By Ana Hernández Kent, Policy Analyst, Center for Household Financial Stability
Hispanic Americans have a multitude of cultures and make up a very diverse group tied together by the Spanish language.
Take me, for example. My family is Puerto Rican and I was born on the “mainland.” Growing up, I fielded questions like: “How do you make the best tacos?” or “Do you like really spicy food?” I now realize these questions were based on a mistaken assumption that I was Mexican. Yet, while I do enjoy the flavorful Mexican cuisine, my family recipes typically focus on savory roasted pork (or lechón), plantains and rice.
Though it may be difficult to sum up a group across distinct cultures, doing so can illustrate some commonalities. National Hispanic Heritage Month, which spans Sept. 15 to Oct. 15, highlights the contributions and influence of Hispanic Americans. Hispanic Americans refers to Hispanics of any race: The terms Hispanic and Latino/Latina/Latinx are often used interchangeably, even though they mean different things. I use Hispanic because the surveys I cite use this term and respondents self-select into this category, not Latino, Latina or Latinx. This annual event prompted me to highlight five trends that focus on the financial well-being of Hispanic families, both before the COVID-19 pandemic and now, and what these trends could mean for the broader economy.
Hispanic population growth over the past few decades has been rapid:
These rising shares mean that a larger portion of future business revenue will rely on Hispanic consumers’ dollars. Also, since roughly two-thirds of gross domestic product (GDP) is made up of consumer spending, Hispanic population growth will influence the broader economy as well.
In April, Hispanic Americans had the highest unemployment rate—18.9%—of any racial or ethnic group, and seasonally adjusted unemployment continued to be high as of August, at 10.5%, according to Bureau of Labor Statistics data graphed in St. Louis Fed data tool FRED. Hispanic workers of any race who lost their jobs are also much less likely than Black and non-Hispanic white workers to expect to return to the same job, according to my calculations of data from the July 2020 household economics survey.
Furthermore, according to the Census Bureau’s Household Pulse Survey conducted Sept. 2-14, 21% of Hispanic renters and 11% of Hispanic homeowners reported that they were not current on their rent/mortgage payments. One in five Hispanic households with children experienced food insecurity, reporting that they sometimes or often did not have enough to eat.
Ten percent of Hispanic families in 2019 had negative net worth (their debts were bigger than their assets), according to the Federal Reserve Board’s 2019
Survey of Consumer Finances (SCF). Seventeen percent were below the poverty line in 2019, according to American Community Survey one-year estimates.
Calculations from 2019 SHED data indicated that fewer than half of Hispanics say they would pay for a $400 emergency expense with cash or its equivalent, highlighting a lack of liquidity. Having cash on hand helps with financial resilience, the ability to financially cover and recover from life events like the loss of a job.
The white/Hispanic median household wealth gap (which mirrors the magnitude of the white/Black wealth gap) is large and has been remarkably stable over the past 30 years. Analysis of data from the most recent 2019 SCF showed the typical Hispanic family had a net worth of $36,000, or just 19 cents per each dollar of non-Hispanic white families’ median household wealth.
A Hispanic family in the 75th percentile for Hispanic families also had less wealth than a white family in the 50th percentile of white families.
The graphic below uses the most recent data from the 2019 SCF to look at white and Hispanic wealth gaps by education. Hispanics at every education level had less median wealth than non-Hispanic whites with the same education. Tellingly, a Hispanic family with a terminal bachelor’s degree had median wealth ($74,000) that was less than that of a non-Hispanic white family with at most a high school degree ($123,000).
Note: Dollar values are adjusted to 2019 dollars using the Consumer Price Index for All Urban Consumers and rounded to the nearest $1,000.
Sources: Survey of Consumer Finances and the author's calculations.
As the country grapples with important questions on diversity and inclusion, minority groups are highlighting their economic contributions and importance. Many leaders and organizations are taking note.
Here at the St. Louis Fed, employees last year formed the employee resource group “Mi Gente” (which translates to “My People” in English) with Bank leadership support. The group promotes Hispanic/Latino heritage.
As the largest minority group in the country, Hispanic Americans are a strong and expanding engine of economic growth. Investing in these communities now is an investment in our future economy. The delicious cuisine is an added bonus.
1 Hispanic Americans refers to Hispanics of any race: The terms Hispanic and Latino/Latina/Latinx are often used interchangeably, even though they mean different things. I use Hispanic because the surveys I cite use this term and respondents self-select into this category, not Latino, Latina or Latinx.