One bright spot in the Census Bureau’s recent poverty report was the significant reduction in the poverty rate for Hispanics, down from 26.5 percent in 2010 to 25.3 percent in 2011. Despite this progress, the 2011 Hispanic poverty rate still far exceeded the overall U.S. rate of 15.0 percent.
The decline in the Hispanic poverty rate appears related to substantial year-over-year growth in the number of Hispanic workers employed year-round and full time. Fully 40 percent of Hispanics 15 and older were employed 50 or more weeks during 2011 at 35 or more hours a week, just slightly below the national average. Nonetheless, low wages have stifled income growth for Hispanic households. Their inflation-adjusted median income actually dropped slightly between 2010 and 2011 to $38,624, remaining well below its peak of $43,319 in 2000. Over the past 40 years, household incomes among Hispanics have declined relative to those of non-Hispanic whites. The ratio of median income between the two groups fell from 0.74 to 0.70 between 1972 and 2011.
Underlying these national trends for Hispanics are substantial geographic differences in their economic circumstances. Hispanic households in the South are faring better than elsewhere, contributing in part to the significant 2010–2011 drop in the poverty rate for that region. Hispanics in the West (including the Mountain and Far West states) have not fared as well. Indicative of this is that New Mexico, the state with the highest share of Hispanic residents (46.3 percent), now has the nation’s highest poverty rate (22.2 percent).
Against this backdrop, the Urban Institute has recently undertaken a study that will shed light on the dynamics of income and wealth for low-income workers in two major southwestern cities with large Hispanic populations: Albuquerque and Los Angeles. Under contract to the U.S. Department of Health and Human Services, we have selected program sites in these cities for an evaluation of the impact of individual development accounts (IDAs), matched savings accounts that encourage low-income individuals to save for homeownership, small business development, or postsecondary education. A combined sample of 1,100 low-income households, all with incomes below 200 percent of the poverty level and more than half expected to be Hispanic, will be randomly assigned to equal-sized treatment and control groups. Treatment cases will be allowed to enter a local IDA program funded federally under the Assets for Independence Act; the control cases will serve as a benchmark for comparison. Program impacts will be measured for outcomes related to saving, asset ownership, and hardship avoidance.
In light of the recent Census report, this upcoming evaluation will develop important further evidence on the factors influencing the economic mobility of low-income households, with a particular focus on the Hispanic population and the impact of programs to promote saving, asset ownership, and self-investment.