by Maira García
The Hispanic middle class will enjoy dramatic growth in the next 10 years with the right financial strategies, contends a new analysis by the Tomás Rivera Policy Institute.
TRPI recommends in its report, released July 24, that financial institutions desiring to tap the income and spending power of the nation’s 44 million Hispanics should prepare for the change by adjusting their policies to attract and retain this expanding segment of the community.
The changes include requiring lower minimum balances for checking and saving accounts and offering more cash-based services and new credit scoring methodologies.
Harry Pachón, president and CEO of the University of Southern California-based-think tank emphasizes that its recommendations to the financial industry are substantive and will not necessarily be easy to implement.
But, it assures, the payoff will be great.
“You can start the process of financial literacy and financial rehabilitation now rather than waiting for 10 or 15 years,” Pachón says.
The report states that presently there are about 3.7 million affluent Hispanics nationwide. U.S. Census Bureau data for 2002 shows that 36 percent of Hispanic households had middle-class wealth.
The very existence of the Hispanic middle and upper classes has gone unnoticed in mainstream society, with their image remaining as a poor immigrant group, according to Pachón.
There are many routes to the middle class, he points out. “You get Hispanic entrepreneurs. You have people coming over (emigrating from other countries) with money already or an education. You get people with educational capital rather than monetary capital. Then you get job mobility of Latinos occurring.”
He says that ruling out immigrants and first-generation Hispanics as having the ability to move into the middle class would be wrong.
“The mobility of these two sectors has been overlooked by many,” he says. “Even the mobility of the undocumented has been overlooked.”
Contacted by Hispanic Link News Service, Rogelio Saenz, a sociology professor at Texas A&M University, compares incomes of native and foreign-born Hispanics to an hourglass figure. About 60 percent of all Hispanics whose income is $25,000 or less are foreign born. Those earning more than $25,000 are mostly native born. Hispanics earning above $250,000 tend to be well-educated immigrants.
The report notes that half of wealthy Hispanics are foreign born.
Saenz concurs the key for Hispanics to move up the socioeconomic ladder is education, stressing that the current system has to incorporate some changes.
“Something I think that is very important is at a very early, young age, you begin linking up people in the community — for example successful professional Latinos that work alongside schools where you have the role models that poor Latino children could have access to,” he says.
He suggests such priority programs as ones where role models would teach youths about financial responsibility.
The report is available at www.trpi.org.
(Maira García is a reporter with Hispanic Link News Service in Washington, D.C. Reach her care of firstname.lastname@example.org.) © 2007