The great American Hispanic wealth gap


Sparse change. Flickr user e-magic

America's Hispanic population might offer one of the clearest examples of the country's widening wealth gap.

Despite steady (and staggering) growth in the U.S.'s Hispanic population—which has swelled from 9.1 million in 1970, to more than 54 million today—Latinos aren't seeing commensurate growth in their bank accounts. The average Hispanic household still only has about $109,000 to its name, or nearly $400,000 less than the average American household, according to a new report by the Federal Reserve Bank of St. Louis, and more than $500,000 less than the average white American household.

Put in other words, Hispanics make up more than 16 percent of the U.S. population, but only hold about 2.2 percent of its wealth. One of the most important voting demographics in the U.S. is getting severely short-changed.

Part of that is due to the fact that Mexicans and Puerto Ricans make up nearly 75 percent of the country's Hispanic population, but each earn significantly less, on average, than the typical American household. The median household income in the U.S. is roughly $51,400, but it's only $38,000 for Mexican families, and $36,000 for Puerto Rican families.


The recession also did little to help alleviate the country's Hispanic wealth gap. Hispanic families lost roughly a third of their net worth between 2007 and 2010, according to the St. Louis Fed report. Between 2005 and 2009, they watched 66 percent of their wealth wither away, the largest among all racial groups, according to a 2011 report by Pew Research.

There is progress in sight, but it comes with a caveat. The report offers two projections, neither of which represent any relative gain in affluence among America's Hispanic population.

The first, and more optimistic one, estimates that Hispanic wealth will grow by $4.4 billion by 2025, at which point it will represent 3.2 percent of the country's total. The catch here is that overall mean income growth will actually still outpace that among Hispanics. In other words, Hispanics will be marginally better off, just not relative to the rest of the US population.

ITB8_fig2

Under the second projection, which estimates Hispanic wealth will grow by $2.5 billion by 2025, the relative wealth gap looks even worse.

ITB8_fig1

Roberto A. Ferdman is a reporter for Wonkblog covering food, economics, immigration and other things. He was previously a staff writer at Quartz.
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