by Maira Garcia
The Hispanic middle class could see dramatic growth in the next 10 years with the right financial strategies, according to a report released July 24 by the Tomas Rivera Policy Institute.
The report proposes financial institutions that want to tap into the income and spending power of the 44 million Hispanics in the United States should adjust policies to attract and keep them. 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-TRPI, said its recommendations to the financial industry were substantive and would not be easy to change overnight, payoff would be great.
“You can start the process of financial literacy and financial rehabilitation now rather than waiting for 10 or 15 years,” he said. The U.S. Census Bureau estimated 36 percent of Hispanic households in 2002 had middle-class wealth. The report indicated there were about 3.7 million affluent Hispanics nationwide.
The very existence of the Hispanic middle and upper classes goes unnoticed in mainstream society, according to Pachón. The image of Hispanics remains as a poor immigrant group, he said.
Pachón said there are many routes to the middle class for Hispanics.
“You get Hispanic entrepreneurs. You have people coming over with money already or an education,” he said. “You get people with educational capital rather than monetary capital. Then you get job mobility of Latinos occurring.”
However, Pachón said 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 said. “Even the mobility of the undocumented has been overlooked.”
Rogelio Saenz, a sociology professor at Texas A&M University,
compared incomes of native and foreign-born Hispanics to an hourglass figure. He said about 60 percents 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 stated 50 percents of wealthy Hispanics are foreign born.
Saenz said the key for Hispanics to move up the socioeconomic ladder is education, but there would have to be changes in the current system.
“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 said.
Saenz proposed programs where role models could teach Hispanic youths about financial responsibility.
The report is available at www.trpi.org. Hispanic link.
