Latinos will make up more than 1 in 5 American workers by 2030. Yet despite high rates of job participation and entrepreneurship, the massive pay gap remains one of the factors hindering their economic mobility, a new study Have got.
The pay gap for Latinos stands at $288 billion a year, according to “The Economic Situation of Latinos in America: The American Dream Deferred,” a report by McKinsey & Company in partnership with the Aspen Institute, released Wednesday.
“Latino workers, as a group, receive 2/3 in a parity scenario, where all Latino workers are paid at the level of their white counterparts in each occupation, and US-born Latino workers in the same occupations. is represented in the rate as an overall population,” the report found.
If these inequalities are reduced, the median wage for Latino workers could be 35 percent higher and more than 1.1 percent. There will be millions more Latinos in the middle class, the study concluded.
“It’s a big deal,” said Bernardo Sichel, a fellow McKinsey and one of the report’s co-authors. “Given the size and possibilities of Latinos, this is no longer a Latino issue. It is an American imperative.”
The report finds that Hispanics make up about 19 percent of the US population, and that their participation in the labor force is “significantly higher” than that of non-Latino whites. Latinos are projected to be 1 in 3 US workers by 2060.
Yet Latinos are underrepresented in high-paying jobs and underpaid in the same fields as non-Latino whites.
The study found that 50 percent of the total Latino pay gap may be due to underrepresentation of Hispanics and pay in 4 percent of occupations, including management, teaching, STEM and occupations such as law, medicine, sales and accounting.
Most Latinos are born in America. Foreign-born Latinos are especially hit hard when it comes to wages, and they are paid less in the same job categories as US-born workers. The median salary for Hispanics born abroad is $31,700, compared to $38,848 for those born in the United States. For non-Latino white workers, that number goes up to $52,942.
Hispanics spend 71 percent of their income on housing, health care, banking, broadband, food and consumer goods. If the gap is closed they could cost an additional $660 billion or contribute 3 percent to GDP.
Latino-owned businesses are growing faster than white-owned businesses. But Latinos’ open businesses are in construction and food services, and they are underrepresented in high-growth industries such as information and real estate.
“More than 70 percent of Latinos used their personal funds to start their business, while whites had similar qualifications,” Sichel said. “They get less approval in terms of banking credit and other sources of funding.”
Despite progress, wealth creation remains a challenge
Latinos have a rate of intergenerational mobility that is similar to that of the white population.
“For the past two decades, Latino wealth has been growing at about 7 percent, which is more than double your growth rate for other demographics,” Sichel said. “When you look at it from one generation to the next, it’s really double digits. So it’s very high.”
Sichel said it comes from a very low base, though. “We are making progress, but it is nowhere near where it should be,” he said.
While Latinos are getting richer, their median household wealth is one-fifth that of non-Latino whites – $36,000 compared to $188,200.
“Demands such as low income, lack of financial inclusion, and family support in the US and abroad impede the ability of many Latino families to accumulate the wealth that provides financial security,” the study found.
Latinos are much less likely to receive an inheritance, and when they do, they are a third less likely to receive it than non-Latino whites.
“Only 5 percent of Latinos inherit from their parents, and in the case of whites it is more than 20 percent,” Sichel said.
Latinos are also less likely to hold stocks, and about a third — 32 percent — send money to relatives overseas.
“Latinos sending remittances send up to 30 percent of their income,” Sichel said.
In addition, about 72 percent of Latino millennials support their families financially, compared to 53 percent of non-Latinos.
The US Latino population is growing rapidly, and by 2050 it is expected to represent a quarter of the US population. The report was based on a survey of 4,000 people.
“In the report, we’re not only diagnosing, but trying to be very practical on certain areas of intervention,” Sichel said, “from both the public side and the private side.”
Credit: www.nbcnews.com /