The 4.7 million Chicanos in the Southwest in 1970 contributed significantly to the local labor supply; yet, they had substantially smaller incomes and greater unemployment than area Anglos. Although Chicanos have moved steadily from unskilled to skilled labor occupations and have entered white collar occupations, they continue to be employed in the traditional areas of domestic service, construction, food processing, railroad and farm work, which are characterized by squalid conditions, poverty, and limited chances for advancement. The process by which Chicanos come to hold inferior jobs can best be explained by the "queueing" theory of worker allocation in which they are at a distinct disadvantage due to general educational disadvantagement, the historical situation of Mexican immigrants, racial discrimination, and cultural differences. The employment and income differences between Chicanos and Anglos are reinforced by the elastic supply of minimum wage labor from Mexico. In addition, earning differences result when Chicanos hold lower paying jobs in broad occupational categories or the same job in different firms. Tight border policy, decline in discrimination, and better education would greatly help the Chicano labor force, as would research regarding cultural barriers to better employment. (SB)