HAZLETON, PA - MARCH 14: Members of the Castillo family sit in their living room March 14, 2007 in Hazleton, Pennsylvania. (Photo by Spencer Platt/Getty Images) (2007 Getty Images)
The size of the Hispanic workforce is at an all-time high, Latinos are more college educated than ever.
But despite this, Hispanic families brought in less income and have less wealth than they did two decades ago.
In other words, all the college degrees earned by Hispanics over the last two decades have not led to long term wealth, government data shows. What’s more, Latinos with degrees got hit harder by the recession than those without.
While the U.S. job market relies on Latino employees more than ever before, with the Hispanic labor participation rate up 137 percent in 20 years, and the number of Latinos attending college more than tripling since 1996, according to Pew Research, the wealth gap continues to grow as income and wealth for Hispanic families is less today than it was in 1992.
The bewildering report by the Federal Reserve Bank of St. Louis found that a typical Hispanic or black family earned less income and built less wealth in 2013 than they did in 1992. Median net worth for college educated Hispanic graduates fell by 27 percent between 1992 and 2013, and median real income fell 10 percent. Meantime, non-Hispanic whites earned 18 percent more income and their net worth rose by 86 percent in the last two decades.
Perhaps more perplexing is that non-college educated Hispanic family income went up by 16 percent and their wealth grew by 31 percent.
“Why didn’t higher education protect Hispanic and black family wealth from either short-term turbulence or long-term competitive pressures?” the report asked.
The report concluded that the financial decision-making, the way Hispanic and black college-educated families spent their money during the so-called Great Recession and its aftermath, are most at fault.
Before the recession Hispanic and black families had way more debt than income, and also were the biggest losers during the housing collapse when families were buying homes they couldn’t afford and banks were giving out mortgages to just about anyone.
So does this mean Hispanic families should stop going to college?
No, to the contrary, Hispanics need to continue to get more advanced education, according to the experts.
“One reason why the income and wealth ratios are highest among white and Asian college graduates is that they are more likely than black or Hispanic college graduates to have graduate or professional degrees,” the federal reserve report said. “Advanced degrees typically provide significantly higher earnings and are strongly associated with greater wealth accumulation.”
The federal Bureau of Labor Statistics found “the under-education of Hispanics” is “particularly critical” to the wealth disparities in this country. “While Hispanics have been acquiring more schooling in recent years, non-Hispanics have as well, which has maintained the Hispanic/non-Hispanic education disparity,” the BLS report said.
Not only did the recession impact Hispanic families worse than any other group, losing 72 percent of their wealth during the six-year recession, but the financial crisis led to the disappearance of middle-class jobs that did not require as much education – disproportionately affecting the community.
“In the past couple of decades, many jobs have become increasingly skill-intensive,” the BLS report said. “These labor market structural changes suggest that without making additional investments in the education of Hispanics, they are likely to fall further behind in upcoming years.”
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