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For immediate release: December 15, 2009

Dallas Fed Report Spotlights Texas Latino Wage Gap, Foreclosures, Fiscal Issues

DALLAS—The latest issue of the Federal Reserve Bank of Dallas' Southwest Economy features articles on the Latino pay gap in Texas, home foreclosures and the state’s fiscal health.

As the Texas economy moves forward, improving education for Latinos is a critical challenge, according to research officer and senior economist Pia Orrenius, Agnes Scott College professor Madeline Zavodny and research analyst Emily Kerr in “Getting to the Bottom of Texas’ Latino Pay Gap.”

The Latino wage gap—the difference between the wages of Latinos and non-Hispanic whites—is notably bigger in Texas than in the rest of the nation, the authors state. Latinos accounted for 76 percent of the state’s labor force growth between 1994 and 2008.

A major factor that may be keeping Latino wages low is education, the authors find. Texas Latinos have fewer years of schooling than non-Hispanic whites in Texas and Latinos living in other parts of the U.S.

 “In Texas, more and better education—specifically in the areas of degree completion and English fluency—are keys to achieving higher wages among Latino workers,” the authors write.

In “Texas Dodges Worst of Foreclosure Woes,” business economist D’Ann Petersen and associate economist Laila Assanie find Texas has fared better than the nation in the current foreclosure crisis, despite elevated foreclosure rates in some pockets.

Of the 254 counties in Texas, only four had foreclosure rates above the national average in third quarter 2009. Characteristics common to Texas counties with high foreclosure rates include sharp jumps in unemployment, high loan-to-income ratios, slower home-price appreciation, significant new construction and a greater prevalence of high-priced lending to minorities, the authors say.

Texas foreclosure trends will bear watching as many Texans have lost their jobs in the current recession, a development showing up in rising delinquencies on prime loans, according to the authors.

In an “On the Record” conversation, senior economist Jason Saving says several factors have left Texas’ state budget in better shape than most other state budgets, including:

  • A friendly business environment, which has helped keep firms alive that might have succumbed to the recession elsewhere.
  • A rise in state government spending that was slower than the national average after the 2001–02 recession.
  • A later entrance to the recession compared with other states.
  • A reliance on sales taxes rather than income taxes.

Still, Texas faces looming fiscal challenges that include dealing with reduced revenues from the newly reformed franchise tax, controlling rising Medicaid outlays and improving education and infrastructure, Saving says.


Media contact:
Alexander Johnson
Phone: (214) 922-5288