By Christopher Robbins
Financial Advisor, June 1, 2016 —
Despite their growing influence, Hispanic Americans continue to fall behind in financial health.
According to a new report by The Hispanic Wealth Project, a New York-based non-profit, Hispanic households are lagging white households as a whole in net worth, with the median white household reporting a net worth 10 times that of the median Hispanic household.
In 2013, the year the report focuses on, white households had a median of $141,900 in wealth, compared with $13,700 for the median Hispanic household. In 2011, the median Hispanic household had only $8,438 in wealth, while the average white household had $111,146 in wealth.
Hispanic refers to an ethnic identity centered on the Spanish language, while white refers to a racial identity — thus some Hispanic households also identify as white, and some white households also identify as Hispanic. In 2015, the U.S. Hispanic population reached 57 million individuals, comprising 18 percent of the overall population.
Over the past five years, Hispanics accounted for 56 percent of new household formations in the U.S., and because of a divergence in birth rates, Hispanics are expected to account for 30 percent of the U.S. population by 2060.
Without active intervention, the HWP believes that the wealth gap will continue to widen.
That means that Hispanic households must be encouraged to own more non-cash financial assets, an area where they continue to lag white households as a whole.
According to the HWP, 25 percent of Hispanic households have taxable investment accounts, compared with 36 percent of white households. While more than half of white households, 55 percent, own stocks, only 17 percent of Hispanic households say the same, according to the HWP.
In its recommendations, the HWP says that advisors should focus on Hispanic family and cultural values as influencers to increase participation in non-cash financial instruments.
Yet there are signals of Hispanic households’ economic ascendancy. Hispanics accounted for 66 percent of the U.S. labor force growth and 73 percent of the increase in U.S. workers employed between 2000 and 2015, according to the HWP.
While Hispanics have a higher unemployment rate than the U.S. population as a whole, 5.4 percent versus 4.9 percent in February 2016, they also had a higher workforce participation rate, 66.1 percent versus 62.9 percent for the population as a whole.