The text on the sign reflects the evolution of ethnic identities and language. Social hierarchies in the 19th century borderlands were very much informed by the legacy of Spanish colonial rule in the not distant past. One important feature of these legacy hierarchies was that the ability to claim close European ancestry was the ability to claim higher standing. Due to this, many of the people who would otherwise be called mestizo would identify as Spanish, particularly if their skin color was light enough to reasonably pass (although importantly the hierarchy was not primarily based on skin color). Non Mexicans in the new territories responded to this distinction in terms by largely ignoring it. The words Spanish, mestizo and Mexican came to represent anyone with links to the former colonial territories. The former specifically could refer to anyone who was not an Indian.

However, your question does have a secondary answer, although my knowledge is restricted to the mining industry of the new Mexico and alta California territories. Southern Europeans, including the Portuguese, Spanish, and Italians were seen as less industrious workers than their northern European counterparts. Consequently, they were paid slightly less than unquestionably "white" workers in the mines. Unfortunately I'm on a vacation and unable to source any of these properly, although the pay scales of the copper queen mine in southern arizona before 1910 were based partially on race.

I can tell you from personal experience that many people in the US still don't know the difference. When I am there and people hear us speaking Spanish, there is often an assumption we are Mexican.