Obviously the best thing to do is to refer to the person by name, however that is not always possible or practical. Most people want to be referred to by terms they have chosen, not labels selected by others outside their group. Perhaps it would be easier to increase sensitivity if more people understood the implications of some words.
Many people with Latino heritage, for example, do not like the term Hispanic, because it was a term formulated by the United States Census Bureau in 1970. When it was realized that many U.S. households consisted of families who spoke Spanish, there had not previously been a way to record this. Rather than attempt to identify every country of heritage, the Census Bureau created the word Hispanic. It is a generalized term used when describing a diverse group of people whose primary or ancestral language is often Spanish. Certainly the cultures of Mexico, Puerto Rico, Argentina, and Guatemala are distinctly different, yet this word lumps them all together. It also includes Brazilians even though their primary language is Portuguese! On the other hand, some people of Latino heritage prefer the term Hispanic because they believe it carries less bias than the words, Mexican or Puerto Rican, for instance. Confusing isn’t it.
Many Blacks prefer African American because the word black is rarely capitalized even when it specifically refers to that ethnic group (except within some books written by African Americans and magazines targeted to the African American culture), whereas "African American" does have the honor of capital letters. Some people believe the small case "b" is another example of subtle, institutionalized racism.
The term African American is a source of pride for many, even though Africa is a continent, not a country. Be careful though, people from the Caribbean with African heritage, are not African American, and some are hughly offended if you make that mistake. Unlike European Americans (the politically correct term for White people), who can choose to recognize their Irish, German, or Italian heritage, African Americans do not have that option. For many it is impossible to identify their ancestors’ country of origin. On the other hand, some Blacks prefer "Black" not "African American" because they see themselves as American and not African. Each time I visit South Africa to work with organizations there, I am acutely aware that I am American, even though I am proud of my African heritage.
The term "American" is seen as ethnocentric by some, when referring to the inhabitants of the United States, because Canadians and people from Central and South America are technically Americans too.
Staying abreast of the current "correct" words is challenging at best, because the rules keep changing. Personally, I would like to meet the "they" that keep changing the rules!
(c)2008 Excel Development Systems,Inc.

By Lenora Billings-Harris, CSP
Diversity Speaker,Consultant, and Author
www.LenoraSpeaks.com

Author's Bio: 

Lenora has been a diversity management consultant, author, and international professional speaker for over 20 years. Diversity is not one of many topics for her, it is 100% of her business focus. She is currently conducting research as a member of the adjunct faculty of the Bryan School of Business and Economics, University of North Carolina-Greensboro. As a community volunteer, she is past president of Win-Win Resolutions, Inc., a non-profit organization that teaches conflict resolution and diversity awareness to K-12 students using interactive drama. Lenora’s MA from University of Michigan, and BS from Hampton University plus years of corporate experience developed within two Fortune 500 companies before founding her firm, enable her to assist clients and inspire audiences through the use of real world techniques that lead to achievable results. Lenora’s professional colleagues have recognized her leadership abilities by electing her president of the National Speakers Association, 2006-2007. Some of her most recent clients are as diverse as her expertise. They include The USMA (West Point), Ritz Carlton Hotels, the Social Security Administration, FedEx, Safeway, Toyota and the PTA (Parent Teachers Association.) Whether through keynotes, workshops, or long term initiatives Lenora’s fun, nonjudgmental, yet thought provoking presentations will inspire you and your group take action