California has a third of the population of Japan—39.4 million versus 122.8 million—but it has a larger gross domestic product than Japan. If California were its own country, it would have the world’s fourth largest economy; Japan would be fifth.
What is California’s secret GDP sauce? In three words: Latino GDP growth.
Gross Domestic Product measures the final value of goods and services a country produces. It describes an economy’s size and productivity.
In California the state’s 15.1 million Latinos generated more than $1 trillion of economic activity in 2023. The Latino GDP grew more than twice as fast as the state’s non-Latino GDP — before, during and after COVID-19 — because the Latino labor force grew 15 times faster than the non-Latino workforce.
It also worked harder. Following a decades-long trend, in 2023 Latinos’ participation in the labor force was 5.5 percentage points higher than non-Latinos’ participation. Latinos also were more likely to work in the private sector than non-Latino workers.
With more people working harder and in the private sector, Latinos’ vigorous work ethic lifted California’s economy above Japan’s.
Latinos also are more entrepreneurial than non-Latino demographic groups, setting up businesses and growing them at faster rates. While it might be easy to assume these businesses would be in construction and agriculture, in 2023 the largest sectors of the California Latino GDP were finance, insurance, business services, and real estate.
One of the large, rapidly growing economic sectors is health. Interestingly, for 175 years, California has done a poor job of producing Latino healthcare providers, such as doctors, dentists, nurses, and others. How did health care become a large sector of California’s Latino GDP when mainstream providers avoided Latino areas?
A new type of health organization arose in Latino communities to fill the service vacuum: Community clinics, governed by community boards, focused on preventive services and health promotion for underserved areas.
One example is AltaMed. What had been a community clinic in a Los Angeles storefront has grown to become 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 month-to-month on irregular donations of supplies. By 1977, with an operating budget of $50,000, it could barely afford a couple of employees.
The little organization suddenly took off, economically speaking. AltaMed now serves more than 700,000 patients annually at more than 60 sites. It employs more than 5,700 people—who are paid competitive wages—and its operating budget in 2024 was $1.64 billion.
But the growth doesn’t end there. AltaMed employees spend their wages in local stores and restaurants, driving growth in those sectors. A nonprofit business, AltaMed contracts with local suppliers and service providers. As it expands its footprint, it hires architects and contracts with construction companies.
Far from its storefront days, AltaMed today has a direct and indirect economic impact of $15.1 billion.
During the last decades of the 20th century, up to 2024, California’s Latino population grew from 1.4 million to 15.1 million. This population growth drove labor force growth, business growth and a Latino GDP growth that’s twice as fast as the rest of the state.
If it were not for the Latino GDP, California wouldn’t be No. 4 in the world. It would be No. 8, near Italy. California would be much poorer and less competitive without Latinos’ work ethic and business drive.
David Hayes-Bautista is a distinguished professor of medicine at UCLA and co-authors Latino GDP Reports.
