I. Overview

A majority of Latinos (54%) believe that the economic downturn that began in 2007 has been harder on them than on other groups in America.

Large shares report that they or someone in their household has been out of work in the past year (59%); that their personal finances are in “only fair” or “poor” shape (75%); that they canceled or delayed a major purchase in the past year (49%); or that they are underwater on their mortgage (28% of Latino homeowners).

The findings are drawn from a new telephone survey of a nationally representative sample of 1,220 Hispanic adults conducted by the Pew Hispanic Center, a project of the Pew Research Center. For a full description of the survey methodology, see Appendix C.

Latinos, who make up 16% of the population of the United States, have long trailed other Americans on most measures of economic well-being, but analyses of recent government trend data indicate that the gaps have widened since 2005, a period that encompasses the housing market crash and the Great Recession. For example:

• Household wealth: From 2005 to 2009, median household wealth (all assets minus all debt) among Latinos fell by 66%, compared with a drop of 53% among blacks and 16% among whites (Kochhar, Fry and Taylor, 2011).
• Unemployment: According to the Bureau of Labor Statistics, the unemployment rate among Latinos in December 2011 was 11.0%, up from 6.3% at the start of the Great Recession in December 2007. Over the same period, the national unemployment rate increased from 5.0% to 8.5%.
• Poverty: Between 2006 and 2010, the poverty rate among Hispanics increased nearly six percentage points—more than any other group—from 20.6% to 26.6%. By contrast, poverty rates among whites increased from 8.2% to 9.9%. And among blacks,¹ poverty rates increased from 24.3% to 27.4% (DeNavas-Walt, Proctor and Smith, 2011).

The new Pew Hispanic survey finds that most Latinos are broadly aware of these trends. Fully 54% say Hispanics have been hurt more than other groups by the economic downturn of the past four years, while just 5% say they have been hurt less. Some 38% say Hispanics have been affected about as much as other groups.

In their responses to a more detailed battery of questions, Latinos are more downbeat than the general public about various aspects of their economic lives. For example:

• Personal finances: Just 24% of Latinos rate their personal finance as excellent or good, compared with 38% of the general public.²
• Unemployment: Some 59% of Latinos say someone in their household has been out of work and looking for a job in the past year, compared with 51% of the general public.³
• Homeownership: Some 28% of Latino homeowners say they owe more on their home than they could sell it for today, compared with just 14% of homeowners in the general public.⁴

Despite these downbeat assessments about their current economic circumstances, Latinos are more upbeat than others about the prospect for better days ahead—both for themselves and their families in the short term and for their children over the long haul.

Fully two-thirds (67%) of Latinos say they expect their financial situation to improve over the next year, compared with 58% of the general population who say the same. Also, two-thirds (66%) of Latinos say they expect their children to eventually enjoy a standard of living that is better than theirs is now. By contrast, just 48% of the general public says the same.

The Latino population, at 50 million strong, is the largest minority group in the country. Some 52% of Latino adults are immigrants, and 48% were born in the United States. As is often the case, the new survey finds significant differences in the attitudes and experiences reported by these two groups.

In general, immigrants are more downbeat. For example, 62% of Latino immigrants say Latinos have been more hurt by the bad economy than other groups, compared with 45% of the native born who say the same. Just 16% of immigrants say their economic situation is “excellent” or “good,” compared with 32% of the native born. And 63% of immigrants say they expect their financial situation and that of their family to improve in the coming year, compared with 71% of the native born.

Immigrants, however, are more likely than the native born to say their children will eventually have a higher standard of living than theirs is now—72% versus 59%.

The new Pew Hispanic survey finds that the sour economy has had a significant impact on Hispanics’ spending and economic behaviors.

Nearly half (49%) say they have delayed or canceled plans to buy a car or make some other major purchase in the past year. Some 45% say they have delayed or canceled plans to buy a home or make major home improvements. Nearly four-in-ten (38%) say they have cut the size of meals or skipped meals because there wasn’t enough money for food. And 37% say they had trouble getting or paying for medical care for their family.

For some behaviors, there are no differences between foreign-born Hispanics and native-born Hispanics. For example, immigrant and native-born Hispanics are equally likely to say they have delayed or canceled plans to buy a car or make some other major purchase—49% and 48%, respectively. And, when it comes to getting medical care for their family, nearly equal shares of foreign-born and native-born Latinos say they have had trouble getting or paying for it in the past year—38% versus 35%.

On other behaviors, foreign-born Hispanics are more likely than native-born Hispanics to say they have changed. Nearly half (48%) of the foreign born say they have delayed or canceled plans to buy a home or make major home improvements, compared with 41% of the native born. And 43% of immigrant Hispanics say they have cut back the size of their meals or skipped meals altogether because of a lack of money for food. Among the native born, 33% say they have done this in the past year.

Among foreign-born Latinos, those who are not U.S. citizens are more likely to have changed their economic behavior than other Latinos. For example, more than half (53%) of immigrant Latinos who are not citizens and not legal residents (a group that closely aligns with the unauthorized immigrant population⁵) and 49% of immigrant Latinos who are legal residents say they have cut back on the size of meals because of a lack of money for food. On getting or paying for medical care, 45% of immigrant Latinos who are not U.S. citizens and not legal residents and 43% of immigrant Latinos who are legal residents say they have had trouble getting or paying for medical care for their family in the past year.

Personal Finances

The difficult economy has also affected Latinos’ assessments of their personal finances. According to the new survey, three-in-four (75%) Latinos rate their current financial situation as either “only fair” (51%) or “poor” (25%). By contrast, among U.S. adults, fewer (61%) rate their current financial situation as “only fair” (37%) or “poor” (24%).

Despite challenging economic conditions and difficult personal finances, Latinos are optimistic about their finances in the coming year—more so than the general public. Two-thirds (67%) of Latinos expect an improvement in their financial situation and that of their family. By contrast, 58% of all adults say they expect to see an improvement.

Overall, foreign-born Hispanics hold a grimmer view of their personal finances than the native born. More than eight-in-ten (83%) foreign-born Hispanics rate their own financial situation as “only fair” or “poor” while two-thirds (66%) of the native born offer the same rating. And when it comes to optimism about personal finances in the next year, fewer immigrant Hispanics than native-born Hispanics expect to see an improvement—63% versus 71%.

Unemployment and Latinos

Many Latinos have experienced a spell of unemployment or know someone who has been unemployed. According to the new survey, nearly six-in-ten (59%) Latino adults say this has happened to their household in the past year. Among all U.S. adults, nearly as many said the same in March of 2011—51% (Kohut, Doherty, Dimock and Keeter, 2011).

Overall, native-born Hispanics and foreign-born Hispanics are just as likely to say their households have experienced unemployment in the last year—57% and 60% respectively. However, among the foreign born there are notable differences. Two-thirds (66%) of immigrant Hispanics who are legal residents and two-thirds (66%) of those who do not have U.S. citizenship and are not a legal resident say someone in their household was without a job or looking for work in the last year. By contrast, 54% of naturalized U.S. citizens say the same.

Experience with unemployment varies across other Latino demographic groups as well. Seven-in-ten (70%) of those ages 18 to 29 have experienced unemployment in their households in the last year—more than any other age group—while 57% of Latinos ages 30 to 49, 57% of those ages 50 to 64, and half (51%) of those ages 65 and older say the same.

The survey also reveals differences by educational attainment. Two-thirds (65%) of Latinos with less than a high school diploma say they or someone in their household has been without a job in the last 12 months. By contrast 53% of those with some college education say the same. Additionally, 60% of high school graduates also say they or someone in their household has been without a job in the last 12 months.

Finally, household experience with unemployment is higher among Hispanics who are not registered to vote than it is among those who are registered—64% of the former say this compared with 53% of Hispanic registered voters.

During the housing boom of the last two decades, homeownership rates increased to record levels (Kochhar, Gonzalez-Barrera and Dockterman, 2009). However, since then, the collapse in the housing market has brought declining homeownership rates and falling housing prices.

For Latinos, after reaching a record high of 49.8% in 2006, the homeownership rate fell to 47.4% in 2011, matching similar declines among other groups.

Falling housing prices have affected household wealth among Latinos more than other groups. In 2005, Latinos derived nearly two-thirds of their net worth from home equity. However, because many Latinos live in places where housing prices increased the most prior to the housing crisis—and have fallen the most since—the housing bust had a greater impact on Latino household wealth than any other group (Kochhar, Fry and Taylor, 2011).

The steep decline in housing prices has many Latino homeowners underwater on their home mortgages. According to Pew Hispanic survey, 28% of Latino homeowners say they owe more on their home than what they could sell it for—double the share (14%) of homeowners in the general population who say the same.

Being underwater varies by region. More than four-in-ten (41%) Latino homeowners in Northeastern states say their mortgage is underwater, a share greater than any other part of the country. By comparison, 32% of Latino homeowners in the West, 27% in the North Central region, and 21% in the South say they owe more on their mortgage than what they could sell their home for.⁶

Recent home buyers are more likely to be underwater on their mortgages than other homeowners. Some 39% of Latinos who bought their home between 2000 and 2011 say they owe more in their home than what they could sell it for. This compares to 22% of those who bought a decade earlier (1990 to 1999) and only 15% of those who bought between 1980 and 1989.

The Investment Value of Homeownership

Despite being hit hard by the housing market downturn, three-in-four (75%) Latinos agree that buying a home is the best long-term investment a person can make in the U.S. This compares with 81% of the general population who say the same (Pew Social & Demographic Trends, 2011).

Large majorities of many groups of Latinos say buying a home is the best long-term investment. Homeowners are more convinced than renters of the value of owning a home. Fully 83% of Latino homeowners say owing a home is the best long-term investment, while 70% of renters say the same. Even among homeowners who are underwater, three-in-four (74%) say buying a home is the best long-term investment.

Home Foreclosures

Latinos have been more affected by the home foreclosure crisis than other groups. According to a recent study by the Center for Responsible Lending (Gruenstein Bocian, Li, Quercia and Reid, 2011), the rate of completed foreclosures on loans originating between 2004 and 2008 was 11.9% for Latinos. That foreclosure rate was more than double the rate for non-Hispanic whites (5.1%) and higher than the rate for blacks (9.8%).

The Pew Hispanic survey asked Hispanics who do not own a home about their experience with foreclosure. According to the survey, 7% of Latinos who do not own homes say they lost a home to foreclosure in the past year. By contrast, 5% of the general public that does not own a home said the same in May 2010.⁷

Despite difficult economic times, in the long trajectory of their lives Latinos see improved standards of living when compared with their parents and expect their children’s standard of living to be even better.

Two-thirds (67%) of Latinos (compared with 61% of the general public) say their standard of living is better than that of their parents when their parents were the age they are now.

This assessment of an improved standard of living is stronger among foreign-born Hispanics than it is among native-born Hispanics. Seven-in-ten (71%) foreign-born Hispanics say their standard of living is better than that of their parents. Among the native born, 62% say the same.

Looking to the next generation, Latinos are more optimistic than the general public. Two-thirds (66%) of Latino adults expect their children will do better than themselves, while fewer than half (48%) of the general public says the same about the next generation.

Among Hispanics, expectations of intergenerational upward mobility are higher among the foreign born than they are among the native born. More than seven-in-ten (72%) Hispanic immigrants say they expect their children’s standard of living will be better than their own. Among the native born, 59% expect their children’s standard of living to be better.

Annual unemployment rates based on Pew Hispanic Center tabulations of the Current Population Survey are shown below. These differ from the monthly unemployment rates reported in the Overview.

Results for this study are based on telephone interviews conducted by Social Science Research Solutions (SSRS), an independent research company, among a nationally representative sample of 1,220 Latino respondents ages 18 and older, from November 9 through December 7, 2011. Of those respondents, 492 were native born (including Puerto Rico), and 728 were foreign born (excluding Puerto Rico). Of the foreign born, 299 are U.S. citizens, 261 are legal residents and 140 are not citizens and not legal residents. For results based on the total sample, one can say with 95% confidence that the error attributable to sampling is plus or minus 3.6 percentage points.

For this survey, SSRS maintained a staff of bilingual interviewers who, when contacting a household, were able to offer respondents the option of completing the survey in Spanish or English. A total of 674 (55%) respondents were surveyed in Spanish, and 546 (45%) respondents were interviewed in English. Any person ages 18 or older of Latino origin or descent was eligible to complete the survey.

To address concerns about coverage, the study employed a dual-frame landline/cellphone telephone design. The sample consisted of a landline component (n = 617) and a cellphone component (n = 603).⁸ Both the landline and cellphone components consisted of a stratified sampling design, oversampling areas with higher densities of Latino residents.

For the landline sampling frame, the sample was run against InfoUSA and other listed databases, and phone numbers that matched to known Latino surnames were subdivided into a Surname stratum. The remaining, unmatched and unlisted landline sample was divided into the following mutually exclusive strata: Very High Latino, High Latino and Medium Latino.

MSG’s GENESYS sample generation system was used to generate cellphone sample, which was divided into High and Medium Latino strata. Overall, the study employed eight strata.

Samples for the low-incidence landline and cell strata were drawn based on responses to SSRS’s weekly dual-frame Excel omnibus survey. Respondents who indicated they were Latino on the omnibus survey were eligible to be recontacted for the present survey.

It is important to note that the existence of a surname stratum does not mean this was a surname sample design. The sample is RDD, with the randomly selected telephone numbers divided by whether they were found to be associated with or without a Spanish surname. This was done simply to increase the number of strata and thereby increase the ability to meet ethnic targets and ease administration by allowing for more effective assignment of interviewers and labor hours.

A five-stage weighting design was used to ensure an accurate representation of the national Hispanic population.

• An adjustment was made for all persons found to possess both a landline and a cellphone, as they were twice as likely to be sampled as were respondents who possessed only one phone type.
• The sample was corrected for a potential bias associated with recontacting respondents in the low-incidence landline and cell strata.
• The sample was corrected for the likelihood of within-household selection, which depended upon the likelihood that the respondent’s age group would be selected, and that within that age group, the particular respondent would be selected.
• The sample was corrected for the oversampling of telephone number exchanges known to have higher densities of Latinos and the corresponding undersampling of exchanges known to have lower densities of Latinos.

Finally, the data were put through a post-stratification sample balancing routine. The post-stratification weighting utilized national 2011 estimates from the Census Bureau’s Current Population Survey, March Supplement, on gender, age, education, census region, heritage, years in the U.S., and phone status (i.e., cellphone only, cellphone mostly, mixed/landline only/landline mostly).⁹