Has Hispanic American Income Risen Faster Than All Others?
Note: Sources for this article varied in their use of Hispanic vs. Latino. For simplicity, the term Hispanic has been used.
In this article, the term ‘Hispanic’ refers primarily to immigrants from Latin America and their U.S.-born descendants.
Has Hispanic American income risen faster than any other in recent years?
The short answer is yes.
However, there are many asterisks to consider. The situation is a complex one, made even more complicated by the economic impact of COVID-19.
Income Growth of Hispanic Americans
In a recent Bloomberg opinion article, also picked up by Yahoo News, columnist Noah Smith detailed the income growth of Hispanic Americans.
According to the article, from 2014 to 2019, Hispanics logged greater income growth than any of America’s other main racial groups.
A recent post by the Pew Research Center backs up this claim, noting that Hispanic median personal income growth rose 5% between 2007 and 2017, vs. 3% for Americans overall.
Why is this happening now? Smith cites several reasons.
1.) Increased education for Hispanic children. In 2012, Hispanic college enrollment rates exceeded those of Whites.
2.) Increased geographic mobility for Hispanic immigrants. Recently, Hispanic immigrants have spread across the country, theoretically giving them access to a broader range of social connections and opportunities.
This is all great news.
But what about those asterisks?
A Closer Look at Hispanic Income Growth
The Pew research article mentioned above explains that these gains in income growth hide a more complex reality: a sharp disparity between Hispanic Americans born in the United States, and Hispanic immigrants.
In 2017, foreign-born Hispanic incomes were 14% higher than in 2007, but the incomes of U.S.-born Hispanics were 6% lower.
This means two important things.
First, increased personal income growth occurred mostly among Hispanic immigrants, not U.S.-born Hispanics. The latter experienced greater losses in the 2007-2017 period.
Second, demographic shifts, not the economy, are the main cause of the income gains for Hispanic immigrants. This is also mentioned in the Bloomberg article. A slowdown in immigration from Latin America led to an increase in the percentage of Hispanic immigrants who have lived in the U.S. for at least a decade. More-established immigrants usually earn more. Their rising incomes gave a significant boost to the average income of Hispanic immigrants overall.
Challenges Still Remain
Beyond the nuances of income growth already mentioned, more challenges remain for Hispanic Americans.
Smith’s article acknowledges that Hispanic Americans still face at least two huge economic hurdles.
1.) Building Hispanic wealth. As of 2016, White households in the lower and middle-income groups each still owned roughly 3 times as much wealth as Hispanic Americans.
2.) Homeownership. White American households continue to be far more likely to own their own homes.
The most recent asterisk comes from the economic impact of the COVID-19 pandemic. It may even call into question whether Hispanic American incomes are still the ones growing the most.
Hispanic Americans disproportionately work in the economic sectors most hurt by COVID-19. For example, food preparation and serving-related occupations.
Maybe most importantly, Hispanic Americans have also been slower to rebound from the economic impacts of the pandemic than Whites.
In January 2021, the Hispanic unemployment rate was still 4.2 percentage points higher than it was in February 2020. White workers’ unemployment rate rose only 2.5 percentage points above its pre-pandemic level.
And between the fourth quarter of 2019 and 2020, the median weekly earnings of full-time Hispanic American workers grew at a slower rate than that of workers overall.
Income growth among Hispanic Americans rose greater than any other group between 2014 and 2017. But the growth is mostly among immigrants and is largely a result of demographic changes instead of the economy. The aftermath of the COVID-19 pandemic has slowed that growth and put continued growth in doubt.
Like so many things in today’s business world, the situation is much more complex than it first appears.