A new Wells Fargo report suggests that Hispanic workers may face difficult times in the future.
According to the firm, Latino workers will take a significant hit in case of a slight recession occurring in 2023 as it seems.
Jay Bryson, chief economist at Wells Fargo wrote that the Hispanic unemployment rate is more than the national average in times of economic declines.
The firm discovered that from 2006 to 2010, Hispanic unemployment rose by 8 percentage points and non-Hispanic unemployment rose by 3 percentage points. Bryson pointed out that this was also higher than non-Hispanic rates of joblessness in the 2020 and early 1990s.
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Data suggests that job composition and age play a major role in this.
Hispanics are responsible for one-third, or 18%, of all construction jobs. Bryson stated that this sector, which is sensitive to interest rates, will be facing “acute problems in the coming year.” Mortgage rates have jumped to over 6%He noted that the number of building permits has already dropped by over 10% from last year.
As a result of the high demand for service, there will be a sharper decline in goods spending during the coming year. Now, total consumer spending stands at 14% above February 2020. Real services spending increased less than one percent during that same period.
“The rotation in spending is likely to lead to sharper job cuts in goods-related industries beyond construction, including transportation and warehousing, retail and wholesale trade, and manufacturing — all industries in which Hispanics represent a disproportionate share of the workforce,” Bryson said.
However, some losses may be offset by job concentrations in the hospitality and leisure sector that was hard hit during the pandemic.
Bryson explained that not only will consumers be spending more on missing vacations or dining out, but the sector’s employment is also about 7% less than pre-Covid.
Hispanics are also affected by the age factor, as workers are more likely to be Hispanic than those who are not.
Bryson stated that junior workers are more likely to lose their jobs than those with greater seniority. In a job market with weak employment markets, it is harder to find work if there are fewer years of experience.
Bryson stated that he does not expect the next recession to be nearly as destructive to the employment market as the two previous ones.
“Employers spent the greater part of the previous five years trying to find workers,” said he. We expect employers to hold onto workers more than in past recessions because they are better aware of the difficulties it might be to hire them back.
— CNBC’s Michael Bloom contributed reporting.