impact of the youthful age structure and above-average birthrates of Hispanics is already being felt in schools today; it will be felt tomorrow in higher education and in labor markets.
With the exception of Mexicans and Puerto Ricans, most Hispanics are first-generation immigrants, but even 42 percent of Mexicans are foreign born. In 1960, a mere 5 percent of the U.S. population was foreign born, and only about 25 percent of Hispanics were born abroad or in Puerto Rico.13 At the time, almost half of all Hispanics—primarily Mexicans—were U.S. born to U.S.-born parents. Just over one in four Hispanics (28 percent) were second generation. After four decades of immigration, the foreign-born share of the total U.S. population doubled to 11 percent, but the foreign-born share of Hispanics (exclusive of island-born Puerto Ricans) nearly tripled—from 14 to 40 percent. By 2030, the second generation is projected to represent 30 percent of the entire Hispanic population, and a third generation will be well on its way, thus sustaining the youthful composition of the Hispanic population (see Figure 4-2).
This infusion of young people into the United States is a potentially positive development, slowing the nation’s overall population aging while partially offsetting the rising burden of dependency of an aging majority—what might be viewed as a demographic dividend. In 1960, less than 10 percent of the total U.S. population was of retirement age or older, compared with less than 3 percent of the Hispanic population. Four decades later, these proportions were more than 12 percent and less than 5 percent, respectively. This relative age difference is echoed in median ages of 39 and 27 years, respectively. A generation from now—by 2030—about 25 percent of white Americans will have reached retirement age or beyond, compared with only 10 percent of Hispanics, just when the burgeoning Hispanic second generation, with a median age of 21, will have reached its prime working years. But labor market impacts will occur well before this time as a result of Hispanics’ younger average age at first employment and growing share of the working-age population (see Figure 4-3).
An aging industrialized society can balance its rising old-age dependency ratio by importing workers and raising women’s labor force participation rates. In the absence of substantial productivity increases, however, such demographic solutions will be insufficient.14 In particular, funding the pensions of a swelling elderly population requires a productive workforce capable of paying taxes, saving, and investing. Hispanic workers—immigrant and natives alike—already contribute to the social security system. In fact, illegal workers, the majority of whom are Hispanic,