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National Research Council (US) Panel on Hispanics in the United States; Tienda M, Mitchell F, editors. Hispanics and the Future of America. Washington (DC): National Academies Press (US); 2006.

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Hispanics and the Future of America.

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8Economic Well-Being

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The social processes described in the preceding chapters—selective migration from the various countries of Latin America, family structure and household size, education, employment, and earnings—are important influences on the economic well-being of Hispanics in the United States. These processes vary considerably among Hispanic subgroups, leading to wide variation in their economic status. Building on those earlier chapters, this chapter examines the outcome of these processes as reflected in total household income, not just earnings, which were examined in Chapter 7. Household income is a more comprehensive measure of economic well-being than individual earnings because it includes the earnings of all household members, plus unearned income from public benefits and other sources. Thus, it gives a more complete picture of the economic resources available to Hispanics, which vitally affect their lives.1

As the earlier chapters have made clear, the Hispanic population is tremendously diverse, both across national-origin groups and across generations. Aggregate statistics for Hispanics as a group mainly reflect the experience of Mexicans, who constitute about 60 percent of all Hispanics. The U.S. Census Bureau publishes data annually on individual, family, and household income and poverty rates for Hispanics overall and separately for Mexicans, Puerto Ricans, Cubans, Central and South Americans (combined), and other Hispanics (U.S. Bureau of the Census, 2003, Summary Table 1, Detailed Tables 12.1–15.2).2 Scholars have produced a number of disaggregated analyses of family or household income based on the 1990 and earlier censuses and on Current Population Survey (CPS) data.3 However, the available studies usually do not identify the smaller national-origin groups (such as Dominicans, Colombians, Salvadorans, and Guatemalans) beyond a catch-all category, Central and South Americans. Moreover, they could not distinguish among the generations born in the United States, because parents' birthplace is not in the decennial census and was not available in the CPS on a regular basis until 1994. This makes it difficult to trace the intergenerational changes in economic well-being for Latinos born in the United States in order to see how the course of assimilation is (or is not) proceeding. Nearly all of the earlier studies examined family income rather than household income, thus omitting nonrelatives' income and ignoring nonfamily households. In addition, the earlier studies are becoming somewhat dated.

Rather than simply review the findings of these older studies, this chapter takes advantage of the pooled 1998–2002 March CPS data that have been used in other chapters and are described in the appendix. This data set has detailed indicators of national origin and generation based on birthplace and parents' birthplace. As in other chapters, this more “objective” measure of national origin enables us to go beyond the self-identified groups (Mexicans, Puerto Ricans, Cubans) in the CPS to distinguish Dominicans, Salvadorans and Guatemalans, Colombians, and Peruvians and Ecuadorians from other Central and South Americans. It also enables us to distinguish between immigrants who came to the United States as adults (the “1.0 generation”) and their children who were born abroad but grew up in the United States (the “1.5 generation”), and between those in the second generation whose parents were both born abroad (the “2.0 generation”) and those who have one parent born in the United States (the “2.5 generation”). Immigrants who came to the United States as children may resemble those who were born in the United States to two foreign-born parents more than they resemble immigrants who came as adults. Similarly, persons with one U.S.-born parent may resemble those with two U.S.-born parents (the “3+ generation”) more than they resemble those with two immigrant parents. It is useful to examine whether the data support this conjecture.

Preliminary analysis of this data set revealed that the national-origin groups in Central America and in South America resemble each other enough in terms of economic status that they can be combined into these two groups, but that Central Americans and South Americans are quite different from each other and Dominicans differ from both. This chapter therefore treats these three groups separately, in addition to Mexicans, Puerto Ricans, and Cubans. To simplify the presentation, in this chapter I usually combine generations 1.0 and 1.5 (first-generation immigrants) and generations 2.0 and 2.5 (second-generation children of immigrants), while noting any significant differences within the first and second generations. The detailed tabulations are available in the appendix at the end of the chapter.

Using this data set, this chapter presents a detailed portrait of the household incomes of Latinos in the United States at the turn of the 21st century, by national origin and generation in the United States. It reveals the diversity behind the aggregate numbers for household income, its sources, and poverty rates for Hispanic subgroups classified by national origin and generation, compared with black and white non-Hispanics who were born in the United States of U.S.-born parents.4 Such a portrait is not available anywhere in the existing literature. While giving a more nuanced picture of Hispanic well-being, it reveals more puzzles and raises more questions than can be answered here. The historical comparisons and multivariate analyses that would be necessary to explain all of the observed patterns are beyond the scope of this chapter and are not attempted here. I hope that the data presented in this chapter will stimulate further research to explain these patterns.

Annual household income and poverty rates are considered first, followed by sources of income in earnings, public benefits, and other unearned income, such as rent, interest, child support, scholarships, and gifts. I also investigate the extent to which Hispanics compensate for low earning capacity by doubling up in an extended household, so that several workers can contribute their earnings. Hispanic subgroups with larger households may have more total income, but less income per person. For each national-origin group, I note changes across generations. Which outcomes show progress from the first to the second generation, and which do not? Are there any changes from the second to the third generation? A separate section is devoted to the elderly, who are a small fraction of the Latino population in the United States today but who will become more important in the future.

I show that the economic status and sources of income of the various Hispanic subgroups are largely governed by their relative levels of education (which largely determine their earning capacity) and by family structure. The legal status of immigrants and phenotype also influence earning capacity. Thus, Mexican, Central American, Dominican, Puerto Rican, and recent Cuban immigrants are limited by lack of education, and in some cases by undocumented status and nonwhite appearance. Dominicans and Puerto Ricans are further limited by the prevalence of female-headed households. These underlying factors lead to striking similarities between Mexicans and Central Americans, between Puerto Ricans and Dominicans, and between Cubans and South Americans in their levels of household income and its sources. At the same time, they result in remarkable contrasts among these pairs of Hispanic-origin groups.

WORKING-AGE HISPANIC HOUSEHOLDS

Annual Income and Poverty Rates

The incomes of Mexican Americans—by far the largest group of Latinos—are very low. Their median annual household income ranges from $30,000 (in 2002 dollars) for the immigrant generation to about $40,000 for those who were born in the United States (see Table 8-1). In each generation they rank lower than the other Hispanic national-origin groups except for Dominicans and Puerto Ricans. However, Mexicans who were born in the United States have higher household incomes than blacks, whose median income is only $32,000 per year. In contrast, the median household headed by a third (or higher)-generation white non-Hispanic has an annual income of $55,000.

TABLE 8-1. Median Real Annual Income and Per Capita Income of Households, in 2002 Dollars, 1997–2001 Pooled .

TABLE 8-1

Median Real Annual Income and Per Capita Income of Households, in 2002 Dollars, 1997–2001 Pooled .

Dominicans and Puerto Ricans have even lower incomes than Mexicans. Immigrants from the Dominican Republic have the lowest median household incomes among first-generation Latinos ($24,000). Puerto Ricans born on the island are just a little higher ($28,000). By the second generation, these groups are better off than blacks, although their median household incomes are still lower than that of U.S.-born Mexicans.

In contrast, Cubans and South Americans are much better off than other Hispanic subgroups of the same generation. Among households headed by working-age Latino adults who were born abroad, South Americans have the highest median total income ($43,000), but among those who were born in the United States of foreign-born parents, Cubans take the lead with $63,000, which is even higher than white non-Hispanics' $55,000. Central Americans are an intermediate group, with incomes between those of Mexicans and Cubans and South Americans.

Income per person is a better measure of economic well-being, because a household's income must support everyone living there. By this measure, Mexicans are as low as or even lower than Dominicans and Puerto Ricans (see Table 8-1), because they have larger households. In the immigrant generation, for example, Mexicans' median per capita income ($7,800) is 25 percent less than Puerto Ricans, even though Mexicans' median total household income is 8 percent higher. Members of half the households headed by first-generation Mexicans and Dominicans are living on less than a third of the income available to half of third (or higher)-generation whites.5

Both total and per capita household incomes increase monotonically across generations for all nationalities, with the largest jumps occurring between the first and second generations.6 Mexicans' income per person, for example, increases by two-thirds from the immigrant to the second generation.7 When the first and second generations are disaggregated further, one finds that immigrants who arrived as children and grew up in the United States have higher incomes than those who arrived as adults, and the U.S.-born with one U.S.-born parent have higher incomes than those with two foreign-born parents (see Appendix Table A8-1). All U.S.-born Latino subgroups have higher median total household incomes than blacks. However, because of their larger households, median per capita income of U.S.-born Mexicans and Puerto Ricans is at or slightly below that of blacks.

Cubans who came to the United States in childhood have the same high median household income ($65,000) as U.S.-born Cubans whose parents were both born in Cuba (see Appendix Table A8-1). This is considerably more than double the income of Cubans who were adults when they arrived. In that 1.0 generation, Cubans are no better off than Mexicans. The sharp contrast between Cubans of the 1.0 and 1.5 generations no doubt reflects differences between the early and later cohorts of immigrants. The Cuban exiles who came as adults in the 1960s brought more skills and capital with them than the later cohorts (Alba and Nee, 2003, pp. 189–191). Many of them are now too old to be in our sample of working-age Cuban households, but their advantages were passed on to their children (the 1.5 generation), whose incomes are well above those of whites. Today's working-age household heads of the 1.0 generation are mainly drawn from the less-skilled later cohorts.

Central Americans' median income jumps by almost 50 percent from the first to the second generation. This is also in part a cohort difference, as the Central American-born parents of second-generation household heads would have arrived in the United States even before the first wave of political exiles came from Nicaragua in the late 1970s and early 1980s. They are likely to have been idiosyncratic immigrants who were disproportionately drawn from their countries' elites. First-generation Central Americans, in contrast, have mostly come to the United States in the past 20 years, many as undocumented refugees from the civil wars and violence there. They are not highly skilled and did not receive official refugee status or U.S. government aid (Alba and Nee, 2003, pp. 196–197).

Lower median incomes are reflected in higher poverty rates and vice versa, with one exception: in the first generation, the Cubans' poverty rate is as high as that of Central Americans, despite the fact that the Cubans' median per capita income is much higher (Table 8-2). This indicates that there is greater inequality among the Cubans, as indicated by the contrast between the 1.0 and 1.5 generations discussed above. Within nationality and generation, poverty rates are higher among children than overall. Over half (54 percent) of Puerto Rican and nearly half (48 percent) of Dominican children who were born on those islands but are now on the mainland are being raised in poor families, as are 43 percent of Mexican-born children.8

TABLE 8-2. Poverty Rates, 1997–2001 Pooled .

TABLE 8-2

Poverty Rates, 1997–2001 Pooled .

Not surprisingly, families headed by unmarried women are extremely likely to be poor, with poverty rates several times those of married-couple families of the same nationality and generation. This helps explain the very high poverty rates of Puerto Ricans and Dominicans. Controlling for headship status, one finds that Puerto Ricans have the highest poverty rate among the foreign-born female-headed families (52 percent), but Dominicans are highest among the U.S.-born (58 percent). Mexicans are second-poorest or a very close third among female-headed families. Among Latino married-couple families, Mexicans have the highest poverty rates regardless of generation.

Disaggregation of the second generation reveals that, unlike household incomes, which increase from each generation to the next, poverty rates do not improve for any group but Cubans until the 2.5 generation, who have at least one parent born on the U.S. mainland. The contrast between intergenerational growth of income and stagnation of poverty rates indicates that inequality increases across generations. Cuban poverty rates drop between the 1.0 and the 1.5 generation, mirroring the jump in income discussed above. By the third generation, the Cubans' poverty rate is even lower than that of white non-Hispanics' (5 versus 8 percent).

Public programs providing noncash benefits—Medicaid, Medicare, food stamps, school lunches, housing subsidies, and energy assistance—represent a significant addition to household resources for Hispanics. The valuation of Medicaid and Medicare coverage is problematic, however, because these values do not represent actual services received by the household, but are more like an imputed insurance premium. The groups with the lowest cash incomes tend to have the largest values of in-kind benefits. Excluding Medicaid and Medicare, the average value of the other noncash benefits (mainly food stamps) per household adds about 4 percent to the median Dominican immigrant household's economic resources—about twice as much as for blacks—and no more than 3 percent for other subgroups.9

In sum, whereas Chapter 7 reports that Mexicans have the lowest education and earnings among Latino subgroups, Mexicans do not have the lowest total household income or the highest poverty rate in each generation; Dominicans or Puerto Ricans do. This paradox can be explained by the characteristics reported in Chapters 3 and 5: Mexican households are less likely to be female-headed, are more likely to be extended, and are concentrated in different locations than Puerto Ricans and Dominicans. Mexicans do have the highest poverty rates among married-couple families, and they often share the bottom rung in per capita income.

Household incomes rise from generation to generation for all groups, but so does inequality, so that poverty rates generally do not drop until the 2.5 generation, who have one U.S.-born parent. By this generation, all Latino nationalities except Dominicans are less likely to be poor than blacks. At the other extreme, Cubans who were born or grew up in the United States have per capita incomes on a par with whites. However, these U.S.-born Hispanics' parents and grandparents who were born abroad were not necessarily comparable to today's immigrants from the same country. This is because, as described in Chapters 2 and 3, changing political and economic conditions in the countries of Latin America have sent waves of exiles and emigrants to the United States whose characteristics have varied over time.

These differences in economic well-being among Latino subgroups are broadly correlated with their earning capacities, as indicated by their education levels. The class backgrounds of the various cohorts of political refugees and economic migrants from each Latin American country affect the position they can achieve in the U.S. labor market and the advantages they can transmit to their children and grandchildren. Such advantages from education and class help explain the high incomes of South Americans and of Cubans whose parents came in the first wave of refugees. Legal status also affects the earnings of the first generation, as undocumented immigrants (who constitute a significant proportion of Mexicans, Central Americans, and Dominicans) are largely confined to marginal jobs and often cannot translate their skills into commensurate incomes. Phenotype may also play a role, as darker Hispanics are more likely to face racial discrimination in the United States than those who look like Europeans. In addition to education, legal status, and phenotype, which affect earning capacity, household structure also plays a major role, as the high female-headship rates of Puerto Ricans and Dominicans reduce their median household incomes.

Sources of Household Income

For a deeper understanding of why household incomes vary across nationalities and generations, it is useful to consider three sources of income: earnings, public benefits, and the incomes of extended household members (defined as persons of working age who are living in the household, other than the head and his or her spouse). The relative shares of income from these sources are influenced by three factors: first, the skills and earnings of the head and secondary earners, discussed in Chapter 7; second, household structure—that is, female headship and household extension beyond the head and spouse (including cohabitation, whether single young adults typically live with their parents until marriage, and whether elderly parents live with their children)—which was discussed in Chapter 5; and third, eligibility for and generosity of public benefit programs.

These three factors influence each other. For example, the share from a spouse's earnings depends on household structure—obviously, because female-headed families do not have a spouse, and less obviously, because grandparents or other extended-household members may provide child care, thus freeing the spouse to take a paid job. Similarly, the share from earnings will tend to be larger for groups that are more likely to have extended households containing multiple workers. Public benefit programs may affect earnings because welfare eligibility rules place ceilings on income.

Income from public benefits, in turn, depends on household structure, earnings, and other income (which in turn depend on household structure) as well as on legal status, time in the United States, and the state of residence. Single female family heads are more likely to be eligible for welfare benefits. Undocumented immigrants and temporary visitors are ineligible for benefits. Legal immigrants who entered the United States after August 1996 are barred from federally funded means-tested benefits for at least five years, but some states provide benefits for these recent immigrants from their own funds. The eligibility rules vary by state, as do the benefit levels.

Finally, household structure may be influenced by earning capacity and culture-based preferences, as discussed in Chapter 5. It has also been argued that the pre-1996 welfare program encouraged female headship among the poor because couples were not eligible for benefits in many states, but researchers have found little empirical evidence that welfare or welfare reform affected marriage rates.10Chapter 5 shows that female headship increases and structural/demographic familism declines across generations. It also shows the variation across Latino subgroups in the prevalence of extended households, which underlies the share of household income derived from members other than the head and spouse.

There are two reasons for household extension that have different implications for its impact on economic well-being: one is taking in others who need support, such as elderly relatives or fellow immigrants who have just arrived in the United States; the other is doubling up to save money by realizing economies of scale and to generate more income, either directly from extra earners or indirectly from help with child care, thus freeing a parent to work for pay. The first reason would reduce the per capita income of the household; the latter might increase it. The effect of education on household extension could go either way. More education leads to higher earnings, so that one can afford to take in others and support them; higher earnings also mean one can afford to indulge tastes for privacy. The correlation between income and household extension could also go either way, as more earners mean more income, but more income can “buy” more privacy.

This section examines strategies for generating income by having multiple earners in the household, by obtaining public benefits and other unearned income, and by pooling income from several generations or other relatives and nonrelatives living in the same household. It compares shares of income coming from earnings, from various public benefits (Social Security, Supplemental Security Income, and welfare), and from unearned income from private sources (such as rent, child support, and gifts). Finally, shares of income coming from the head's children and parents, from other relatives, from a cohabiting partner, and from other nonrelatives are compared.

Earnings

As one would expect, households headed by someone under age 65 get most of their income from earnings. One would expect the fraction of income derived from earnings to be greater for groups with more earners, higher skills, or less access to public benefits and asset income. Latino households headed by working-age adults have an unusually large number of workers. Except for Puerto Ricans and Dominicans, all Latino groups in all generations have more earners per household than third (or higher)-generation blacks (who average 1.4 earners, as shown in Appendix Table A8-8). The lowest skilled groups tend to have the most; households headed by Salvadoran and Guatemalan immigrants have 1.9 to 2.0 workers on average, and Mexican, Peruvian, and Ecuadorian immigrants have 1.8 to 1.9—even more than third (or higher)-generation working-age white non-Hispanics (1.7). This is surprising, since only half of Mexican women in this generation are employed. Mexican immigrant households must often include more than two potential workers, so that others can contribute earnings. By the second generation, however, Mexicans are on a par with whites, whereas Cubans and Central Americans still have 1.8 earners per household. The unusually low incomes of Puerto Ricans and Dominicans are due in part to the fact that they have fewer workers per household (1.3 to 1.6) than do other Latino groups, reflecting their high rates of female headship.

As one might expect of groups that include many undocumented labor migrants, in the foreign-born generation Mexicans and Central Americans derive over 90 percent of average household income from earnings, a larger share than other Latino groups, but this share declines across generations, as they gain access to public benefits and other income sources (Table 8-3). Reflecting their high earning capacity, South Americans and U.S.-born Cubans also get at least 88 percent of their household income from earnings, a considerably higher share than either blacks (78 percent) or whites (84 percent). In later generations, Mexicans and Central Americans are intermediate among Hispanics in this respect, with 86 percent of their household income coming from earnings. A smaller fraction of Puerto Rican and Dominican household income is derived from earnings than in other Latino groups—only 70 and 74 percent, respectively, among those who were born abroad, but this fraction increases across generations so that it eventually surpasses that of blacks.

TABLE 8-3. Mean Shares of Household Income by Source: Earnings, Public Benefits, Other Unearned Income, 1997–2001 Pooled .

TABLE 8-3

Mean Shares of Household Income by Source: Earnings, Public Benefits, Other Unearned Income, 1997–2001 Pooled .

In households headed by a working-age adult, earnings by the head's spouse contribute about one-fifth of the income, on average, for Hispanics and non-Hispanic whites (see Appendix Table A8-9). The one-fifth share is remarkably consistent across Hispanic national origins and generations, with the exceptions of Puerto Ricans and Dominicans. Reflecting the prevalence of single-mother families, a smaller fraction of their household income is derived from the earnings of a spouse (14 to 17 percent) than in other Latino groups. In this respect they are closer to blacks, only 12 percent of whose household income comes from the earnings of a spouse. Children's earnings contribute another 5 to 6 percent to the income of the average Hispanic adult-immigrant household, regardless of nationality. In subsequent generations, this fraction drops to 3 percent or less, similar to blacks and whites.

The parity of most Hispanic subgroups with whites in terms of spouse's earnings may seem inconsistent with the higher female headship rates among Hispanics shown in Chapter 5 and the lower labor force participation rates of Latinas than white married women. However, whites are more likely to live alone, so that the married-couple proportion of all households is similar for Hispanics and whites. Moreover, the gender gap in earnings is smaller for Hispanics than whites, partly offsetting the lower probability that married Latinas work outside the home.

Public Benefits and Other Unearned Income

Reflecting their high poverty rates, Dominicans and Puerto Ricans have the highest rates of public benefits receipt among Latinos. A total of 50 and 41 percent, respectively, of households headed by first-generation Dominicans and Puerto Ricans receive benefits from at least one of the major needs-tested programs: welfare, Supplemental Security Income (SSI), food stamps, or Medicaid (see Appendix Table A8-10). These rates are much higher than for blacks (30 percent) and whites (11 percent). They diminish across generations, however, until Puerto Ricans with a mainland-born parent are somewhat less likely to receive any of these benefits than blacks.

Most of this aid is in the form of Medicaid and food stamps. Only 16 and 12 percent of first-generation Dominican and Puerto Rican households, respectively, receive welfare, and 11 and 14 percent, respectively, receive SSI. These are considerably higher than the rates for blacks (8 percent) or any other Hispanic nationality. Participation in each of these public cash benefit programs declines across generations of Dominicans, so that the rate for those born in the United States resembles that of blacks. In contrast, the fraction of Puerto Rican households that receive welfare is as high among those whose parents were born on the U.S. mainland as among those who were born on the island.

Not surprisingly given their high rates of benefit receipt, a larger fraction of Dominican and Puerto Rican household income comes from public cash benefits (specifically, Social Security, SSI, welfare, unemployment insurance, workers' compensation, and veterans' benefits) than in other Latino groups—19 and 24 percent, respectively, for Dominicans and Puerto Ricans who were born abroad (see Table 8-3). This share diminishes across generations so that Dominicans who were born in the United States and Puerto Ricans with mainland-born parents are less dependent on this source of income than are blacks (15 percent). Social Security and SSI are the most important public benefits for Puerto Ricans who came to the mainland as adults; whereas welfare is most important for Dominicans of all generations (see Appendix Table A8-11).

Because their poverty rates are similar to Puerto Ricans and Dominicans, one might expect Mexicans to receive public benefits at similar rates. However, this is not the case. Only 30 percent of households headed by Mexican immigrants receive benefits from welfare, SSI, food stamps, or Medicaid (see Appendix Table A8-10)—a rate 11 to 20 percentage points lower than that of the other two groups. The Mexicans' participation rate is the same as those of blacks and three times that of whites. Among U.S.-born Mexicans it is about 24 percent. Again, most of the aid is in the form of Medicaid and food stamps; only 4 to 6 percent of Mexican households in each generation receive welfare benefits (below blacks' 8 percent) and only 2 to 5 percent receive SSI, with a slight increase across generations. The share of Mexicans receiving Social Security (from disability or survivors' insurance or from elderly persons living in the household) doubles across generations from 5 to 10 percent, the same as whites but slightly below blacks.

As a result of these low rates of receipt of public cash benefits, Mexicans get a surprisingly small share of their household income from these benefits. The share for Mexican immigrants is similar to that for whites (just under 7 percent, as shown in Table 8-3). It is about 9 percent for Mexicans who were born in the United States. This is still much lower than for blacks, who rely on public income maintenance programs for 15 percent of their household income.

The contrast between Mexicans, on one hand, and Puerto Ricans and Dominicans, on the other, may reflect the greater prevalence of female-headed families among the latter groups. This makes them more likely to be eligible for public benefit programs. Moreover, programs are more generous in the Northeast, where Puerto Ricans and Dominicans are concentrated, than in Texas, where a large proportion of Mexicans live. In addition, Puerto Ricans, being U.S. citizens by birth, have greater access to public benefits than recent immigrants from Mexico and elsewhere.

Reflecting their relative income levels, Central Americans' rates of receipt of public benefits fall between those of Mexicans and South Americans (see Appendix Table A8-10). Like Mexicans, they derive only a small share of their household income from public benefits (see Table 8-3). In keeping with their high incomes, Cuban and South American households are even less dependent on public benefits than are whites. The exception is Cubans who came to the United States as adults, who get 8 percent of their household income from Social Security (see Appendix Table A8-11). More Cuban and South American households receive SSI than welfare, which may reflect the presence of elderly relatives who did not work enough in the United States to qualify for Social Security benefits.

Other sources of unearned income (such as rent, interest, child support, and gifts) constitute 7 percent of the average black household's income and 9 percent of that of whites (see Table 8-3). Among Latinos, only U.S.-born South Americans and Dominicans equal whites in this respect. The Dominican case is puzzling, but the South Americans are among the Hispanic subgroups with the highest incomes, a significant share of which may come from investments. Foreign-born Mexicans and Central Americans, in contrast, derive exceptionally low shares of household income (less than 4 percent) from these other sources.

Income of Extended-Household Members

Thus far I have examined the shares of household income from two sources, earnings and public benefits, across Hispanic subgroups. I now turn to the third major source: the income of extended-household members (defined here as persons of working age other than the head and spouse). As discussed in Chapter 5, household extension may be a response to economic need or an expression of cultural preferences (see Angel and Tienda, 1982a, 1982b see Angel and Tienda, 1984; Feliciano, Bean, and Leach, 2006; Flippen and Tienda, 1998; Glick, Bean, and Van Hook, 1997; Ruggles, 1987). If the former, it could be one strategy for coping with low earning capacity; if the latter, it may reduce the per capita income of households. To determine which is the dominant reason is beyond the scope of this chapter, but I can describe the patterns of extension across Hispanic subgroups compared with blacks and whites, insofar as they are reflected in household income.11

Adapting the classification used by Glick et al. (1997) and Ruggles (1987), I distinguish two general types of household extension: “vertical” or multigenerational—including the head's adult children and parents; and “horizontal”—including other relatives and nonrelatives.12 Depending on norms regarding marriage, a cohabiting partner may be another source of household income. According to Glick et al. (1997), horizontal extension is primarily a response to economic need, whereas vertical extension reflects cultural preferences as well as need. They find that horizontal extension occurs primarily among undocumented and other labor immigrants from Mexico and Central America and fades with time in the United States. In the immigrant generation, vertical extension is more common among refugees, who may migrate as multigenerational family units. Among labor immigrant groups, who typically migrate as single young adults, vertical extension may be more prevalent in the 1.5 and second than the 1.0 generation, because the former have parents living in the United States.

Reflecting typical living arrangements in the United States, Hispanic households get almost all of their income—80 percent or more—from the head and his or her spouse. Nevertheless, all groups of Hispanics except U.S.-born Cubans rely more on the income of extended-household members than do third (or higher)-generation non-Hispanic blacks and whites (see Table 8-4). This is especially true of first-generation Mexicans, Central Americans, and Dominicans. The average U.S.-born Cuban or white non-Hispanic household derives 9 percent of its income from members other than the head and spouse. For blacks, this share is 12 percent, whereas for Mexican, Central American, and Dominican immigrants it is 20 percent. For the other Latino subgroups and generations, it is 14 to 15 percent. Thus, among Latinos who were born abroad, Dominicans rely on extended-household members for income as much as Mexicans and Central Americans do. One way in which Puerto Ricans differ from Dominicans is that, in the first generation, Puerto Ricans (like Cubans and South Americans) rely less on extended-household income pooling.

TABLE 8-4. Mean Shares of Household Income by Source: Income of Extended-Household Members, 1997–2001 Pooled .

TABLE 8-4

Mean Shares of Household Income by Source: Income of Extended-Household Members, 1997–2001 Pooled .

In some ethnic groups, elderly parents typically live with their children, and single adults live with relatives rather than alone. Moreover, doubling up with others in the same household is one strategy for coping with poverty and child care.13 I therefore next investigate whether the contribution of extended-household members to household income comes primarily from children and parents of the head, from doubling up with other rela tives, from a cohabiting partner of the head, or from other nonrelatives. The pattern varies by race/ethnicity and by generation in the United States for Hispanics, shedding some light on the question of “familism” and norms regarding cohabitation that were discussed at length in Chapter 5.

In general, for Hispanics who were born abroad, vertical and horizontal relatives are each more important than nonrelatives as a source of household income. Both types of relatives are generally more important sources of income for Hispanic immigrants than they are for blacks and whites. For blacks, too, relatives contribute more than nonrelatives. For the average non-Hispanic white household, income from nonrelatives and cohabiting partners is as important as income from relatives.

Among foreign-born Dominicans, 11 percent of household income comes from the head's children and parents (mostly children) living in the household. These vertical relatives contribute 7 to 9 percent of household income in the immigrant generation of other Latino national origins. For Mexicans, the share from the head's children and parents remains at 8 percent in the second generation, then drops to 6 percent in the third (and higher) generation. For the other Latino origin groups, however, the share from children and parents is smaller for the U.S.-born than the immigrant generation. Other (horizontal) relatives contribute 5 to 7 percent of household income for foreign-born Mexicans, Central Americans, and Dominicans, but less than 4 percent of household income for Puerto Ricans, Cubans, and South Americans. Except for Puerto Ricans, the share from horizontal relatives also drops sharply in the U.S.-born generation.

Thus, as expected, horizontal relatives are more important among less-skilled labor immigrants than in other groups. Nevertheless, in all groups, the head's children and parents contribute more to household income than horizontal relatives do. The decrease in the vertical relatives' share across generations (except for Mexicans), while not as dramatic as the decrease in horizontal relatives' share, suggests that having parents in the United States and the persistence of cultural preferences do not outweigh decreased need and the influence of U.S. norms regarding living arrangements. By this measure, U.S.-born Cubans are no more familistic than white non-Hispanics. It thus appears that structural/demographic familism may characterize the Hispanic immigrant generation, but it begins to fade by the second generation. (However, the patterns observed may reflect relative increases in other sources of income rather than changes in living arrangements.)

Among Latinos who were born abroad, Central Americans rely more on income from nonrelatives in the household (other than a cohabiting partner) than any other Hispanic group, deriving 5 percent of household income from this source. Central Americans have been coming to the United States in large numbers only in the past 20 years, so that new arrivals are a significant presence among them. Many young men and women arrive without family and share housing with compatriots. Established immigrants may take them in as boarders or live-in domestics (Alba and Nee, 2003, pp. 196–197; Mahler, 1995, pp. 202–203). For Central Americans and Mexicans, other nonrelatives contribute a smaller share in the second generation than the first, but for Puerto Ricans, Cubans, and South Americans this share increases across generations, and for Dominicans it remains stable. These patterns suggest that nonrelatives may play a similar role to horizontal relatives for the least-skilled immigrant groups. In the higher income Latino groups, in contrast, it may be more common for U.S.-born single young adults to move out of their parents' home and share an apartment with a roommate.

In part reflecting the prevalence of female headship, cohabiting partners contribute a larger share of income (4 percent) for Dominicans and Central Americans who were born in the United States than for other Latinos, blacks, or whites. For all groups except Cubans, the share from a cohabiting partner is larger in the second generation than the first.

To sum up, this section presents several distinct patterns of income sources among the Hispanic national-origin groups and generations, which are characterized by the shares of household income from earnings, public benefits, and extended-household members. Mexicans, Central Americans, South Americans, and U.S.-born Cubans depend on earnings for more of their household income than other groups. Dominicans and Puerto Ricans are much more dependent on public benefits than the others. Mexican, Central American, and Dominican immigrants get a larger share from extended-household members than other Hispanics, blacks, and whites. By the third (and higher) generation, Hispanics resemble blacks in this respect, but they rely more on earnings and less on public benefits than do blacks.

More research is needed on household extension, income pooling, and whether public benefits and household extension are alternative ways of coping with low earnings. For example, it is suggestive to observe that the low-skilled groups (Puerto Ricans and Dominicans) that have high female-headship rates and are concentrated in the Northeast, where benefits are relatively generous, tend to derive large shares of their income from public benefits; the low-skilled groups (foreign-born Mexicans and Central Americans) that have low female-headship rates and tend to live in the Southwest get a relatively small share from public benefits and an unusually large share from extended-household members. But we do not know the roles played by cultural preferences versus earning capacity in determining household structure, female headship, and therefore eligibility for public benefits.14 And we do not know who primarily benefits from household extension—the head's nuclear family or the other members—or even whether there is a net benefit when the additional income is offset by the costs of added members. Angel and Tienda (1982a, 1982b, 1984) and Flippen and Tienda (1998) explore these questions using cross-sectional data without being able to reach firm conclusions; further investigation using longitudinal data would be useful.

ELDERLY HISPANICS

The numbers of elderly Latinos will grow rapidly in the future, although they are only a small proportion of the Hispanic population today, because immigration has surged in the past two decades and most immigrants come when they are young.15 An examination of the situation of the Latino elderly today may give us some insights into how those currently of working age and their children are likely to fare in old age. Unlike the Latino households with heads under age 65 discussed in the previous section, who gain most of their income from working, households headed by someone over age 65 are heavily dependent on unearned income from public transfer programs. In this section I focus on poverty rates, Social Security and SSI receipt, and the contributions of extended-household members of elderly Latino immigrant households by country of origin and of elderly U.S.-born Mexicans by generation.16

Poverty Rates

Poverty among elderly Latino immigrants is a special concern because Latinos tend to work in jobs that do not provide pensions (or health insurance, for that matter) (Brown and Yu, 2002; Honig, 2000; Honig and Dushi, 2004). Moreover, they cannot get Social Security benefits unless they have worked for at least 10 years in covered jobs in the United States, and Social Security is responsible for keeping 39 percent of older Americans out of poverty (Social Security Administration, 2000, p. 133). Even if they qualify for Social Security, Latinos' low lifetime earnings translate into small benefit amounts. The alternative, SSI, has benefit levels that are below the poverty threshold. It is therefore not surprising to see (Table 8-5) that older Latino immigrants of all national origins are more likely to be poor than white non-Hispanics (8 percent of whom are poor), but it is somewhat surprising that in most cases Latinos' poverty rates do not exceed the rate for elderly blacks (24 percent). The exceptions are immigrants from the Dominican Republic and Puerto Rico, the poorest elderly Latinos, whose poverty rates are 37 and 27 percent, respectively. Elderly immigrants from Mexico and Cuba have poverty rates similar to elderly blacks, and elderly immigrants from Central and South America are less likely to be poor than the other groups. There is some improvement across generations of elderly Mexicans, as only 18 percent of those who were born in the United States are living in poverty.

TABLE 8-5. Poverty Rates of Elderly Persons, 1997–2001 Pooled .

TABLE 8-5

Poverty Rates of Elderly Persons, 1997–2001 Pooled .

This ranking of the nationalities in part reflects the living arrangements of the elderly and the ranking among younger immigrants with whom the elderly may be living. It also reflects the class backgrounds of those who came from the various countries in earlier decades, as discussed in Chapters 2 and 3. The relatively high poverty rates of elderly Cubans may seem surprising in light of the high skill level of the first wave of refugees. However, Cubans who are now 65 or older were already adults when the refugees began arriving in the United States in 1959. That a quarter of them are poor in old age points up the difficulty that many adult refugees had in adapting to life in the United States.

The extreme poverty of elderly island-born Dominicans and Puerto Ricans is no doubt related to the prevalence of female-headed families and lack of earnings in these groups when they were of working age and now among their children with whom they may be living. Perhaps the fact that older Latino immigrants of other national origins are no more likely to be poor than blacks, despite the fact that those who came to the United States in middle age or later are likely to get little or nothing from Social Security and pensions, is because they are more likely to live with their children who are not poor.17

Sources of Household Income

Retirement income for non-Hispanic whites in America rests on the proverbial three-legged stool, comprising Social Security, private pensions, and asset income from accumulated savings. Given Latinos' low rates of pension coverage noted above, it is not surprising that employer pensions are less important as a source of income for elderly households in all foreign-born Hispanic subgroups and for U.S.-born Mexicans than for whites or blacks (Table 8-6). Limited incomes during their working years make it difficult for most Latino groups to save for retirement (Cobb-Clark and Hildebrand, 2004; Smith, 1995; Wolff, in press). Social Security and other sources of income are therefore especially important for the Hispanic elderly. This section examines the shares of elderly household income from three of those sources: Social Security, SSI, and extended-household members.18

TABLE 8-6. Mean Shares of Household Income by Source: Social Security, SSI, Pensions, Income of Extended-Household Members, 1997–2001 Pooled .

TABLE 8-6

Mean Shares of Household Income by Source: Social Security, SSI, Pensions, Income of Extended-Household Members, 1997–2001 Pooled .

Households headed by elderly Latino immigrants and second-generation Mexicans whose parents were born in Mexico are less likely to get Social Security benefits than blacks (90 percent of whom receive Social Security; see Appendix Table A8-12). Some Latino immigrants receive no Social Security benefits at all because they do not accumulate 10 years of covered earnings; others have low benefits because of a short earnings record. And 16 percent of Latino immigrant workers in the United States in 1997–2001 (almost 10 percent of all Latino workers) came after they were 30 years old.19 Consequently, they will not have time to accumulate a full 35 years of covered earnings in the United States.

Moreover, Latinos are more likely to work in noncovered jobs or to have employers who do not report their earnings as domestics, agricultural workers, or in the informal economy. In 2000 7.4 percent of Hispanic workers were in farming, forestry, fishing, or private household service occupations, compared with only 2.6 percent of non-Hispanics (U.S. Census Bureau, 2001, Table 10.4). There is evidence that workers in these occupations are less likely than others to have had their earnings reported to Social Security (Kijakazi, 2002, p. 10). Furthermore, undocumented workers get no credit for their earnings while in that status. As a result of these characteristics, Latinos have shorter covered-earnings histories, lower average monthly earnings on record, and consequently, lower Social Security benefits than others with similar lifetime earnings. Besides, except for U.S.-born Cubans and South Americans, their earnings are lower than whites, as reported in Chapter 7. Consequently, only 77 percent of all elderly Hispanics received Social Security benefits in 1998, compared with 91 percent of older white non-Hispanics, and their median benefit was only 76.5 percent of whites (Social Security Administration, 2000, Tables I.9 and V.A.3).

The disaggregated data show that in the immigrant generation, rates of Social Security receipt range from 68 percent for Dominicans to 83 percent for Puerto Ricans. However, Mexicans with at least one U.S.-born parent are similar to blacks, but still below whites, in this respect (see Appendix Table A8-12). The lower rates of Social Security receipt for the foreign-born reflect their failure to accumulate an earnings record of 40 quarters in covered jobs. This may be due to the lack of coverage of jobs in agriculture and domestic service often held by low-skilled Hispanic immigrants, as well as the fact that immigrants who arrive in middle age may not work long enough in covered jobs to qualify for Social Security.20

Nevertheless, Social Security is the source of at least half of average household income for all groups except foreign-born Central Americans, South Americans, and Dominicans, who derive only 42 to 46 percent of the average household's income from this source (Table 8-6). Elderly island-born Puerto Ricans, third (and higher)-generation Mexicans, and blacks get similarly large shares of household income from Social Security on average (63, 59, and 58 percent, respectively) even though Puerto Ricans are less likely to receive it. This must be because they have less income from other sources than blacks, as their benefits are unlikely to be larger. Older foreign-born Cubans and first- and second-generation Mexicans get a smaller percentage of household income from Social Security, similar to whites (55 percent). These differences reflect current differences in other income, such as employer pensions, investment income, and earnings of younger household members, as well as differences in the elderly Latinos' eligibility for Social Security and their earlier earnings levels.

Low-income elderly individuals whose Social Security benefit is very low, or who do not qualify for Social Security at all, may qualify for SSI benefits. SSI beneficiaries are automatically covered by Medicaid as well. SSI is quite important for the Hispanic immigrant generation in old age, especially for Dominicans, who are the group least likely to receive Social Security benefits and who are most likely to be poor, so they qualify for SSI. Reflecting their degree of poverty, 45 percent of households headed by elderly Dominican immigrants receive SSI (see Appendix Table A8-12), which accounts for a quarter of their income, and 66 percent are covered by Medicaid. In addition, one-third of older island-born Puerto Rican households receive SSI and 53 percent receive Medicaid. These rates may reflect New York's relatively generous SSI and Medicaid program for the elderly as well as the poverty of these groups. They may continue in the future, given the low incomes of working-age Dominican and Puerto Rican household heads. For elderly Mexican, Cuban, and Central American immigrant households, the rates of SSI receipt are 21 to 24 percent, and the rates of Medicaid receipt are 37 to 39 percent, considerably higher than for blacks. South American immigrants and U.S.-born Mexicans, however, are no more likely than blacks to be on SSI (14 percent) or Medicaid (27 percent). By comparison, among elderly white households, only 4 percent get SSI and 10 percent are on the Medicaid rolls.

Another potential source of income for elderly Latinos is household extension.21 The mean share of income from household members other than the head and spouse is 13 to 18 percent for older Hispanics in the aggregate (depending on generation), which is quite similar to working-age households (Table 8-6). It is 14 percent for blacks and 6 percent for whites. Most of this comes from vertical relatives, who contribute 19 percent of the income of older Mexican immigrants' households and 12 to 15 percent for U.S.-born Mexicans and foreign-born Central and South Americans and Dominicans (see Appendix Table A8-13). These are larger than the shares from vertical relatives in working-age Latino households. Older Cubans and Puerto Ricans get smaller shares of household income from vertical extension (6 and 9 percent, respectively) than the other first-generation Latinos. Horizontal relatives, however, provide a smaller share of income (2 to 4 percent) for older than younger Latino households.22 The differences among Latino national-origin groups and by age suggest differences in need and in familism, as older foreign-born Mexicans derive a larger share of their income from vertical relatives than do other groups.

SUMMARY AND CONCLUSIONS

This chapter has used the March CPS data for 1998–2002 to describe the levels of household income and its sources for Latinos classified by national origin and generation, compared with black and white non-Hispanics whose parents were born in the United States. It highlights the wide range of median household incomes and poverty rates across Hispanic groups. Aggregate statistics for all Hispanics combined mainly reflect the experience of Mexicans because they make up about 60 percent of the total Latino population. Currently, Hispanic immigrants in the aggregate have median household income that is virtually the same as blacks, although their per capita income is only two-thirds of blacks because their households are larger. Hispanics who were born in the United States of U.S.-born parents (about two-thirds of whom identify themselves as of Mexican origin) have median household income that is 25 percent above blacks, although still much below whites. However, the Hispanics' per capita income is only slightly above blacks. Their poverty rate is lower than blacks, but much higher than whites.

Disaggregation reveals that Puerto Ricans and Dominicans are at the bottom on most measures of economic well-being, with Mexicans near and sometimes at the bottom, too. Central Americans are somewhat better off than Mexicans. Furthermore, later generations of every Latino national origin are better off than earlier generations, with most of the improvement occurring between the first and second generations. Regardless of national origin, U.S.-born Hispanics have higher total household incomes than blacks. U.S.-born Mexicans and Puerto Ricans have slightly lower median per capita incomes than blacks, despite having higher household incomes, because the Hispanics have larger households. South Americans and Cubans who were born or grew up in the United States are at the top, and the U.S.-born among them are close to white non-Hispanics. However, one must use caution when attempting to use these cross-sectional differences among generations to predict the future. The (grand)parents of today's second- and third-generation Latinos were not necessarily comparable to today's immigrants from the same country, because changing political and economic conditions in sending countries have sent waves of exiles and emigrants with different characteristics to the United States at different times.

The differences in income among nationalities and generations reflect the variation in their education levels and household size and structure. For example, recent immigrants from Mexico, Central America, and the Dominican Republic have been predominantly low skilled, with consequently low household incomes. However, the reasons for a similar outcome may vary across nationalities, as in the case of Mexican, Dominican, and Puerto Rican poverty rates. As pointed out in Chapter 7, Mexicans are the least educated group in the immigrant generation, and—although subsequent generations have much more education than the first—Mexicans suffer from an educational deficit relative to blacks and whites even in the third (and higher) generation. This results in limited earning capacity. Dominicans in the United States today are largely recent immigrants with limited skills, and (as shown in Chapter 5) both they and Puerto Ricans are further handicapped by a high incidence of female-headed households. The double whammy of having only one potential earner and the gender wage gap depresses their potential household income. Cubans and South Americans are more educated than the other nationalities. As noted in Chapters 2 and 3, earlier waves of Cuban and Central American exiles were more skilled than recent refugees and economic migrants from those countries.

Examination of the sources of household income reveals that low-wage groups respond by adopting two general strategies for boosting household income: doubling up and obtaining public benefits. Extended-household members contribute larger shares of household income among most Hispanic subgroups than among black and white non-Hispanics. This may reflect Hispanic cultural values of familism as well as need, although there is little evidence that Hispanics are any more family-oriented than other migrants have been (Gambino, 1974). In the immigrant generation, Mexicans, Central Americans, and Dominicans are unusually reliant on extended-household members, but in the generations that have U.S.-born parents, Hispanics resemble blacks in this respect. The share of household income contributed by the head's children or parents (that is, vertical relatives) decreases less sharply across generations than the share due to other (horizontal) relatives.

The second strategy, reliance on public benefits, is the mirror image of household income, with the poorest groups deriving the largest shares of their income from this source. Thus, Puerto Ricans and Dominicans derive larger shares of their household income from public benefits than do other groups. This reflects their high female headship rates, their greater access to the more generous benefit programs in the Northeast, and the scarcity of jobs where they live. Female-headed families are more likely to be eligible for public benefits than married-couple families. Puerto Ricans, as U.S. citizens by birth, are eligible for public benefit programs, whereas new immigrants are not. Moreover, jobs are scarcer and benefit programs are more generous in New York and elsewhere in the Northeast, where Puerto Ricans and Dominicans are concentrated, than in Florida, California, and the Southwest, where the other Hispanic groups are concentrated. The high cost of living in New York further exacerbates the Puerto Ricans' and Dominicans' high levels of poverty.

Poverty rates of the elderly range widely across Hispanic subgroups, reflecting their income at younger ages. They are 36 percent for elderly foreign-born Dominicans and 27 percent for Puerto Ricans, even higher than the poverty rate for blacks (24 percent). Older foreign-born Mexicans and Cubans also have high poverty rates, similar to that of blacks. Reflecting the higher incomes of working-age members of the same national origin and generation, poverty rates are lower for elderly foreign-born Central and South Americans and the U.S.-born generations of Mexicans.

Latinos tend to work in jobs that do not offer pensions; other sources of income are therefore more important for elderly Hispanics than for blacks and whites. Gaining an adequate Social Security benefit is also a problem for Latinos who work at low wages, “off the books,” or in sectors that until recently were not covered by Social Security, such as agriculture and household service. Elderly Hispanic households are heavily dependent on Social Security benefits, but—apart from Puerto Ricans and Cubans—foreign-born Hispanics do not rely on this source of income as much as whites or blacks. The share of their household income from Social Security ranges from 42 to 63 percent, being smallest for foreign-born Central and South Americans and largest for island-born Puerto Ricans, whose share from Social Security is even larger than blacks. These differences reflect the variation in income from other sources, including that provided by younger household members, as well as differences in the elderly Latinos' Social Security benefits.

Elderly immigrants who did not work long enough in covered jobs in the United States to qualify for Social Security and whose income is very low are likely to depend on SSI. Others may receive such a low Social Security benefit—due to a lifetime of low-wage work—that they also qualify for SSI. Elderly foreign-born Hispanic households (other than South Americans) get an even larger share of their income from SSI than do blacks, but SSI is a smaller share of income for U.S.-born Hispanics than for blacks.

Doubling up in an extended household contributes a similar share of the income of elderly households and of younger ones for most Hispanic groups and blacks, but more of it is from vertical relatives and less from horizontal relatives in the older group. Among older foreign-born Latinos, Mexicans and Central Americans have the largest shares of household income from children living with them, and Puerto Ricans and Cubans have the smallest.

The future economic well-being of Hispanics in the United States will depend on education and family structure—of new immigrants, their children, and their grandchildren who are born in the United States. There are grounds for both optimism and pessimism in the patterns revealed in this chapter. In future years the proportion of Hispanics who are first-generation immigrants will shrink due to the more rapid growth of the second and third generations, as shown in Chapter 3. Because the later generations have higher incomes than the first, this compositional effect alone would improve the overall economic well-being of each Hispanic nationality as time passes. Secularly declining fertility rates would also tend to raise per capita incomes and lower poverty rates over time. For Hispanics' incomes to converge with whites, however, their education levels must catch up. Otherwise the earnings gap will remain, and it may grow even wider as they remain trapped on the short end of the widening inequality in income between education levels.

The increase in female-headed households across generations of Hispanics, and their increase over time among Hispanics as well as blacks and whites, also act as a drag on household income. Because female-headed households have much lower incomes than married couples, overall economic well-being would decline over time due to this compositional effect alone. We already see its effect in the very low household incomes of Dominicans and Puerto Ricans, many of whose households are headed by single females. In the absence of a reversal of this trend, the future economic well-being of many Latinos will depend on improvements in women's wages and public benefit programs, as well as on removing the barriers to educational attainment that are described in Chapter 6.

It is too soon to tell what the long-term effects of welfare reform will be on the Latino groups that depend heavily on public benefits, particularly Dominicans and Puerto Ricans. It is also too soon to tell whether the dispersion of Mexicans, Puerto Ricans, and other Latinos from California and New York to new parts of the country, as described in Chapter 3, will enable their children to break out of the vicious cycle of poor schools–poor jobs–poverty. Much will depend on how the new destinations rise to the challenge of providing good schools for the newcomers.

DATA AND METHODS

The chapter is based on tabulations of the amounts and sources of income of the various Hispanic national-origin groups and immigrant generations, based on the pooled 1998–2002 March CPS files.23 In the detailed appendix tables at the end of the chapter, a five-generation classification scheme is used (1.0: arrived as adult; 1.5: arrived as child; 2.0: U.S.-born, both parents foreign-born; 2.5: U.S.-born, one parent U.S.-born; 3.0+: U.S.-born, both parents U.S.-born). For the first four generations, an “objective” national-origin identification is used, based on the birthplace of the person and his or her parents. Third (or higher)-generation Mexicans, Puerto Ricans, and black and white non-Hispanics are identified by the “subjective” Spanish-origin and race questions in the CPS. In the tables presented in the text these five generations are reduced to three by combining generations 1.0 and 1.5 (the foreign-born) and generations 2.0 and 2.5 (the U.S.-born with at least one foreign-born parent).

Results are shown only for age/national-origin/generation groups that have at least 90 observations in the pooled CPS sample. To attain this sample size, countries or generations are sometimes combined. All results use the CPS March supplement weights in order to represent the U.S. population. All income amounts are adjusted for inflation using the consumer price index and are expressed in 2002 dollars. When computing shares of income by source, I compute the share of income derived from a particular source (Social Security, for instance) for each household, and then takes the average share across households in an origin-generation group. This answers the question, “What is the importance of Social Security benefits for the average household in the group?”

APPENDIX TABLE A8-1. Median Real Annual Income and Per Capita Income of Households, in 2002 Dollars, 1997–2001 Pooled

APPENDIX TABLE A8-2. Poverty Rates, 1997–2001 Pooled

APPENDIX TABLE A8-3. Mean Shares of Household Income by Source: Earnings, Public Benefits, Other Unearned Income, 1997–2001 Pooled

APPENDIX TABLE A8-4. Mean Shares of Household Income by Source: Income of Extended-Household Members, 1997–2001 Pooled

APPENDIX TABLE A8-5. Poverty Rates of Elderly Persons, 1997–2001 Pooled

APPENDIX TABLE A8-6. Mean Shares of Household Income by Source: Social Security, SSI, Pensions, Income of Extended-Household Members, 1997–2001 Pooled

APPENDIX TABLE A8-7. Mean Annual Value of In-Kind Public Benefits, Excluding Medicaid and Medicare, 1997–2001 Pooled

APPENDIX TABLE A8-8. Number of Earners Per Household, 1997–2001 Pooled

APPENDIX TABLE A8-9. Mean Shares of Household Income by Source: Detailed Earnings of Head's Nuclear Family, 1997–2001 Pooled

APPENDIX TABLE A8-10. Public Benefits Receipt by Households, 1997–2001 Pooled

APPENDIX TABLE A8-11. Mean Shares of Household Income by Source: Detailed Public Benefits, 1997–2001 Pooled

APPENDIX TABLE A8-12. Public Benefits Receipt by Households, 1997–2001 Pooled

APPENDIX TABLE A8-13. Mean Shares of Household Income by Source: Income of Extended-Household Members, 1997–2001 Pooled

APPENDIX TABLE A8-14. Sample Sizes: Households

APPENDIX TABLE A8-15. Sample Sizes: Households with Nonnegative Income (for Tables 8-3, 8-4, 8-6, Appendix Tables A8-3, A8-4, A8-6, A8-9, A8-11, and A8-13 on Shares of Income)

APPENDIX TABLE A8-16. Sample Sizes: Children and Elderly Persons

APPENDIX TABLE A8-17. Sample Sizes: Persons, by Family Structure

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  29. Wolff EN. Changes in household wealth in the 1980s and 1990s in the U.S. In: Wolff EN, editor. International perspectives on household wealth. Northampton, MA: Elgar; (in press)

The picture is still incomplete, however, because household income excludes fringe benefits (such as employer-provided health insurance), in-kind benefits (such as food stamps, Medicaid, and Medicare), capital gains on investments, and the services provided by assets (such as automobiles and owner-occupied houses). Some types of income are underreported, such as welfare benefits, business income, and dividends. Moreover, taxes and income diverted to other households (for example, remittances and child support) are not deducted. Finally, some households may not in fact pool income, as is implicitly assumed.

The Census Bureau also published tables based on the 1990 census showing income and poverty rates for Hispanics by self-identified national origin for all the countries in Latin America, nativity, whether the foreign-born entered the United States in 1980 or later, and citizenship status (U.S. Bureau of the Census, 1993, Table 5). These tables have not yet been published for the 2000 census.

For example, see the chapter on “Earnings and Economic Well-Being” in Bean and Tienda (1987). Amidst a wealth of information, it shows changes from 1970 to 1980 in family income and poverty rates and in sources of income for Mexicans, Puerto Ricans, Cubans, Central/South Americans, other Hispanics, and black and white non-Hispanics by nativity, type of headship, family size, and age of head. Other studies of the changing American income distribution, such as Karoly (1993) and Levy (1995, 1998), have compared family incomes for Hispanics in the aggregate with black and white non-Hispanics. Chiswick and Sullivan (1995) provide a more detailed picture of mean household income in 1989 of the foreign-born by date of arrival, separating Mexicans from other Latin Americans. A Bean et al. (1994) study is one of the rare earlier studies that disaggregates Mexicans by generation in the United States, but it focuses on social indicators, such as education and naturalization, rather than economic outcomes.

Throughout this chapter, for the sake of brevity I often refer to third (or higher) generation non-Hispanic whites and blacks simply as “whites” and “blacks.” I use the terms “Hispanic” and “Latino” interchangeably. Although persons born in Puerto Rico are U.S. citizens by birth and thus are not immigrants, they are grouped with first-generation immigrants, and “U.S.-born” refers only to those born on the U.S. mainland.

Foreign-born Salvadorans and Guatemalans are worse off than other Central Americans in terms of per capita income, although their total household incomes are similar, as shown in Appendix Table A8-1.

The slight drops observed between the second and the third (and higher) generations of Mexicans and Puerto Ricans could result from the shift from parents' birthplace to self-identification. In the 2.5 generation, who have one mainland-born parent, income is slightly lower for those who identify themselves as Puerto Ricans than for those whose other parent was born in Puerto Rico (author's tabulation, not shown). This suggests that, when island-born Puerto Ricans intermarry with non–Puerto Ricans, the children who have higher incomes disproportionately identify with their non–Puerto Rican parent's national origin. This selective loss of the more successful in later generations could bias downward measures of intergenerational progress for those of Puerto Rican ancestry.

These estimates of income by generation are defined by the generational status of the householder. On an individual level, the distinction among generations is blurred, as second-generation persons grow up in first-generation households and share their economic status.

These poverty rates are only a rough indication of the proportion of each group that faces serious hardship, because they do not take account of in-kind benefits such as food stamps, Medicaid, school lunches, and housing subsidies; by the same token, the official poverty threshold is unrealistically low.

These percentages are derived by dividing the value in Appendix Table A8-7 by the value in Table 8-1.

Among the many studies of this topic, see Grogger, Karoly, and Klerman (2002) for a review of the literature on welfare reform and marriage.

Share of household income is an imperfect measure of extendedness, because it omits extended members who have no income and it reflects the relative amounts of income from each source. By this measure household extendedness would decrease as the head's or spouse's income rises, without any change in household composition.

The data do not permit us to distinguish the spouse's parents (or the spouse's children who are not children of the head) from other relatives of the head. As a result the share from vertical extension is slightly understated, and the share from horizontal extension is correspondingly overstated.

In this chapter “doubling up” refers to all types of household extension beyond the head and spouse.

For an analysis of marital disruption across generations of Mexicans, see Bean, Berg, and Van Hook (1996). Also see Glick et al. (1997) and Feliciano et al. (2006) for analyses of the role of economic need in household extension.

According to the 1998–2002 CPS data used in this chapter, only about 5 percent of all Latinos and about 10 percent of Latino household heads are currently age 65 or older.

The sample sizes of elderly in the pooled 1998–2002 March CPS are sufficient to examine elderly Mexicans of all generations, but the other national-origin groups have adequate samples only in the immigrant generation. Older Mexicans whose ancestors lived in the Southwest and California when they were part of Mexico or whose parents moved to the United States in the early 20th century are rather numerous, but few non-Mexican Latinos who were born in the United States have yet reached age 65. This is because large-scale migration to the United States from elsewhere in Latin America (outside Mexico) began only about 60 years ago, when Puerto Ricans began coming to New York in large numbers after World War II.

Table 5-4 in Chapter 5 shows that elderly Hispanics of all nationalities are much less likely to live alone and more likely to live with other relatives, than blacks and whites. According to the 1998–2002 CPS data used in this chapter, 20 percent of Latinos, 13 percent of blacks, and 6 percent of whites age 65 or older were living in someone else's household who was not their spouse.

The sources of income of households headed by elderly Latinos may give a distorted impression of the sources of income of all elderly Latinos, because it omits many of the elderly who live with their children in a household headed by someone under age 65, either by choice or because they cannot afford to live on their own. This chapter therefore does not discuss the sources of income for households headed by elderly Latinos in as much detail as it does for working-age adults. Detailed tables showing household income and its sources for households headed by elderly Latinos are available from the author upon request.

Author's tabulations of March 1997–2001, CPS microdata.

Most of the whites, blacks, and U.S.-born Hispanics who do not receive Social Security benefits probably worked in government jobs, many of which are not covered by Social Security. This is unlikely to be an important factor for Hispanic immigrants.

This implicitly assumes that household members actually pool their income and that the younger members are helping to support the elderly. Some intergenerational households may primarily benefit the younger generation, either through economic support or help with household tasks and child care (Flippen and Tienda, 1998).

These shares may understate the role of household extension in supporting the Latino elderly because they refer to households headed by older Latinos. The elderly who live in separate households may be those who can afford it, whereas lower income elderly are more likely to live with others. One-fifth of elderly Latinos live in someone else's household (not their spouse), and they have only half as much personal income on average as elderly household heads (author's tabulations). The member designated as “householder” is likely to be the one who owns or holds the lease on the home. Therefore, elderly persons who are not dependent on others' income may be more likely to be classified as “head of household.”

Thanks to Rubén Rumbaut and Charles Morgan for providing the recoded data and tabulations of this data file.

Footnotes

1

The picture is still incomplete, however, because household income excludes fringe benefits (such as employer-provided health insurance), in-kind benefits (such as food stamps, Medicaid, and Medicare), capital gains on investments, and the services provided by assets (such as automobiles and owner-occupied houses). Some types of income are underreported, such as welfare benefits, business income, and dividends. Moreover, taxes and income diverted to other households (for example, remittances and child support) are not deducted. Finally, some households may not in fact pool income, as is implicitly assumed.

2

The Census Bureau also published tables based on the 1990 census showing income and poverty rates for Hispanics by self-identified national origin for all the countries in Latin America, nativity, whether the foreign-born entered the United States in 1980 or later, and citizenship status (U.S. Bureau of the Census, 1993, Table 5). These tables have not yet been published for the 2000 census.

3

For example, see the chapter on “Earnings and Economic Well-Being” in Bean and Tienda (1987). Amidst a wealth of information, it shows changes from 1970 to 1980 in family income and poverty rates and in sources of income for Mexicans, Puerto Ricans, Cubans, Central/South Americans, other Hispanics, and black and white non-Hispanics by nativity, type of headship, family size, and age of head. Other studies of the changing American income distribution, such as Karoly (1993) and Levy (1995, 1998), have compared family incomes for Hispanics in the aggregate with black and white non-Hispanics. Chiswick and Sullivan (1995) provide a more detailed picture of mean household income in 1989 of the foreign-born by date of arrival, separating Mexicans from other Latin Americans. A Bean et al. (1994) study is one of the rare earlier studies that disaggregates Mexicans by generation in the United States, but it focuses on social indicators, such as education and naturalization, rather than economic outcomes.

4

Throughout this chapter, for the sake of brevity I often refer to third (or higher) generation non-Hispanic whites and blacks simply as “whites” and “blacks.” I use the terms “Hispanic” and “Latino” interchangeably. Although persons born in Puerto Rico are U.S. citizens by birth and thus are not immigrants, they are grouped with first-generation immigrants, and “U.S.-born” refers only to those born on the U.S. mainland.

5

Foreign-born Salvadorans and Guatemalans are worse off than other Central Americans in terms of per capita income, although their total household incomes are similar, as shown in Appendix Table A8-1.

6

The slight drops observed between the second and the third (and higher) generations of Mexicans and Puerto Ricans could result from the shift from parents' birthplace to self-identification. In the 2.5 generation, who have one mainland-born parent, income is slightly lower for those who identify themselves as Puerto Ricans than for those whose other parent was born in Puerto Rico (author's tabulation, not shown). This suggests that, when island-born Puerto Ricans intermarry with non–Puerto Ricans, the children who have higher incomes disproportionately identify with their non–Puerto Rican parent's national origin. This selective loss of the more successful in later generations could bias downward measures of intergenerational progress for those of Puerto Rican ancestry.

7

These estimates of income by generation are defined by the generational status of the householder. On an individual level, the distinction among generations is blurred, as second-generation persons grow up in first-generation households and share their economic status.

8

These poverty rates are only a rough indication of the proportion of each group that faces serious hardship, because they do not take account of in-kind benefits such as food stamps, Medicaid, school lunches, and housing subsidies; by the same token, the official poverty threshold is unrealistically low.

9

These percentages are derived by dividing the value in Appendix Table A8-7 by the value in Table 8-1.

10

Among the many studies of this topic, see Grogger, Karoly, and Klerman (2002) for a review of the literature on welfare reform and marriage.

11

Share of household income is an imperfect measure of extendedness, because it omits extended members who have no income and it reflects the relative amounts of income from each source. By this measure household extendedness would decrease as the head's or spouse's income rises, without any change in household composition.

12

The data do not permit us to distinguish the spouse's parents (or the spouse's children who are not children of the head) from other relatives of the head. As a result the share from vertical extension is slightly understated, and the share from horizontal extension is correspondingly overstated.

13

In this chapter “doubling up” refers to all types of household extension beyond the head and spouse.

14

For an analysis of marital disruption across generations of Mexicans, see Bean, Berg, and Van Hook (1996). Also see Glick et al. (1997) and Feliciano et al. (2006) for analyses of the role of economic need in household extension.

15

According to the 1998–2002 CPS data used in this chapter, only about 5 percent of all Latinos and about 10 percent of Latino household heads are currently age 65 or older.

16

The sample sizes of elderly in the pooled 1998–2002 March CPS are sufficient to examine elderly Mexicans of all generations, but the other national-origin groups have adequate samples only in the immigrant generation. Older Mexicans whose ancestors lived in the Southwest and California when they were part of Mexico or whose parents moved to the United States in the early 20th century are rather numerous, but few non-Mexican Latinos who were born in the United States have yet reached age 65. This is because large-scale migration to the United States from elsewhere in Latin America (outside Mexico) began only about 60 years ago, when Puerto Ricans began coming to New York in large numbers after World War II.

17

Table 5-4 in Chapter 5 shows that elderly Hispanics of all nationalities are much less likely to live alone and more likely to live with other relatives, than blacks and whites. According to the 1998–2002 CPS data used in this chapter, 20 percent of Latinos, 13 percent of blacks, and 6 percent of whites age 65 or older were living in someone else's household who was not their spouse.

18

The sources of income of households headed by elderly Latinos may give a distorted impression of the sources of income of all elderly Latinos, because it omits many of the elderly who live with their children in a household headed by someone under age 65, either by choice or because they cannot afford to live on their own. This chapter therefore does not discuss the sources of income for households headed by elderly Latinos in as much detail as it does for working-age adults. Detailed tables showing household income and its sources for households headed by elderly Latinos are available from the author upon request.

19

Author's tabulations of March 1997–2001, CPS microdata.

20

Most of the whites, blacks, and U.S.-born Hispanics who do not receive Social Security benefits probably worked in government jobs, many of which are not covered by Social Security. This is unlikely to be an important factor for Hispanic immigrants.

21

This implicitly assumes that household members actually pool their income and that the younger members are helping to support the elderly. Some intergenerational households may primarily benefit the younger generation, either through economic support or help with household tasks and child care (Flippen and Tienda, 1998).

22

These shares may understate the role of household extension in supporting the Latino elderly because they refer to households headed by older Latinos. The elderly who live in separate households may be those who can afford it, whereas lower income elderly are more likely to live with others. One-fifth of elderly Latinos live in someone else's household (not their spouse), and they have only half as much personal income on average as elderly household heads (author's tabulations). The member designated as “householder” is likely to be the one who owns or holds the lease on the home. Therefore, elderly persons who are not dependent on others' income may be more likely to be classified as “head of household.”

23

Thanks to Rubén Rumbaut and Charles Morgan for providing the recoded data and tabulations of this data file.

Copyright © 2006, National Academy of Sciences.
Bookshelf ID: NBK19894
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