas?

A new type of health organization emerged in Latin American communities to fill the service vacuum: community clinics run by community boards focused on preventive services and health promotion for underserved areas.

One example is AltaMed. What was a community clinic in a storefront in Los Angeles has grown into one of the largest federally qualified health center operations in the country.

Founded in 1969, at the height of the Chicano movement, the East LA Barrio Free Clinic began as a volunteer organization living each month on irregular donations of supplies. By 1977, with an operating budget of $50,000, it could barely afford two employees.

The small organization suddenly took off, economically speaking. AltaMed now serves more than 700,000 patients annually in more than 60 sites. It employs more than 5,700 people who receive competitive wages and has a 2024 operating budget of $1.64 billion.

But the growth doesn’t end there. AltaMed employees spend their paychecks at local stores and restaurants, driving growth in those sectors. A not-for-profit business, AltaMed contracts with local vendors and service providers. As he expanded his reach, he hired architects and contracted with construction companies.

Far from its storefront days, AltaMed today has a direct and indirect economic impact of $15.1 billion.

In the last decades of the 20^th century, by 2024 California’s Hispanic population has grown from 1.4 million to 15.1 million. This population growth has led to labor force growth, business growth, and Latino GDP growth that is twice as fast as the rest of the state.

If it wasn’t for Latin American GDP, California wouldn’t be #4 in the world. It will be number 8, near Italy. California would be much poorer and less competitive without the work ethic and business drive of Latinos.

This article was originally published on CalMatters and is republished under Creative Commons Attribution-NonCommercial-No Derivatives license.