Why U.S.-born Latinos Tend to Fare Better than Immigrant Latinos

16 Aug 2016 | Sahelit Bahiru
Why U.S.-born Latinos Tend to Fare Better than Immigrant Latinos

Second generation immigrants show improved socioeconomic outcomes over their parents. Despite America’s many challenges in creating equitable opportunities, it is a rare bright spot in the nation’s racial and ethnic landscape. New data added to the National Equity Atlas in July shows how U.S.-born Latinos trail U.S.-born Whites in education, wages, and poverty, but still fare better than their immigrant counterparts (with one notable exception).

The recently added nativity breakdowns in the National Equity Atlas allow users to compare outcomes for immigrants and U.S.-born people. In the analysis below, we compare the outcomes of Latinos and Whites with a specific focus on those who are U.S.-born across three socioeconomic indicators: median wage, educational attainment, and poverty, and suggest some reasons why this stratification might persist. For reference, two thirds of Latinos were born in the United States, while 95 percent of Whites are U.S.-born citizens.  

The White-Latino wage gap is smaller among the U.S.-born population

The median wage for Latino workers is $7 less than the median wage for White workers. When looking only at U.S.-born workers, however, the wage gap decreases: U.S.-born Latinos only trail U.S.-born Whites by $4. This narrower wage gap can be explained, in part, by the fact that U.S.-born Latinos earn a much higher median wage ($18/hour) than their immigrant counterparts ($13/hour).

Regions with the greatest numbers of Latinos have larger wage gaps

To better understand how this wage gap varies by region and with the size of the overall Latino population, we looked at the six U.S. metro areas with the largest numbers of Latinos: Los Angeles, New York, Miami, Houston, Chicago, and Riverside, California. Taken together, these six metro areas are home to 37 percent of the total Latino population in the United States.

In nearly all of these regions, the wage disparities between U.S.-born Whites and U.S.-born Latinos are higher than the national average. The wage gap in the Los Angeles and New York metros reach as high as $10/hour—$6/hour more than the national wage gap between U.S.-born Latinos and U.S.-born Whites. Only Miami has a wage gap comparable to the national average.

Why is the wage gap between U.S.-born Latinos and U.S.-born Whites so much higher than the national average in the regions where the most Latinos live? It is mainly being driven by the particularly high wages of U.S.-born Whites in these regions. As the chart above illustrates, U.S.-born Latinos in all six regions have higher median wages than the national average of $18/hour, reaching as high as $21/hour in the New York metro area. U.S.-born Whites in all six regions also have median wages that are above the national average of $22/hour, reaching as high as $31/hour in New York. As a consequence, the median wage gap tends to be significantly above the national average in these regions, despite U.S.-born Latinos also reporting higher median wages.

Both place and educational attainment affect median wages

Metropolitan regions attract high-skilled and educated workers, and the fact that these metro areas are home not only to the largest populations of Latinos but also to some of the biggest cities in our nation could help explain the wage gaps described above. But how do U.S.-born Latinos and Whites in these regions compare in terms of educational attainment?

The figure below reveals that the share of residents with at least a bachelor’s degree (BA) in most of these regions is much higher than the national average for both U.S.-born Whites and U.S.-born Latinos. In four of the six regions, a greater share of U.S.-born Latinos has a bachelor’s degree compared to the national average of 18 percent for all U.S.-born Latinos. There is also considerable variation in educational attainment among the U.S.-born White population. Only in Riverside is the share of U.S.-born Whites with at least a BA smaller than the national average of 34 percent.

A report from the Federal Reserve Bank of Philadelphia shows that workers with and without college degrees tend to earn higher wages in larger cities, but college graduates experience a much faster growth in their median wages in big cities. The big-city factor might be one reason for these above-average wages.

Comparing the data on wages and education levels for U.S.-born Latinos from the charts above reveal how Miami’s U.S.-born Latinos tend to be highly educated yet do not earn particularly high wages, while Riverside’s U.S.-born Latinos are less educated and earn particularly high wages.

The poverty rate is similar for immigrant and U.S. born Latinos

While U.S.-born Latinos do better than immigrant Latinos when it comes to median wages and educational attainment, when you look at poverty (at the 100 percent of the federal poverty level threshold), you will see a different story. As the chart below illustrates, U.S.-born Latinos and Latino immigrants experience poverty at about the same rate—24 percent—compared with 10 percent for Whites. This suggests that U.S.-born Latinos are not better off than their immigrant counterparts when it comes to poverty, and, in fact, the unrounded numbers show that their poverty rates are actually slightly higher—24.4 percent versus 24.0 percent. When looking at 200 percent of poverty, however, the trend is similar to one we saw with wages and education: U.S.-born Latinos are less likely than Latino immigrants to fall below 200% of poverty (51 percent versus 57 percent). Still, the fact that U.S.-born Latinos experience deep poverty at the same rate as their immigrant counterparts is troubling.

One potential explanation for this could be that many U.S.-born Latinos belong to recent immigrant households whose socioeconomic status often has reverberating effects for their children and the generations that follow. Another possible explanation is that immigrant-headed households tend to be larger with more workers, raising their family-based poverty threshold while U.S.-born Latinos are more likely to be in smaller, nuclear families.

Inclusion and integration for the fastest growing community in the U.S.

The U.S. Latino community, the fastest growing group in the richest country on earth, should not be steeped in this magnitude of poverty. The astounding numbers of U.S.-born Latinos and Latino immigrants living under the poverty line underscore not only how great the challenges are to Latino immigrant integration and inclusion, but more shockingly how great the challenges are to achieving equity for their U.S.-born counterparts.

One starting point to address this lack of integration in the Latino community is to insure the children and youth within this community have access to quality education that could launch them on a positive trajectory to achieve economic success.

To learn more about how U.S.-born people and immigrants are faring in your community, go to the Indicators tab, select one of the eight equity indicators that have data by nativity (Wages: $15/hour, Unemployment, Homeownership, Wages: Median, Working poor, Poverty, Disconnected youth, or Education levels and job requirements), and click on the “By nativity” breakdown.