Compared with the general population, Latinos are less likely to hold debt. Some 28% of Latinos report that they have no credit card or installment loan debt whatsoever, compared with 19 percent of the general population (Pew Research Center for the People & the Press, October 2008). More than half (55%) of the general population reports carrying a small amount of debt that is either equal to, or less than, what they can afford. Among Latinos, this share is 46%. The likelihood of carrying high debt is roughly equal among Latinos and the general population. About one-fourth of Latinos (23%) and the general population (25%) state that they owe more than they can afford on credit cards and installment loans.
Foreign-born Latinos are less likely than their native-born counterparts to struggle with debt. Only one-in-five (19%) of the foreign born report that they have more debt than they can afford. In comparison, 28% of native-born Latinos say the same. Due in part to being not entering credit markets or not considered creditworthy (Kochhar 2004) immigrant Latinos are also more likely to report that they carry no debt at all compared with native-born Latinos (34% versus 23%).
There is no association between respondents’ annual household income, education or employment status and their view that they carry more debt than they can afford. In fact, Hispanics who are less educated, of lower income or not employed are all less likely to report having any debt in the form of loans or credit cards. For instance, 39% of Latinos lacking a high school diploma also report no debt whatsoever, compared with 24% of Latinos with a high school diploma and 13% of Latinos who are college graduates or more. While 36% of Latinos earning less than $30,000 annually lack any debt, this share drops to 13% for Latinos making $30,000 or more a year. And while 38% of Latinos who are not employed lack any debt, the share drops to 22% for employed Latinos.
The Recession and Hispanic Workers
According to a Pew Hispanic Center analysis of the Current Population Survey, Hispanics, like all U.S. workers, found few new job openings and faced sharply rising unemployment in the past year (Latino Workers in the Ongoing Recession: 2007 to 2008). The unemployment rate for Latinos increased from 5.7% in the third quarter of 2007 to 7.9% in the third quarter of 2008. That is a sharper rise than the increase for non-Hispanic workers, which went from 4.6% to 5.8% in the same period.
The increase in the unemployment rate was especially severe for native-born Hispanics, whose unemployment rate is now 9.6%, up from 7.1% in the third quarter of 2007. The unemployment rate for foreign-born Hispanics in the third quarter of 2008 was 6.4%, not much higher than the 6.1% rate for the total U.S. workforce. However, a smaller share of the foreign-born Hispanic workforce is currently active in the labor force than a year ago. If the same share had remained in the labor force, actively looking for work, the unemployment rate for foreign-born Hispanics today would be nearly 8%.
The majority of workers have experienced wage cuts. In unpublished tabulations from the Current Population Survey, the Pew Hispanic Center compared the weekly earnings of a group of Hispanic workers in the third quarter of 2008 with their earnings in the third quarter of 2007. More than 50% of this group was earning less in 2008 than in 2007. Non-Latino workers experienced similar wage declines during the same period.