News Column

The Hispanic Middle Class Comes of Age

Middle class family

U.S. Hispanics are more numerous – and more prosperous – than ever. By Robert R. Brischetto
HISPANIC BUSINESS® magazine, Dec. 2001 The phenomenal growth of the U.S. Hispanic population has been among the most remarkable demographic trends of the past two decades. And nowhere is that growth more pronounced than among the Hispanic middle class. Between 1979 and 1999, the Hispanic middle class grew 71.2 percent to number 9.5 million, according to Census data. At the same time, Hispanics achieved impressive gains in terms of household income, educational attainment, and homeownership. Hispanic households earning between $40,000 and $140,000 annually reached 2.5 million in 1999, or about one-third of all Hispanic households nationwide. Last year, 64 percent of middle-class Hispanic households either owned or were buying a home, and 20 percent were headed by someone with a bachelor's or an advanced degree, according to HispanTelligence®, the research division of Hispanic Business Inc. But these figures tell only part of the story. In fact, the expansion of the Hispanic middle class is one of the dominant forces shaping economic life in the United States, the full implications of which are yet to be seen. Just as the baby-boom generation put its indelible mark on American culture and became the focus of Madison Avenue and corporate marketing, so will the "Hispanic generation" as it continues to grow and gain economic clout. "I think it's going to shock the heck out of most people out there – specifically, companies that had not found the Hispanic market a worthy target, perhaps because they believed that Hispanics didn't have any money," says Jose Villasenor, a vice-president at Ketchum Inc., a global marketing communications firm. "For any corporation that hadn't, in the past, thought about the Hispanic market, the huge growth of the middle class should convince them that they need to look at that." The following articles and accompanying charts examine the Hispanic middle-class phenomenon, including income and education levels, occupational trends, homeownership rates, voting tendencies, and ethnic breakdowns. Trends in Economic Class Size and Income Education and Class Status Portrait of the Hispanic Middle Class Conclusion How the Study Was Conducted The HISPANIC BUSINESS middle-class study was based chiefly on individual and household-level records taken from the 1 percent Public Use Microdata Samples (PUMS) of the 1980 and 1990 Census and the Current Population Survey (CPS) conducted by the Census Bureau in March of each year from 1996 to 2000. We pooled the samples from the CPS over five years in order to achieve greater stability in the estimates of subgroups of the Hispanic population. The data sets for the 1980 and 1990 PUMS files and the 1996–2000 PUMS files were obtained from the University of California at Irvine's Center for Research on Immigration, Population, and Public Policy, under the direction of Professor Frank Bean. Magnus Lofstrom put together the data sets, which were limited to information on households headed by persons age 15–64, or those identified as the working sector. All figures for income and earnings reported in this research were converted to 1998 dollars, using the national city average of the Current Price Index for Urban Consumers. "Middle class" was defined in absolute rather than relative cut-off points and based on previous research conducted by HISPANIC BUSINESS (November 1994). Households with total annual income between $40,000 and $140,000 were categorized as middle class. A similar definition (without the upper bound) was used by the Center for Research on Immigration, Population, and Public Policy in its study, The Latino Middle Class, published by the Tomás Rivera Policy Institute. Since the higher-income group, however small, differed in many important ways from the middle-income group below it (see the table titled "Characteristics of Hispanic Income Classes: 1996–2000"), we thought it important to distinguish the two groups in discussing the Hispanic middle class. Furthermore, most economists recognize that the upper class differs substantially from the middle class in lifestyle, entrepreneurship, and asset-building behavior. This continues the distinction established in our 1994 report. We limited our analysis to cross-tabulations and comparisons of group means with controls for other variables instead of a multivariate model that measures the effects of various factors on income differences. The subgroup samples were large enough in most cases to discuss differences as real characteristics of the larger population and not the result of sampling error. Where differences were too small to rule out sampling error as an explanation, those differences were noted as nonexistent or not significant.

Source: HISPANIC BUSINESS magazine

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