(April 2002) Prior to the current recession, the United States experienced the longest economic expansion in its history. Both the boom and the recent bust have demonstrated the special vulnerability of Hispanics to economic ups and downs.
The number of Hispanics and their economic fortunes grew markedly over the last decade. In March 1991, Hispanics in the labor force numbered 10.7 million, with an unemployment rate of 9.8 percent. By March 2001, their numbers had grown 47 percent to 15.7 million, and their unemployment rate had dropped to 6.2 percent. During the decade, inflation-adjusted median family income for Hispanics rose from $29,600 to $35,000. The poverty rate for Hispanics fell by one-third to 21 percent in 2000.
Declining unemployment was the most immediate reason for Hispanics’ improving fortunes (see figure). From 1995 to 2000, median family income for Hispanics rose by 27 percent in real terms, compared with 11 percent for all families. Hispanics’ income peaked in 2000 as their unemployment rate dropped to a prerecession low.
Hispanic Unemployment and Income
Note: Income is in constant 2000 dollars. Source: A. Krueger and J. Orszag, Hispanics and the Current Economic Downturn: Will the Receding Tide Sink Hispanics? (2002).
By December 2001, nine months into the recession, the Hispanic unemployment rate had risen to 7.8 percent, which translated into 1.3 million Hispanics out of work. During the recessions of the 1980s and 1990s, the climb in unemployment was steeper in the early phases, suggesting that Hispanics may be better off this time. However, the unemployment rate for Hispanics began to go up as early as late summer 2000, and for African Americans the trend became evident by late autumn. Unemployment data indicate that the recession began earlier for minority workers than for whites.
Hispanics are experiencing significant job losses in this recession because they were in the wrong place at the wrong time. The manufacturing sector alone has produced nearly one-fifth of all unemployed Hispanics. One reason is their concentration in the manufacture of nondurable goods (garments and food processing), where layoffs begin at the first sign of slackening demand. Beyond manufacturing, another fifth of the Hispanic unemployed are found in retail trade (eating and drinking establishments, and furniture and home furnishings). Together with construction, these three industries account for one-half of Hispanic unemployment.
Hispanics of Mexican origin, especially women, have had a particularly high level of job loss. In December 2001, the unemployment rate among Hispanics of Mexican descent was 7.9 percent, while among all other Hispanics it was 7.3 percent. Women of Mexican descent had an unemployment rate of 8.9 percent, compared with 7.2 percent for Mexican males.
The most striking characteristic of the recession’s impact has been worsening unemployment among second-generation Hispanics — those born in the United States who have at least one parent born abroad. This young population is 10 million strong, and nearly 3 million are in the labor force. In fact, the average age of members of the second generation is just 19 years old, and unemployment is known to be particularly high among teens and young adults less than 25 years old. By last December, unemployment among second-generation Hispanics was solidly above 9 percent and had spiked as high as 10 percent.
Hispanic unemployment is projected to hit 8.4 percent by mid-2002 before beginning a slow rebound to prerecession levels in 2004, if economists’ forecasts of a strong recovery are correct. On the other hand, if the pattern of recovery is more like that of the early 1990s, Hispanic unemployment could hit 10 percent in 2003 and not return to prerecession levels until March 2008. Under any scenario, median family income for Hispanics can be projected to remain stagnant through 2004 and perhaps even longer. Poverty, too, can be projected to increase.
Having gone into this recession in better overall economic shape than ever before, Hispanic workers may suffer less than they have in past downturns. But unemployment losses have been heavy, and Hispanics are still in for a prolonged period of losses as this recession runs its course. Many young people and recent immigrants are still establishing themselves in the work force. The lingering effects of this recession potentially will complicate that process.
B. Lindsay Lowell is director of research at the Pew Hispanic Center in Washington, D.C.
For More Information
This article is based on New Lows from New Highs: Latino Economic Losses in the Current Recession, by Roberto Suro and B. Lindsay Lowell of the Pew Hispanic Center, online at www.pewhispanic.org/site/docs/pdf/phc_report_final_draft.pdf.