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For Hispanic and Latino Families, Race Remains Central to Economic Outcomes


Wednesday, September 15, 2021

By Ana Hernández Kent, Senior Researcher, Institute for Economic Equity

During National Hispanic Heritage Month, which spans Sept. 15 to Oct. 15, the country celebrates Hispanic and Latino Americans’ diverse cultures, histories, heritages and accomplishments. How do Hispanic and Latino Americans identify themselves? How does that identification relate to economic outcomes?

Race plays an important role, with Hispanic white families having significantly higher incomes and wealth than other Hispanic groups. People of Hispanic or Latino ethnicity may be of any race: for example, Hispanic white or Hispanic Black. (In this post, “Hispanic” is shorthand for Hispanic or Latino when used in combination with a race. Otherwise, Hispanic and Latino are both used as the terms overlap but have different meanings.)

Differentiating between racial groups for those of Hispanic and Latino ethnicity is important: Doing so allows us to better distinguish the distinct economic experiences of these groups.

What Races Are Hispanic and Latino Americans?

In the United States, about two-thirds of people who identified as being of Hispanic, Latino or Spanish origin on the Census Bureau’s American Community Survey in 2019 also classified themselves as white. Interestingly, the next biggest racial group was “other race, not elsewhere classified.” Research suggests (PDF) this group would largely disappear if Hispanic/Latino were added as an option under race because many who select this category would prefer a Hispanic/Latino option.

Some surveys, like the Federal Reserve Board’s Survey of Consumer Finances (SCF) take this approach and include “Hispanic/Latino” as a response under race while also asking a separate ethnicity question. Indeed, when this option was included under race, most Hispanic and Latino families selected it. On the 2019 SCF, Hispanic and Latino families could choose from four race and ethnicity combinations. They selected:

  • Hispanic/Latino race, Hispanic/Latino ethnicity (82% of Hispanic/Latino families of any race)
  • White race, Hispanic/Latino ethnicity (13%)
  • Black race, Hispanic/Latino ethnicity (4%)
  • Other or multiple race, Hispanic/Latino ethnicity (1%)

Thus, most Hispanic and Latino respondents preferred to select Hispanic or Latino under race when given the option, suggesting it is a central part of their identities that supersedes traditional race categories of white, Black, Asian, etc. As shown in the next section, such self-identification matters as both race and ethnicity were strongly related to income and wealth.

Race and Ethnicity Both Influence Economic Outcomes

The following graphs show how the financial circumstances of Hispanic and Latino families differed by race, and how those circumstances compared with those of their non-Hispanic counterparts (if applicable). Black families had very similar incomes, regardless of ethnicity. Incomes for both groups of Black families were slightly lower than–though fairly comparable with–those of Hispanic respondents who selected Hispanic or Latino race.

All three of these groups, however, fell below the median family income of Hispanic white families. This group had a median income of about $52,000, roughly 25% lower than that of non-Hispanic white families.

White Families Have Higher Median Incomes, Regardless of Ethnicity

Bar chart showing income comparisons by ethnicity

SOURCES: Federal Reserve Board’s Survey of Consumer Finances (2019) and author’s calculations.

NOTES: Family income is rounded to the nearest $1,000 and is shown in 2019 dollars.

These trends were mirrored, though more extreme, for family wealth outcomes. Self-identifying as white race significantly buoyed the median wealth of Hispanic or Latino (ethnicity) families. While they had roughly 39% less wealth than non-Hispanic white families, their median wealth of $113,000 was more than three times larger than that of Hispanic and Latino families who identified as Hispanic/Latino race.

Hispanic Black families had the lowest wealth outcomes, with a median family wealth of just $8,000. Families who chose Hispanic/Latino for both race and ethnicity and non-Hispanic Black families had over four and a half times, and about three times, more wealth, respectively. Hispanic Black families thus seem to be facing significant economic headwinds related to both their race and ethnicity.

White Families Have Significantly Higher Median Wealth

Bar chart showing median wealth comparisons by ethnicity

SOURCES: Federal Reserve Board’s Survey of Consumer Finances (2019) and author’s calculations.

NOTES: Family wealth is rounded to the nearest $1,000 and is shown in 2019 dollars.

Self-Identification Plays a Big Role in Financial Outcomes

These comparisons illuminate the importance of considering both race and ethnicity–color and culture–in combination whenever possible. Self-identification is very important. The financial outcomes of Hispanic and Latino families of any race (outcomes for that group are not shown in the graphs) closely mirror those of families who choose Hispanic and Latino under both race and ethnicity. This is not too surprising given that most Hispanic/Latino families in the SCF also select this category under race.

However, for those who select white or Black race, wealth outcomes vary substantially. Similarly to their non-Hispanic counterparts, Hispanic white families had more favorable economic outcomes than Hispanic Black families.

These distinctions and nuances have implications for researchers, nonprofits and policymakers interested in the Hispanic and Latino population. Hispanic white individuals who can be accepted or perceived, or “pass,” as non-Hispanic white may face less discrimination in the labor market than their Hispanic and Latino peers who cannot. Such “passing” could translate into higher income and wealth.

Hispanic Black people, on the other hand, may face discrimination related to multiple aspects of their identity. Therefore, policymakers and other leaders who are addressing challenges and creating opportunities for Hispanic and Latino people must take an intersectional lens. Race needs to be included as part of the conversation for solutions to be effective and appropriate.

ABOUT THE AUTHOR
Ana Hernández Kent 

Ana Hernández Kent is the senior researcher for the Institute for Economic Equity at the Federal Reserve Bank of St. Louis. Her research interests include economic disparities and opportunity, class and racial biases, and the relationship between psychological factors and the household balance sheet. Read more about Ana’s research.

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