Rapidly increasing amounts of debt, high job losses, skyrocketing gas and food prices, and a tidal wave of foreclosures are driving many American families to the edge of financial ruin. Although all U.S. households are hurt in the economic slowdown, Hispanic and African-American households are more vulnerable; they are likely to suffer first and to suffer more.
The 1990s were fruitful for both Hispanics and African Americans—as seen in the analysis below—because both groups made gains across several economic indicators and narrowed the gap between their economic standing and that of whites. Yet these gains have either slowed or been reversed since 2000.
Take a look at these key indicators of African Americans’ and Hispanics’ standing in the economy:
Family Income
Hispanics’ median family income declined by an average of 0.5 percent per year from 2000 to 2006, after rising an average of 1.5 percent per year in the 1990s. From 1990 to 2000, Hispanics’ median income rose from $33,394 to $38,834 (in 2006 dollars), an annualized average growth rate of 1.5 percent. Yet from 2000 to 2006, their median income decreased from $38,834 to $37,781, an annualized average decline of 0.5 percent. Whites’ median income also decreased during this time, but only by an annualized average rate of 0.3 percent. In 2006, whites’ median family income stood at $52,423, which was 1.4 times higher than Hispanics’ median family income of $37,781.
African Americans’ median income declined by an average of 1.3 percent per year from 2000 to 2006, after having risen by an average of 2.2 percent per year in the 1990s. From 1990 to 2000, African Americans’ median income rose dramatically from $27,929 to $34,735 (in 2006 dollars). But this number actually declined from $34,735 in 2000 to $32,132 in 2006, an annualized average decline of 1.3 percent. Whites’ median income decreased during this time as well, but only by an annualized average rate of 0.3 percent. In 2006, whites’ median income was $52,423, which is 1.6 times greater than African Americans’ median income in that year.
Unemployment
Hispanics’ unemployment rate has increased faster than whites’ since 2000, after declining more quickly than whites’ on average throughout the 1990s. Between 1990 and 2000, the unemployment rate for Hispanics declined by an average of 0.4 percent each year, but has since increased by an average of 0.2 percent each year. The unemployment rate for whites decreased at a moderately slower rate than Hispanics throughout the 1990s—an average of 0.1 percent each year—but has also risen more slowly since 2000, at an average annual rate of 0.1 percent each year. The disparity between the growth rates of the unemployment rates of the two races suggests that the current gap between the 5.6 percent unemployment rate for Hispanics and 4.1 percent for whites may continue to increase.
Unemployment levels for African Americans have increased an average of 0.1 percent since 2000 after consistently decreasing during the 1990s. The unemployment rate for African Americans declined by an average of 0.4 percent each year between 1990 and 2000, while the rate for whites declined by an annual average of 0.1 percent. Yet since 2000, the unemployment rate has averaged an annual increase of 0.1 percent for both African Americans and whites. African Americans’ unemployment rate in 2007 was 8.3 percent—4.2 percentage points higher than whites’ 4.1 percent unemployment rate.
Health Care
The percent of Hispanics not covered by health insurance increased by an average of 0.3 percent per year from 2000 to 2006, after holding steady during the 1990s. During the more prosperous economic times of the 1990s, the percent of Hispanics not covered by health insurance effectively held steady, decreasing by an annual percent difference of less than 0.1 percent from 1990 to 2000. But after rising by an average rate of 0.3 percent since 2000, 34.1 percent of Hispanics were not covered by health insurance in 2006. Only 10.8 percent of whites were not covered in 2006.
The percent of African Americans not covered by health insurance increased by an average of 0.3 percent per year from 2000 to 2006, after having decreased significantly in the 1990s. The number of African Americans without health insurance decreased from 19.7 percent in 1990 to 18.3 percent in 2000, an average annual decline of 0.2 percentage points. But from 2000 to 2006, the number of uninsured African-American individuals increased from 18.3 percent to 20.3 percent, an average annual rise of 0.3 percentage points. In 2006, 20.3 percent of African Americans were not covered by health insurance, compared to only 10.8 percent of whites who were not covered.
Retirement Plan Participation
Less than one-third of Hispanics participated in an employer-sponsored retirement plan in 2006, compared to over half of whites. Between 2002 and 2006, the share of Hispanics who participated in an employer-sponsored retirement plan in the private sector declined by an average rate of 0.9 percentage points per year. Hispanics were already less likely than whites to participate in an employer-sponsored retirement plan, with only 31.1 percent of Hispanics participating in 2002 compared to 58.8 percent of whites, but this gap has only widened. By 2006, the percentage of Hispanics who participated in an employer-sponsored retirement plan had fallen to 27.6 percent, well below the 55.0 percent of whites who participated.
Only 43.8 percent of African Americans participated in an employer-sponsored retirement plan in 2006, compared to 55.0 percent of whites. The percent of African Americans who participated in an employer-sponsored retirement plan in the private sector declined from 47.5 percent in 2002 to 43.8 percent in 2006, which translates to an annual decline of 0.9 percentage points. This further widened the gap between the percentage of African Americans and the percentage of whites participating in an employer-sponsored retirement plan, with 55.0 percent of whites participating in 2006, or roughly 20 percent more than the percentage of African Americans participating.
High-Cost Mortgages
Nearly 46 percent of home-purchase loans made to Hispanics in 2006 were high-cost, as opposed to only 18 percent for whites. Many more Hispanics got high-cost mortgages than did whites. Data collected under the Home Mortgage Disclosure Act show that 241,919 loans made to Hispanics were high-cost, as opposed to only 284,208 that were market-rate.
More than 53 percent of home-purchase loans made to African Americans in 2006 were high-cost, as opposed to only 18 percent for whites. Many more African Americans received high-cost mortgages than whites. Data collected under the Home Mortgage Disclosure Act show that 172,055 loans made to African Americans were high-cost, as opposed to only 150,301 that were market-rate.
Earnings
A large earnings gap between Hispanics and whites persists even though Hispanics’ usual median weekly earnings have grown at a faster average annualized rate than whites’ since 2000. Between 2000 and 2007, the usual median weekly earnings of Hispanics in 2006 dollars grew at an average annualized rate of 0.7 percent, while whites’ earnings grew at an average annualized rate of 0.2 percent. Despite the 0.5 percentage point difference between Hispanics’ and whites’ earnings growth rates, Hispanics’ usual median weekly earnings were a troubling $207.05 less than those of whites by the end of 2007. Hispanics usual median weekly earnings stood at just $488.94 (in 2006 dollars), while whites’ earnings were $695.95.
African Americans’ usual median weekly earnings have stagnated since 2000, while whites’ have continued to increase slightly. African Americans’ usual median weekly earnings (in 2006 dollars) have essentially remained unchanged since 2000, declining at an average annualized rate of -0.001 percent, while whites’ earnings grew at an average annualized rate of 0.2 percent. Although African Americans’ earnings rose slightly in the early 2000s, they have since declined, standing at $553.10 at the end of 2007—$0.04 below where they were in 2000 (in 2006 dollars). The earnings gap between African Americans and whites also continued to widen, standing at a $142.89 difference at the end of 2007.
Poverty
The percent of Hispanics living in poverty increased slightly from 2000 to 2006, after having declined significantly in the 1990s. In 1990, 25.0 percent of Hispanics were living in poverty, but by 2000, this number dropped to 19.2 percent, an average decrease of 0.7 percent per year. Yet from 2000 to 2006, the percent of Hispanics living in poverty increased, rising from 19.2 percent to 20.6 percent, or an annual percentage point difference of 0.2 percent. In 2006, the most recent year for which data is available, only 8.2 percent of whites were in poverty, compared to the 20.6 percent of Hispanics.
The percent of African Americans living in poverty increased from 2000 to 2006 by an average of 0.82 percent per year, after having declined by an average of 1.25 percent per year in the 1990s. The percent of African Americans in poverty decreased from 29.3 percent in 1990 to 19.3 percent in 2000, an annual decline of 1.3 percent. But much of these gains were lost from 2000 to 2006. The percent of African Americans in poverty jumped from 19.3 percent in 2000 to 24.2 percent in 2006, an annual increase of 0.8 percent. In 2006, only 8.2 percent of whites were in poverty, compared to the 24.2 percent of African Americans.
Homeownership Rate
Hispanics’ homeownership rose from 2000 to 2006, but at a much slower rate than from 1994 to 2000. The homeownership rate for Hispanics increased from 41.2 percent to 46.3 percent between 1994 and 2000—an annual increase of 0.85 percent. While it continued to rise from 2000 to 2006, it did so more slowly, rising from 46.3 percent to 49.7 percent, an annual increase of 0.6 percent. The homeownership rate for whites in 2006 was 75.8 percent, as compared to only 49.7 percent for Hispanics. Homeownership data by race are not available before 1994.
African-American homeownership rose at a slower rate between 2000 and 2006 than during the 1990s. From 2000 to 2006, the homeownership rate for African Americans increased by an average annual growth rate of just 0.1, from 47.2 percent in 2000 to 47.9 percent in 2006. Whites’ homeownership rate, in comparison, increased by an average annual growth rate of 0.3 percent. This trend is in part because African Americans have actually seen their homeownership rate decline since 2004. This is compared to the 1990s, when African Americans’ homeownership rate increased by an average annual growth rate of 0.8 percent from 1994 to 2000. Whites’ rate was 0.6 percent during this time. Homeownership data by race are not available before 1994.
Employment Level
Hispanics’ average annualized employment growth rate has markedly declined since the 1990s. The robust economy that dominated the later portion of the 1990s allowed the number of employed individuals to grow, a trend that was especially evident for Hispanics. Between 1990 and 2000, the number of employed Hispanics grew on average by an impressive 4.7 percent each year, while the number of employed whites grew by an average rate of 1.1 percent each year. Yet since 2000, these growth rates have markedly declined. The average annual employment growth rate for Hispanics shrank by almost a quarter between 2000 and 2007 from 4.7 percent in 2000 to 3.7 percent in 2007; the rate for whites declined from 1.1 percent to 0.7 percent during the same period.
African Americans’ employment rate has grown on average more than 60 percent more slowly since 2000 than it did throughout the 1990s. The robust economy that dominated the later portion of the 1990s allowed the number of employed individuals of all races to grow at steady rates. Between 1990 and 2000, the number of employed African Americans increased at an average rate of 2.2 percent each year, and the number of employed whites grew by an average rate of 1.1 percent each year. Yet between 2000 and 2007, the average annual employment growth rate for African Americans fell by more than 60 percent from 2.2 percent in 2000 to 0.8 percent in 2007; the rate for whites declined from 1.1 percent to 0.7 percent during the same period.
Employment to Population Ratio
The employment to population ratio for Hispanics has declined since 2000 after growing throughout the 1990s, The employment to population ratio for Hispanics—the percentage of the civilian population that is employed—increased by an average of 0.4 percentage points each year throughout the 1990s. Since 2000, the ratio has declined by an average of 0.1 percentage points each year. Whites’ employment to population ratio grew slower on average than Hispanics’ throughout the 1990s, increasing on average by 0.1 percent each year, and has declined by an average of 0.2 percent every year since 2000.
The employment to population ratio for African Americas has shrunk at a faster rate than whites’ since 2000 after growing at a faster rate during the 1990s. The employment to population ratio for African Americans increased by an average of 0.4 percentage points each year between 1990 and 2000, compared to whites’ average growth rate of just 0.1 percentage points each year. Yet since 2000, the employment to population ratio for African Americans has declined on average by 0.4 percentage points each year—more quickly than whites’ average decline of 0.2 percentage points per year. Importantly, the employment to population ratio of African Americans still lags behind that of whites, standing at 58.4 percent in 2007 compared to 64.9 percent for whites.
Sources
Family Income: U.S. Bureau of the Census, Historical Income Tables. White refers to white non-Hispanic. Beginning with 2002, data represent white non-Hispanic alone, which includes people who reported white alone or in combination. Beginning with 2005, data represent black alone or in combination. People of Hispanic origin may be of any race.
Unemployment: Bureau of Labor Statistics, Current Population Survey and Current Employment Statistics. African American refers to blacks and African Americans, and Hispanic refers to Hispanics and Latinos.
Health Care: U.S. Bureau of the Census, Historical Health Insurance Tables. White refers to white non-Hispanic. Beginning with 2002, data represent white non-Hispanic alone, which includes people who reported white alone or in combination. Beginning with 2005, data represent black alone or in combination. People of Hispanic origin may be of any race.
Retirement Savings: Current Population Survey data as analyzed in Purcell, Patrick. 2007. “Pension Sponsorship and Participation: Summary of Recent Trends.” Washington: Congressional Research Service. White refers to white non-Hispanic and African American refers to black non-Hispanic. 2002 was the first year the Current Population Survey used expanded categories of race and ethnicity, making comparisons with earlier years problematic.
High-Cost Mortgages: Home Mortgage Disclosure Act data. White refers to white non-Hispanic. People of Hispanic origin may be of any race. High-cost mortgages are defined as those with a rate three points or greater than the treasury rate when the loan was enacted.
Earnings: Bureau of Labor Statistics, Current Population Survey and Current Employment Statistics. African American refers to blacks and African Americans, and Hispanic refers to Hispanics and Latinos. Usual median weekly earnings refer to the median weekly earnings of a full-time non-self-employed wage and salary earner before taxes, including overtime pay, commissions, and tips earned from a primary job.
Poverty: U.S. Bureau of the Census, 2008 Statistical Abstract, Income, Expenditures, Poverty, and Wealth section. White refers to white non-Hispanic. Beginning with 2002, data represent white non-Hispanic alone, which includes people who reported white alone or in combination. Beginning with 2005, data represent black alone or in combination. People of Hispanic origin may be of any race.
Homeownership Rate: U.S. Bureau of the Census, Housing Vacancies, and Homeownership. White refers to white non-Hispanic. Beginning with 2002, data represent white non-Hispanic alone, which includes people who reported white alone or in combination. African American refers to African American only. People of Hispanic origin may be of any race.
Employment Level: Bureau of Labor Statistics, Current Population Survey and Current Employment Statistics. African American refers to blacks and African Americans, and Hispanic refers to Hispanics and Latinos.
Employment to Population Level: Bureau of Labor Statistics, Current Population Survey and Current Employment Statistics. African American refers to blacks and African Americans, and Hispanic refers to Hispanics and Latinos.