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The Surprising Story: The Economic Resilience of Low-Income Hispanic Households through the Recession

By Lisa Gennetian, Ph.D.

This is the third in a series of blog posts and other efforts by the National Research Center on Hispanic Children & Families to dig deeper into how Latino families experience poverty and earn income, and the implications that these findings have for programs and policy. The series, Latinos Interrupted: How Income and Poverty Impact Hispanic Families’ Economic Mobility, launched December 8, 2015 with the release of three briefs on poverty and income among Hispanic families.

Hispanic families are the visible pulse of the local labor market across many U.S. communities, including mine north of New York City. In 2008, the number of workers lingering along the curbside over the course of the day and the lines outside of the Community Resource Center (formerly the Hispanic Resource Center) were noticeably higher. While the Great Recession had enormous negative impacts on many U.S. families, Hispanic workers were especially hard hit. Like the overall child poverty rates, Hispanic child poverty had a clear uptick from 2007 to 2009, and crossed the threshold of one out of every three Hispanic children in 2009.

The Recession and Income Stability

My research looks under the hood of conventional poverty metrics and asks about other aspects of economic well-being among low-income Hispanic children, such as stability of income. Given the nature of low-wage work, it was surprising that I found low-income[1] Hispanic children were more likely to be in stable-income households—largely because of stable earnings month to month—than their low-income peers. It is not yet possible to definitively answer questions about whether or not such income stability among poor children is “good” or “bad” (though we do know chronic poverty is not good for children). However, it is worth understanding whether and how household economic circumstances adjust in the context of broader macro-economic shifts, particularly when such shifts negatively affected  certain sectors of the economy that were dominated by Hispanic workers.

We pulled data on a cohort of Hispanic children from 2004-2006, and then another from the 2008-2010 period, and compared the economic circumstances of these two groups of kids. The results were again surprising: Hispanic children did not fare worse than their predecessors in 2004-2006, nor as compared to their peers, on overall measures of income stability.

Economic Mobility during a Recession

However, three things about the economic conditions of Hispanic children did look different during the post-recessionary period relative to the 2004-2006 pre-recessionary period. Each of these points to potential barriers to upward economic mobility among low-income Hispanic households with children.

  • First, the distribution of Hispanic children shifted to the middle, primarily via a reduction in the proportion of Hispanic children at the highest income level. This same shift did not occur among non-Hispanic groups. If the economic status of Hispanic child households were improved, then we’d expect a spike or increase in Hispanic child households in the middle to upper end of the income distribution and related reduction of the proportion in the lowest income group.
  • Second, average monthly income among the lowest income Hispanic households was lower. Thus, after the recession, children in the lowest-income households were not only stuck at the lowest end of the income distribution but also were more income-poor than the children who were at the lowest end of the income distribution prior to the recession.
  • Third, the lowest income Hispanic child households were less likely to experience positive income shocks (increases in monthly income within a year). This is unfortunate as these positive shocks could be an indicator of incremental growth in income.

This infographic describes how the recession affected the income of low-income Hispanic families.

 

The Surprising Exception of English-Language Proficiency

Hispanic children are a diverse group, residing in households with varying citizenship and nativity status, English-language proficiency, and countries of origin. Income stability in the pre- and post-recession periods looks fairly similar across all Hispanic households with one exception: those who were English-language proficient appeared to have more stable earned income after the recession. This was a change from the pre-recession period, when those households who were not English-language proficient actually had more income stability than their English-language proficient Hispanic counterparts. We don’t yet fully understand the reasons why income stability varies with English-language proficiency, but these findings point to the value of additional research on this particular topic.

One other surprising finding is that income stability does not look different by parents’ nativity status (i.e., stability is the same for parents who are U.S.-born and who are foreign-born). This is contrary to the patterns observed on other aspects of family life, where parental nativity is associated with such factors as the number of related and unrelated adults in the household and the formation of families.

Interpreting What Income Stability Means for Low-Income Hispanic Families

It’s debatable whether low—but stable—income is better for children and families than low and unstable income, or even higher earnings with potentially less stability. However, we now know that the stability of income among Hispanic households before and after the recession was paralleled by a general downward shift in income among Hispanic families. Here at the Center, we’re looking deeper at these questions and the ways in which public policies and programs can support the human capital development of income-poor Hispanic children, particularly as they come to represent more and more of the future of the U.S.  workforce.

By Lisa Gennetian, Ph.D., Co-Investigator of the National Research Center on Hispanic Children & Families. Dr. Gennetian is also associate research scientist at New York University’s Institute for Human Development and Social Change, and a senior researcher at the National Bureau of Economic Research.

[1] I.e., in the lowest of five income brackets.

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