Latinos and the American Dream
The demographic makeup of the American population is changing rapidly, and nowhere is this more apparent than in the nation's many Latino communities. Long considered minorities in the political, economic and social sense, Latin Americans now play a bigger role than ever in shaping the nation, and this will only become more true if current population trends continue.
According to the latest data from the U.S. Census Bureau, as the population of the U.S. grows to nearly 417 million people by 2060, its cultural and ethnic makeup will only become more diverse1. As of 2014, the 55 million Americans who identify as Hispanic will more than double to 119 million by 2060. This will amount to more than 28 percent of the estimated population total for the nation in that year.
This massive growth means that trends among Latino Americans will play an increasingly important role in shaping the nation's economy, especially in the personal finance industry. To get a better sense of how Latinos currently manage their finances, as well as their feelings on the future of the American economy, Pew Research conducted extensive polling of Latino and Hispanic households2. Their findings are useful for those curious on how personal financial management may change in the coming decades.
INCREASING CONFIDENCE, RISING COSTS
The dominant theme among Pew's research was one of optimism among Latinos in America. Since the recession created significant uncertainty for the economy almost 10 years ago, Latino and Hispanic consumers seem to have adopted a more positive outlook on their financial situation compared to the average American. Around 81 percent of Hispanics surveyed in 2015 told Pew they expected their family's financial situation to improve over the next year, while only 61 percent of the general public agreed.
When asked if their finances were in good shape, however, slightly fewer Hispanic families than average had positive remarks. Forty percent of Hispanics surveyed said their financial situation was in excellent or good shape, compared to 43 percent overall. On the bright side, Hispanics' views of their own situation has only improved since the recession, while the general public remains stagnant.
How America's source of immigrants has changed over time:
— PewResearch Hispanic (@PewHispanic) July 11, 2016
Still, Hispanic communities face challenges in the workforce, despite gains among other groups of Americans. The U.S. Bureau of Labor Statistics found the unemployment rate to be 6.4 percent among Hispanics at the end of 2015, still higher than its recent low of 5 percent in 2005. The nation's overall unemployment rate came in at 4.8 percent over the same period.
Pew's analysis also found Latinos ranked behind the median in other key indicators. Household income for Hispanics in 2014 averaged $42,500 compared to $53,700 for all households. Hispanics also generally had lower net worth per household and higher rates of poverty than the national average.
The reasons behind these concerning trends are difficult to fully understand. As Pew reported, more Hispanic families - 53 percent - said their income was falling behind the cost of living. This rate remained unchanged between 2014 and 2015, despite progress among other groups.
Despite these struggles, Latino survey respondents still overwhelmingly held a positive outlook on the financial future of themselves and their children. Hispanic families were much more optimistic on money matters than the average American household, with 81 percent expecting their position to improve. That's a 14 percent change over 2008. And 72 percent of all Hispanics expected their children to be better off in the future.