Kentucky was a relative newcomer to the phenomenon of Hispanic immigration. This story, originally published in 2004 in The Lane Report, a Kentucky business magazine, was one of the first in the state to take a sweeping look at the trend from a business perspective. It earned a national award for business reporting.

Both controversial and beneficial, Hispanic immigration is changing Kentucky’s economy and politics.

By Andy Olsen

José Bartolo Vasquez left his ego at the border.

Jobs American workers scorned years ago, he risked his life to find. What other people call sweat equity, he calls honest work. And while stripping tobacco in the hills of Madison County may not be the path to white-collar suburbs, it’s buying Vasquez freedom he could not afford in Veracruz, Mexico.

“That’s the only benefit,” Vasquez said. “I can save and do what I want. Say I go back to Mexico. I go with what’s mine.”

The 21-year-old immigrant lives with his two brothers, his wife, and their one-year-old son in a small trailer on farmland tucked inside a bend of the Kentucky River. The road to get there narrows to one lane a few miles outside of Richmond and clings to the edge of a winding ridge like an Andean highway on the wrong continent.

The Vasquez family leads mostly hidden lives. Uninsured with a baby, bills to pay and cash to wire to Mexico, they have myriad worries to keep them busy. But their presence – and that of thousands more like them – is dramatically changing Kentucky in ways we have only begun to understand.

Taken as a whole, Hispanics here would form the state’s third-largest and fastest-growing city. According to the Census, the state’s Hispanic population boomed from 21,984 in 1990 to almost 60,000 in 2000. That’s a 173 percent increase – the eighth-largest rate of growth in the country. And since most illegal immigrants did not answer the door when Census workers came knocking, government estimates place the actual number of Hispanics in the state at well over 100,000.

Latino immigrants are the overwhelming force beneath the state’s mostly agricultural economy. By nearly all estimates, well over half are undocumented. They are also costing Kentucky millions of dollars in medical costs and unpaid taxes each year.

But at the same time, what was widely assumed to be a penniless group, in fact, has plenty of money to spend. Hispanics represent enormous untapped buying power at a time when the state is grappling with a potential budget deficit. This year, a relatively small number of immigrants in Kentucky – 26,068 – are expected to send at least $53 million back to their families and friends in Latin America. That’s according to a new study by the Inter-American Development Bank, whose figures may be conservative considering local migrant advocates guess that as many as 60,000 Hispanics live in Central Kentucky alone.

Any way it’s counted, there’s a mountain of money moving south from Kentucky, and Ricardo Hernandez has been doing his part. The 28-year-old is remodeling his cement-block house in Jalisco, Mexico, with paychecks he earns milking cows 40 hours a week at a dairy farm near Maysville. Taking a break, he pointed to a photograph of his parents and his young son standing stiffly in a bare room, clothed in crisp new shirts and pants. In another picture, a spotless new color television sits prominently in his family room in Mexico. “The first paycheck,” Hernandez said, smiling.

Sent mostly in sums of $200 to $300 a month, remittances have surpassed oil and tourism as Mexico’s largest source of income – now at more than $13 billion a year.

“It’s not that our community is poor. That’s a misconception,” said Andrés Cruz, editor and part owner of La Voz, a Lexington-area Spanish-language newspaper. “It’s that our money is not being invested in your community.”

Cruz thinks that’s because few people in Kentucky have made reaching out to Hispanics a priority. As if to illustrate his hunch, only six people sat in on a seminar he offered in July about marketing to Latinos during the Lexington Bluegrass Area Minority Business Expo – an event attended by nearly 250 business leaders. “People don’t realize the potential market we’re dealing with here.”

Kentucky is fairly new to Latino immigration. Compared with states much more versed in dealing with undocumented immigrants like California and Texas, Kentucky has done relatively little so far to encourage Hispanics to get an education, put their money into banks or take out loans to start businesses. But that hasn’t stopped many from moving out of agriculture and into construction, hotels, fast food and retail.

Like many Hispanic migrants who come north hopping from job to job, Vasquez doesn’t plan to stay in America forever. Someday, maybe, he’ll return to Veracruz with his family and start again in a place where a dollar will stretch quite a long way. But the odds are against him. If history is any indication, he will likely get a better-paying job than tending tobacco and will settle here with his wife and son – the first U.S.-born citizen in their family.

In the last decade, tighter security on the Southwest border has turned what was once a fluid population of mostly Mexican migrants that went back and forth into one that mainly stays put. Most undocumented workers would rather return to Mexico every now and then to preserve their roots.

But they are increasingly reluctant to visit, knowing that the return trip to America involves crossing miles of heavily guarded desert on foot and a good chance of getting caught. That, coupled with an increasingly fragile Mexican economy, has triggered what many experts say is easily the largest wave of immigration in American history across the longest border ever to separate First and Third World countries. The number of illegal immigrants in the country grows by an estimated half-million each year. Since many of them can no longer find jobs in immigrant-saturated Southwestern states, the wave has spread to states like Kentucky.

In the last 15 years or so, Hispanic migrants have become the primary force keeping Kentucky agriculture from stalling for want of workers. Ask nearly any farmer, and he’ll say he doesn’t have anywhere else to turn.

“It’s not necessarily (Latinos) competing with non-migrant labor as much as it is filling a void that’s not being filled with local labor,” said Steve Isaacs, a professor of agricultural economics at the University of Kentucky. “The farmers are out there saying, ‘Look, we’ve got to get this done.’ They’re really between a rock and a hard place.”

Of course, the workers aren’t just men. As immigrants increasingly bring their families, women are taking their places beside their husbands. “It would blow your mind to see these women come into the field,” said Eddie Warren, a tobacco farmer in Madison County who has relied on migrant labor for years. “You don’t want to tell them they can’t cut tobacco, because they’ll make you look stupid.”

Because so many are undocumented, there’s no way to measure how many of Kentucky’s farm workers are Hispanic. But the Department of Agriculture estimates that Latinos make up about 80 percent of the state’s 25,000 tobacco workers – the foundation of a $400 million-a-year crop. And thousands more have moved into area horse, dairy and poultry operations. Most estimates place Hispanic immigrants as the largest sector of the workforce in Kentucky’s $1.4 billion agriculture industry.

But the Latino contribution to Kentucky’s economy is the silver lining inside a growing political cloud. Governments and taxpayers are slowly beginning to feel the pinch of illegal immigration’s unpleasant side effects – among the most prominent of which is the state’s “underground economy.” In short, a lot of wages aren’t being taxed.

No one is sure how much landscaping, house painting and construction is done off the books in Kentucky. But it’s no secret that much of the money paid for work on tobacco and horse farms never goes through a bank.

“Paying cash is not a new thing. That’s been around a long while,” Isaacs said. “Other than the speed limit, the most violated law in the land is tax violations.”

To be sure, undocumented immigrants aren’t the only ones being paid in cash. But retiring Rep. Jack Coleman of Burgin thinks immigration has been ignored for so long in Frankfort that it’s become a hole in the state’s pockets through which a lot of change is falling. He estimates that undocumented immigrants in Kentucky earn between $300 million and $450 million a year that aren’t being taxed.

“We’re policymakers. This is a public policy issue. We need to solve it,” Coleman said. “We have a huge problem. This is not a fantasy world where we can twitch our nose and they’re gone.” Coleman was the key sponsor of a bill in 2001 that would have allowed illegal immigrants from Canada or Mexico to obtain drivers licenses. That would open the door for them to buy car insurance, become documented taxpayers and more easily move their money into banks.

But Kentucky’s drivers license bill died in the wake of Sept. 11, when concern that terrorists would enter the state with fake licenses quashed any momentum it had. It was a blow for immigrant activists who thought Frankfort was finally starting to notice the Latino elephant in the middle of the living room.

“All of a sudden we became the minority again and could not get anything passed,” said David Moss, former board member of the Lexington Hispanic Association, a migrant advocacy group. “And that’s where we’re still at.”

Like a live grenade that everyone is afraid to touch, illegal immigration has been mentioned little in Frankfort since Sept. 11. Coleman, who said he is one of a small few policymakers willing address the issue, is retiring from the Legislature this year. That’s at least in part because of the price he paid for being seen as an advocate for undocumented immigrants (he refuses to call them “illegal”). Making periodic trips to Mexico to provide a Cancún high school with classroom computers, Coleman has made empowering Latinos a mantra of sorts. He believes the state must do the same.

“What’s the answer? I don’t know,” said Coleman, who doesn’t imagine anyone in Washington will solve illegal immigration anytime soon. “In the end, when you ask me, are you trying to legalize an illegal activity? I don’t know. I guess I am. And that’s a difficult hurdle we’ve got to cross, because it seems like we’re trying to.”

Until we jump that hurdle, it will continue to cost more. Jewish Hospital in Shelbyville provides an early example of how. Consider: A poorly paid undocumented immigrant, without medical insurance, has an emergency, goes to the hospital and runs up a five-figure bill. If he can prove his income falls below a certain level, the hospital will cover the cost. That’s called charity care. But if he can’t, he writes an IOU that’s as good as his fake ID and runs off. That’s called bad debt.

But in truth, charity care and bad debt are the same thing. There are no grants to cover the loss, no government assistance to repay it. Nearly a quarter of the charity care in Jewish Hospital’s emergency department last year went to Hispanics, even though they accounted for fewer than one in ten of the hospital’s ER patients. Overall, the hospital provided $390,000 in charity care to Hispanics in 2003.

Michael Collins, Jewish Hospital’s president, said the hospital first began tracking charity care given to Hispanic patients last year. Unpaid bills by Hispanics are a growing problem for the hospital in Shelby County, a largely rural county with a booming Latino population. Jewish Hospital absorbed $5.6 million in bad debt last year. While Collins still does not track Hispanic-related bad debt, he does know that Hispanic immigrants tend to be uninsured or underinsured and earning low wages.

“What we’re seeing is Hispanics are pretty much on their own and they don’t have health insurance. They just show up at your emergency room door and are entitled to your services,” he said. “We know that people who are uninsured, underinsured and in low-pay jobs – statistically, that’s where the bad debt comes from.”

Even migrant workers who are here legally with temporary visas often go without insurance. While the federal government mandates that employers
provide food and shelter for them, it’s not forcing anyone to provide medical coverage for three or four months at a time.

Part of Rachael Fitzgerald’s job is relieving some of the burden immigrants place on public health facilities. Fitzgerald is the business director of the Bluegrass Farmworker Health Center, an Eastern Kentucky University based clinic that provides discount medical care for migrants and seasonal farmworkers. This year, she has to spread $883,000 in federal grant money across an eight-county area to serve more than 3,000 uninsured patients.

The clinic had 5,500 encounters with clients last year. Fitzgerald figures that’s 5,500 encounters that public health facilities in Kentucky did not have to deal with. Regardless, the center has yet to receive state funding, and probably will not anytime too soon – the Census reported that 29.9 percent of Kentuckians under 65 are uninsured. “Considering the situation that Frankfort is facing with (so many) people in the state being uninsured, I’d say the Latino farmworkers aren’t on the radar.”

That may be true, but for how much longer no one is sure. One thing is certain: Over the next decade or two, the number of Latinos in the state who can vote will grow by thousands. In Shelbyville’s Jewish Hospital alone, 29 percent of the babies born last year were Hispanic. By 2010, Hispanic children born in America as recently as the early 1990s will be turning 18 and drawing candidates’ interest in both local and state elections.

“The future is coming, and it’s going to look a lot different than it does now,” said Adam Ruiz, director of Centro Latino, a migrant advocacy group in Shelbyville. “And whoever gets on board with it now is going to do well.” There are signs that that future may already be here. The state could welcome its first Hispanic legislator next year if either Tony Moreno, a republican from Midway, or Ralph Alvarado, a republican physician from Winchester, wins a seat in November’s election. Certainly, neither candidate is a first-generation immigrant, and neither has heralded himself as a champion for the immigrant cause.

But they could attract Hispanic attention. Moreno, for example, jokes with Latino workers in Spanish at a theater he is remodeling in downtown Midway. The son of a horse trainer and grandson of a cheese maker in Southern California, he is well-connected in Woodford County horse circles and knows first-hand illegal immigration’s deep impact on society.

“The old saying is that a farmworker is never a farmworker for long,” Moreno said. He looks west for inspiration when it comes to understanding Latino immigration. “We have a tremendous opportunity to avoid some of the growing pains that have happened in other states.”

And there are plenty of those pains. California’s government estimates it loses between $3 billion and $6 billion annually in income taxes. In 2002, a third of Los Angeles County residents were uninsured or grossly underinsured – only slightly higher than Kentucky’s current 29.9 percent. Incidentally, L.A. County nearly closed two hospitals in 2002 because hospital revenue could not keep up with demand.

But the question remains, is there a solution? The fundamental problem – and the hardest to overcome – is that of status. Ruiz said that while free and discount clinics and state-issued identification help to a degree, they are only Band-Aids as long as an underground immigrant society remains. And Kentucky’s government has little control over what happens at America’s borders.

The obvious answer would be to dry up the jobs for illegal immigrants – crack down on employers who knowingly hire undocumented workers and force them to hire only those who are here with permission. The problem, according to Coleman, is that undocumented workers are benefiting nearly everyone in Frankfort and, indeed, the state’s entire economy.

For now, Angel Sales thinks the answer is simply education. The Cubanborn immigrant works with the Paducah Chamber of Commerce to provide Hispanics with small loans and offer classes to teach them how to manage their money and invest it. The goal is to establish a handful of Hispanics with successful small businesses or well-managed finances – instead of cash stuffed into a hole in some mattress. They, in turn, will be models for others, and their money will shift into the formal economy.

So far, Hispanic response has been less than exciting. Sales thinks that’s because Western Kentucky is still crying out for other basic aids to immigrants like language classes, degree-completion assistance and basic low-cost health care. There is little state funding for new programs or expansion of existing ones. His premise: Teach them English. Teach them a bit about America. They’ll take care of themselves.

“If we can just get a few the others can emulate and say, ‘Look, we can do it,’” Sales said. “You’re talking several, tens of millions of dollars that could be circulating in the economy.”

But La Voz’s Cruz told businessmen and women at a recent seminar they cannot expect Latinos to do all the work. An organization with no bilingual employees can forget about attracting Hispanic clients – and their dollars – in coming years. Cultural barriers come down slowly. Overcoming those barriers, of course, costs money.

Governments and companies in Kentucky may wince at the price of evolving to connect with the state’s booming Latino population. But Cruz is not sure they can they afford the cost of ignoring it.

As he told the six onlookers at his seminar, “If your community doesn’t approach this cultural change with a multilingual approach – a multicultural approach – we’re going to be left behind. Big time.”