Working More and Harder Is Not Enough For Latinx Families
During Hispanic heritage month, it is important to remember that the American Dream is still out of reach for too many LatinX families. The idea of if you work really hard, you can make it, often doesn’t hold true for Latinx families. Latinx men and women are more likely to be employed than whites, but they are also more likely to work in lower paying jobs with few benefits. They regularly have a lot less wealth than whites do as a result. This makes it harder for Latinx people to invest in their own future, to start a business, to switch jobs when new opportunities arise or to support their children’s education. It also puts them at greater risk of falling behind on paying their bills in the case of an unexpected costly event such as a layoff, cut in hours at work and medical emergency. The combination of poor jobs and low wealth creates a vicious cycle of low economic mobility and high economic insecurity for many Latinx families.
Importantly, Latino men and Latina women are more likely to work than is the case for white.. Among Latinas 20 years old and older, 58.1% were employed in August 2019 compared to 56.2% for white women. At the same time, 77.1% of Latinos had a job, while only 69.6% of white men did. Latinx individuals are more likely to work longer hours and are somewhat more likely to work full-time jobs than their white counterparts. In August 2019, for instance, 89.8% of employed Latino men worked full-time compared to 89.3% of white men. At the same time, 77.7% of Latina women worked full-time, while 76.3% of white women did.
The median usual weekly earnings for a full-time Latinx worker was $565 in the second quarter of 2019, compared to $933 for white workers who worked full-time. And only 49.6% of Latinx people had private health insurance in 2018, typically from an employer, compared to 69.3% for whites. Similarly, fewer than one-in-three non-retired Latinx households had a retirement savings plan at work from 2010 to 2016, while 55.9% of white households did. Additionally, Latinx workers are more likely to work in jobs with unpredictable schedules and thus uncertain earnings from week to week.
Low pay, fewer employer benefits and unstable jobs make it more difficult for Latinx families to save for their future. Lower earnings leave less money for families to put money away after they pay their bills. Families with lower earnings also get less or no help from the tax code for their savings than higher-income families do. Fewer employment-based health insurance benefits increase costs for Latinx families and less access to employer-sponsored retirement plans means that Latinx families get less help from an employer match, for instance, for their savings. To top it all off, less stable jobs and earnings make it much harder to plan for the future for Latinx families. This uncertainty regularly contributes to lower savings since families don’t know how much they will have left over from week to week.
But low-quality jobs are only one obstacle that makes it harder for Latinx families to save. They also face greater demands on their incomes. For example, Latinx families are more likely than any other racial or ethnic group to care for an ailing family parent or other family member. And Latinx families are more likely to have high-cost debt such as credit cards than their white counterparts do, adding another financial burden to their already stretched budgets.
Latinx families are getting squeezed from both sides. They have fewer opportunities to save and have larger costs at the same time. Not surprisingly, they have a lot less wealth than is the case for whites. In 2016, non-retired households 25 years old and older had less than one-sixth the median wealth of whites and less than one-fifth the average wealth of whites. At the median, Latinx working-age families owned $20,765 compared to $142,180 for whites.
This wealth gap reflects less access to key household assets for Latinx families than is the case for whites. Latinx families are less likely to have any retirement plan, have lower home ownership rates, and are much less likely to own their own business. For instance, only 6.6% of Latinx families owned all or a share of private business from 2010 to 2016, compared to 18.9% of white families. Worse, the value of these assets was much lower for Latinx families than for whites among all of those families that own such assets, reflecting the fact that Latinx families have fewer financial resources available to start or support a private business. The median value of Latinx owned businesses was $30,933 from 2010 to 2016, while it was $92,799 for whites. As Latinx families have fewer assets, they have a harder time investing in their future, making it more difficult to get away from the vagaries of low paying, unstable jobs with few benefits.
Addressing poor job quality is a large part of the solution to shrink the wealth gap between Latinx and white families. This will require substantially raising the minimum wage but also creating more pathways for people to join unions. Union membership boosts wealth for all families, but it has a disproportionately positive impact on Latinx and African-Americans. Union members have higher pay, better benefits and more stable jobs, all of which make it easier to save. Other policy steps should include debt free college and other means for people to gain an education and skills that doesn’t drown them in debt. Without substantially improving jobs and career paths, Latinx families will continue to fall behind whites, even as they make up a growing share of the population. Policymakers instead can take meaningful steps to put the American Dream in reach of all families, regardless of race and ethnicity.