Numbers, Facts and Trends Shaping Your World

The Wealth of Hispanic Households: 1996 to 2002

I. Overview

Hispanic households have less than ten cents for every dollar in wealth owned by White households.* This situation is worse than just a few years ago as the net worth of Hispanics was higher in the years leading into the 2001 recession. The recession eroded over one-quarter of the value of Hispanic wealth between 1999 and 2001. Latinos recouped some of that loss in the following year but ended 2002 with less wealth than they had in 1999. A similar picture emerges for Black households in recent years. The differences are that the net worth of Blacks is even less than that of Hispanic households and that it fell by more from 1999 to 2002. At the same time, the wealth of White households continued to grow, albeit at a slower pace than before the recession.

A Pew Hispanic Center analysis of data from the Census Bureau finds that the 2001 recession and the jobless recovery that followed were much harder on the net worth of minority households. Large segments of Hispanic and Black households are extremely vulnerable to economic downturns since over one-quarter of them have zero or negative net worth. Also, more than one out of four Hispanic and Black households owns no assets other than a car or unsecured debt. Most Hispanics and Blacks fall into the lowest category of wealth and the size of their middle-class is relatively small in itself and in comparison to Whites. One result of this is that the wealthiest 25 percent of households own over 90 percent of the total wealth in the Hispanic and Black communities. But even the wealthiest five percent of Hispanic households have a net worth that is less than one-half of the net worth of comparably placed White households.

The wealth gap between White households on the one hand and Hispanic and Black households on the other is much higher than the difference in income across these groups. Even though the median income of Latino and Black households is two-thirds as high as that of White households their wealth is only one-tenth as much. The reasons for this disparity include the facts that minorities have more limited access to financial markets and face greater barriers to homeownership. The ownership of a home bears a strong relationship with the net worth of a household. Homeowners own more of other assets and have a huge advantage in net worth over renters and other households. Hispanic homeowners, in fact, have a net worth that is half as much as the wealth of non-Hispanic homeowners. But non-Hispanic households are much more likely to own homes and that creates an even bigger gulf in wealth across the two groups.

Compared to Whites, Hispanics are also relatively young, not as highly educated, concentrated in high cost regions, such as New York and California, where homeownership can be less attainable, and are much more likely to be immigrants. All of these factors contribute to lower levels of wealth but are also self-correcting to some extent. The wealth gap should shrink as the Latino population ages and acquires greater education, especially college degrees. The Hispanic population is also starting to penetrate into new settlement areas, such as, Raleigh, Omaha and Nashville, with lower costs of living than the traditional areas of concentration, and this trend may help more Latino households become homeowners. As immigrants assimilate into labor and financial markets, their income and wealth rises naturally. Although the process of assimilation is not complete in the sense that it leads to wealth parity, it does eliminate much of the initial wealth gap between immigrants and native-born households.

The data from the Census Bureau enable the estimation of wealth maintained within the borders of the U.S. only. But, many immigrants, and especially Hispanics, display a strong propensity to send remittances to their source countries. Indeed, for many migrants the ability to support family members through remittances is an important motive for coming to the United States. Remittance flows to Latin American and Caribbean countries are presently estimated at more than $30 billion per year. That computes to over $2,500 per year for each Hispanic household in the U.S. If that sum were saved and invested within the U.S. it would have a significant impact on the measured wealth of Hispanic households, even if it were not nearly enough to close the gap between them and non-Hispanic households.

Major findings of this report include:

  • The median net worth of Hispanic households in 2002 was $7,932. This was only nine percent of $88,651, the median wealth of White households at the same time. The net worth of Black households was only $5,988.
  • Between 1999 and 2001, the net worth of Hispanic and Black households fell by 27 percent each. The net worth of White households increased by 2 percent.
  • Twenty-six percent of Hispanic, 32 percent of Black and 13 percent of White households had zero or negative net worth in 2002. These proportions are essentially unchanged since 1996.
  • Fifty-five to 60 percent of Hispanic and Black households had wealth less than one-fourth the national median level of wealth between 1996 and 2002. Fewer than 40 percent have middle-class levels of wealth and this proportion has not changed since 1996. Nearly 75 percent of White households have middle-class or higher levels of wealth.
  • The wealthiest 25 percent of Hispanic and Black households own 93 percent of the total wealth of each group. Among White households, the top 25 percent own 79 percent of total wealth.
  • The percentage of White households who owned homes in 2002 was 74.3 percent. The homeownership rates for Hispanic and Black households were 47.3 percent and 47.7 percent respectively.
  • Financial market participation for Hispanic and Black households is well below the norm for White households. More than 25 percent of Latino and Black households, and only 6 percent of White households, own no assets other than a vehicle or unsecured liabilities.
  • Home equity is a key component of household wealth and accounts for two-thirds of the mean net worth of Hispanic and Black households. The strength of the housing market in the recent economic slowdown eased the erosion in wealth of households which can be traced to the loss in value of financial assets.
  • The median net worth of renters is only one percent of the level of net worth of homeowners.
  • The net worth of immigrant households is only 37 percent of the net worth of native born households. Immigrants tend to be younger and less educated and their incomes are below average. Many are also in the early stages of assimilation.
  • Hispanic immigrants from Central American and Caribbean countries had a net worth of only $2,508 in 2002. Cuban immigrants led the way for first-generation Hispanics with a net worth of $39,787. Mexican immigrants are in the middle with a net worth of $7,602 in 2002.
  • Immigrants, Hispanic and non-Hispanic, show initial signs of rapid assimilation into homeownership, but it takes about 20 years for the homeownership rate among immigrants to equal the rate among native-born households of the same ethnicity.

* The terms Latino and Hispanic are used interchangeably in this report. The terms White and Black refer to the non-Hispanic portions of those racial groups.

  1. The terms “wealth” and “net worth” are used interchangeably in the report. Net worth is the market value of assets owned by households less the liabilities of those households. A list of assets appears in Table 6 below.
  2. For example, see Asena Caner and Edward Wolff, “Asset Poverty in the United States: Its Persistence in an Expansionary Economy,” The Levy Economics Institute, Public Policy Brief No. 76, 2004.
  3. A series of recent reports by the Pew Hispanic Center have examined employment and wage trends for Hispanic and non-Hispanic workers over the past decade. See “Jobs Lost, Jobs Gained: The Latino Experience in the Recession and Recovery,” October 2003, “Latino Labor Report, 2003: Strong but Uneven Gains in Employment,” February 2004, and “Latino Labor Report, First Quarter, 2004: Wage Growth Lags Gains in Employment,” June 2004. Detailed tables on the employment and earnings of Hispanic workers are also available on the Web site of the Pew Hispanic Center (
  4. Differences between the SIPP and SCF are explored in detail in Shawna Orzechowski and Peter Sepielli, “Net Worth and Asset Ownership of Households: 1998 and 2000,” U.S. Census Bureau, P70-88, May 2003.
  5. See the appendix for additional details on SIPP and the time periods referenced in this report. Because of the timings of the surveys, SIPP did not collect wealth data for 2000.
  6. The median net worth is the number which divides the wealth distribution into two equal halves, with one-half of households owning more and the other half of households owning less than the median amount of wealth.
  7. A wide gulf between White and Hispanic households is also observed in estimates from the Survey of Consumer Finances. Research by Edward Wolff shows that, in 1995, the wealth of Hispanics was only eight percent of the wealth of White households. This proportion fell to three percent by 2001. Over the same time period, the wealth of Black households was estimated to be around 10 percent of the wealth of White households. See Edward Wolff, “Changes in Household Wealth in the 1980s and 1990s in the U.S.” The Levy Economics Institute, Working Paper No. 407, May 2004. Wolff excludes equity in vehicles and other consumer durables from his definition of wealth. There are also other differences in the definition of wealth and ethnicity between SIPP and SCF. The Federal Reserve Board, which conducts the SCF, does not publish wealth estimates for Hispanic or non-Hispanic Black households.
  8. Using data from the Survey of Consumer Finances, Edward Wolff (see citation in footnote 7) reports that the following percentages of households had zero or negative net worth in 2001: Hispanic—35.3 percent, Black—30.9 percent, and White—13.1 percent. Thus, the SCF data also show that Hispanic and Black households were two to three times more likely than White households to be without assets or in net debt.
  9. It should be noted that the wealth distribution of White households may be more concentrated at the top than shown in Table 4. By design, SIPP data contain an over sample of low-income households. Therefore, in comparison to other surveys of wealth, e.g., the Survey of Consumer Finances, estimates of wealth from SIPP tend to be on the low side. To the extent that the richest households, more likely to be White than Hispanic or Black, are under sampled in SIPP, the distribution of wealth for non-Hispanic Whites may appear more equal than it really is. For more on the distribution of wealth as estimated from SCF data see the Edward Wolff paper cited in footnote 7 or Arthur B. Kennickell, “A Rolling Tide: Changes in the Distribution of Wealth in the U.S., 1989-2001,” Federal Reserve Board, March 3, 2003.
  10. The Federal Reserve Board also finds that, between 1998 and 2001, net worth increased faster for households positioned above the median. See Ana M. Aizcorbe, Arthur B. Kennickell, and Kevin B. Moore, “Recent Changes in U.S. Family Finances: Evidence from the 1998 and 2001 Survey of Consumer Finances,” Federal Reserve Bulletin, January 2003.
  11. “Income, Poverty, and Health Insurance Coverage in the United States: 2003,” U.S. Census Bureau, P60-226, August 2004. Not only is the median income of Hispanics and Blacks closer to the income of non-Hispanics it is also more evenly distributed in comparison to wealth. In Table 3 it was shown that nearly 60 percent of Hispanics and Blacks have wealth that is less than one-fourth the national median level of wealth. The Pew Hispanic Center estimates that only about 10 percent of Hispanics and 18 percent of Blacks have income that it less than one-fourth the national median level of income as reported by the Census Bureau ($43,318 per household in 2003). When ranked by income, most Hispanics and Blacks would fall into the lower-middle income category, i.e., income from one-fourth to the national median level of income.
  12. Another potential source of error with longitudinal data such as SIPP is “attrition bias.” That arises from the departure of households or persons from the sample over time.
  13. This finding echoes that of earlier reports released by the Pew Hispanic Center that studied the impact of the latest recession on the employment and earnings of different racial/ethnic groups. See the PHC reports referenced in footnote 3 above.
  14. Based on the analysis of data from the Survey of Consumer Finances, the Federal Reserve Board reported an increase of 10.4 percent in the median wealth of all U.S. households between 1998 and 2001 (see the reference in footnote 10). The gains for White and Black households were reported to be 16.9 percent and 13.1 percent respectively. Estimates from the SIPP, as shown in Table 5, also reveal double-digit percentage increases in the wealth of all households and White households between 1998 and 2001. The difference is that SIPP data show a decline in the wealth of Black households from 1998 to 2001. That may be a consequence of the fact that SIPP over samples low-income households and the opposite is true of the Survey of Consumer Finances.
  15. The estimated rates of homeownership from the SIPP data are very similar to those reported by the Census Bureau from its annual Housing Vacancy Survey. According to that survey, the homeownership rates by race and ethnicity in 2002 were as follows: Hispanics—47 percent, Whites—74.7 percent, and Blacks—47.4 percent. One difference between SIPP and the Housing Vacancy Survey is that the latter indicates a 4.2 percentage point increase in the homeownership rate for Hispanics between 1996 and 2002 instead of the 3.1 percentage point increase derived from SIPP.
  16. The magnitudes of the declines in these asset values for Hispanics are likely to have been affected by the sample effect discussed in section 3 above. But the direction of the change is unlikely to have been the consequence of just the sample effect, especially since the same changes are observed for White households and the stock market began a slide in 1999 that lasted several years.
  17. The non-Hispanic category includes non-Hispanic Whites, non-Hispanic Blacks, and non-Hispanic Others (Asians and others).
  18. Gaps of this magnitude also emerge from SCF data. Aizcorbe, Kennickell and Moore (see the citation in footnote 10) report that the median wealth of renters and others was less than three percent of the median wealth of homeowners in 2001.
  19. Table 6 shows data for non-Hispanic Whites and Blacks only. The homeownership rate of non-Hispanic Others was 57 percent in 2002.
  20. As is the case with previous tables, the median values are only computed over the set of households that own any particular asset.
  21. The income quintile ranges are given in the footnote to Table 12.
  22. See the papers by Edward N. Wolff (cited in footnote 7) and Ana M. Aizcorbe, Arthur B. Kennickell and Kevin B. Moore (cited in footnote 10).
  23. For non-Hispanics, the rate of homeownership in New York was 59.3 percent in 2002, much below the national average rate of 70 percent.
  24. A recent report by the Tomás Rivera Policy Institute examines barriers to homeownership for Mexican-Americans in three large metropolitan areas in the South and West. See Jongho Lee, Louis Tornatzky and Celina Torres, “El Sueño de su Casa: The Homeownership Potential of Mexican-Heritage Families,” The Tomás Rivera Policy Institute, 2004.
  25. The sample of households used to derive the estimates in Tables 17 to 20 is different from the sample for all preceding estimates except for the estimates in section 3. The immigrant status of a person in the SIPP sample is ascertained only during the second wave (Wave 2) of interviews. Thus, in Tables 17 to 20 the sample consists only of persons who were also present and interviewed during Wave 2. The size of this sample shrinks over time as households attrite from the SIPP panel for a variety of reasons.
  26. Data on the age, education and income of Hispanics by generation are available on the Web site of the Pew Hispanic Center (
  27. Other studies that have looked at the role of the characteristics of immigrants in determining relative wealth are Deborah A. Cobb-Clark and Vinvent Hildebrand, “The Wealth and Asset Holdings of U.S.-Born and Foreign-Born Households: Evidence from SIPP Data,” Australian National University, December 9, 2002, and Lingxin Hao, “Immigrants and Wealth Stratification in the U.S.,” Johns Hopkins University, January 2001.
  28. See the citations in footnote 3.
  29. Homeownership by immigrants is studied in detail in Demetrios Papademetriou and Brian Ray, “From Homeland to a Home: Immigrants and Homeownership in Urban America,” Fannie Mae Papers, Vol. 3, Issue 1, March 2004. Another detailed study is by George J. Borjas, “Homeownership in the Immigrant Population,” Research Institute for Housing America, Working Paper No. 02-01, March 2002. Their estimates of the gap in homeownership between native-born and foreign-born households are similar to those reported in Table 17.
  30. This issue was first raised by George Borjas, “Assimilation, Changes in Cohort Quality, and the Earnings of Immigrants,” Journal of Labor Economics, Vol. 3, No. 4, 1985.
  31. Sample attrition can cause a bias in estimates of the change in wealth of a cohort if more wealthy (or less wealthy) households are systematically more or less likely to exit the sample over time.
  32. The data for 2001 and 2002 come from a different SIPP sample and also utilize somewhat different definitions for immigrant cohorts. Therefore, the data for these two years should not be compared with the earlier years for judging the assimilation of a specific cohort.
  33. A similar conclusion is reached by Sherrie Kossoudji and Stan Sedo, “Immigrants, Natives, and Home Ownership,” paper presented at the conference on Financial Access for Immigrants: Learning from Diverse Perspectives, Federal Reserve Bank of Chicago, April 15-16, 2004.
  34. Details on SIPP are available at Additional information on SIPP, especially as it pertains to the estimation of wealth, is contained in the following report: Shawna Orzechowski and Peter Sepielli, “Net Worth and Asset Ownership of Households: 1998 and 2000,” U.S. Census Bureau, P70-88, May 2003.
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