1 The Hispanic Economic Experience Federal Reserve Bank of Dallas June 16, 2011 Trends in Poverty and Inequality Trends in Poverty and Inequality among Hispanics among Hispanics Pia Orrenius, Dallas Fed & Madeline Zavodny, Agnes Scott College Disclaimer: The views expressed herein are those of the presenter; they do not necessarily reflect the views of the Federal Reserve Bank of Dallas or the Federal Reserve System. 35 40 Poverty Rate Poverty rates declined since 1970, Poverty rates declined since 1970, but not for Hispanics but not for Hispanics 10 15 20 25 30 35 Hispanics Non-Hispanic Blacks 0 5 10 1970 1980 1990 2000 2010 Source: Authors’ calculations from IPUMS data from the 1970-2000 Censuses and the 2010 March Current Population Survey. Non-Hispanic whites
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1
The Hispanic Economic ExperienceFederal Reserve Bank of Dallas
June 16, 2011
Trends in Poverty and Inequality Trends in Poverty and Inequality among Hispanicsamong Hispanics
Pia Orrenius, Dallas Fed &
Madeline Zavodny, Agnes Scott College
Disclaimer: The views expressed herein are those of the presenter; they do not necessarily reflect the views of the Federal Reserve Bank of Dallas or the Federal Reserve System.
35
40
Poverty Rate
Poverty rates declined since 1970, Poverty rates declined since 1970, but not for Hispanicsbut not for Hispanics
10
15
20
25
30
35
Hispanics
Non-Hispanic Blacks
0
5
10
1970 1980 1990 2000 2010
Source: Authors’ calculations from IPUMS data from the 1970-2000 Censuses and the 2010 March Current Population Survey.
Non-Hispanic whites
2
14
16 All Hispanics Non-Hispanic Whites
Percent
Hispanics more likely to be at bottom of Hispanics more likely to be at bottom of the income distributionthe income distribution
4
6
8
10
12
0
2
4
1 2 3 4 5 6 7 8 9 10Deciles
Source: Authors’ calculations from IPUMS data from the 2009 American Community Survey.
Poverty PuzzlePoverty Puzzle
Poverty rates for nonPoverty rates for non--Hispanic blacks Hispanic blacks d d 10 i t i 1970d d 10 i t i 1970dropped 10 points since 1970dropped 10 points since 1970
Poverty rates for Hispanics stagnantPoverty rates for Hispanics stagnant
Why?Why? Immigration? Immigration?
3
30Poverty Rate
Hispanic immigrantHispanic immigrant--native poverty native poverty gap at record high in 2010gap at record high in 2010
Immigrants
20
25
Natives
15
1970 1980 1990 2000 2010
Source: Authors’ calculations from IPUMS data from the 1970-2000 Censuses and the 2010 March Current Population Survey.
40
45
Poverty Rate
Hispanic immigrants from Mexico Hispanic immigrants from Mexico have highest poverty ratehave highest poverty rate
15
20
25
30
35
40
Cuba
Mexico
Central America
Caribbean
Puerto Rico
5
10
15
1970 1980 1990 2000 2010
Source: Authors’ calculations from IPUMS data from the 1970-2000 Censuses and the 2010 March Current Population Survey.
South America
4
So far…So far…
HispanicsHispanics Improvement in poverty rates limited to Improvement in poverty rates limited to
nativesnatives
Poverty rates for immigrants worsened in Poverty rates for immigrants worsened in recessionrecession
What if we follow groups over time?What if we follow groups over time?New immigrants have higher poverty than New immigrants have higher poverty than established immigrantsestablished immigrants
35
40
Poverty Rate
Hispanic immigrant cohorts: Hispanic immigrant cohorts: poverty rates drop with time in U.S.poverty rates drop with time in U.S.
15
20
25
30
352005-2010
1965 1970
1995-2000
1985-1990
1975-1980
5
10
15
1970 1980 1990 2000 2010
Source: Authors’ calculations from IPUMS data from the 1970-2000 Censuses and the 2010 March Current Population Survey.
1965-1970
5
35
40
Poverty Rate
Hispanic natives: Hispanic natives: poverty rates drop with agepoverty rates drop with age
15
20
25
30
35
2010
2000
5
10
15
1970 1980 1990 2000 2010
Source: Authors’ calculations from IPUMS data from the 1970-2000 Censuses and the 2010 March Current Population Survey.
1970
19901980
Explaining the poverty gapExplaining the poverty gap
Oaxaca decomposition (2009 ACS)Oaxaca decomposition (2009 ACS) Gap is due to differences in characteristics Gap is due to differences in characteristics
((explainedexplained) and returns to characteristics ) and returns to characteristics ((unexplainedunexplained))
ExampleExampleEducation differences: 9.6 % less than high school Education differences: 9.6 % less than high school
39 1 % l th hi h h l d39 1 % l th hi h h l dvsvs 39.1 % less than high school degree39.1 % less than high school degree
Returns to education differ: reward for an Returns to education differ: reward for an additional year of education additional year of education
Unexplained portion could be many factors…Unexplained portion could be many factors…
6
12
14% points
What explains the poverty gap? What explains the poverty gap? Hispanics vs. nonHispanics vs. non--Hispanic whitesHispanic whites
0
2
4
6
8
10
2. Hours worked
3. Age4. Education
1. English
-2
Source: Authors’ calculations from IPUMS data from the 2009 American Community Survey.
8
10% points
What explains the poverty gap? What explains the poverty gap? Hispanic natives vs. nonHispanic natives vs. non--Hispanic whitesHispanic whites
0
2
4
6
-2
Source: Authors’ calculations from IPUMS data from the 2009 American Community Survey .
7
14
16% points
What explains the poverty gap? What explains the poverty gap? Hispanic immigrants vs. nonHispanic immigrants vs. non--Hispanic whitesHispanic whites
0
2
4
6
8
10
12
-2
Source: Authors’ calculations from IPUMS data from the 2009 American Community Survey .
Poverty gapsPoverty gaps
Explained byExplained by English speaking abilityEnglish speaking ability
Hours workedHours worked
AgeAge
EducationEducation
Unexplained portionUnexplained portionUnexplained portionUnexplained portion Biggest for Hispanic nativesBiggest for Hispanic natives
8
What else?What else?
Lack of legal statusLack of legal status Lower wages: Work for less, change jobs Lower wages: Work for less, change jobs
more often, less training, fewer promotions, more often, less training, fewer promotions, no benefitsno benefits
Less public assistance: No cash welfareLess public assistance: No cash welfare
Great RecessionGreat Recession
What does the future What does the future hold for Hispanics?hold for Hispanics?
Danger signsDanger signs OneOne--third Hispanic children live in poor third Hispanic children live in poor
familiesfamilies
Troubling trendsTroubling trends Rise in nonRise in non--marital birthsmarital births
Growing elderly populationGrowing elderly population Growing elderly populationGrowing elderly population