In my wide and close personal experience with both the term and the target, as well as my long friendship with hispanics, the only ones who feel it is a racial term are limo libs. They also consider "illegal alien" to be a racial term, so that should let you know where they are coming from. Even the wetbacks that I know, and have known for most of my life, realize that it refers to the method by which they enter the US, not the race of the one refered to.