Expand the EITC, Expand Workers’ Livelihoods

By Yuqi Wang, Economic Policy Analyst, NCLR

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The latest Census data on income and poverty is proof that hardworking Americans and targeted policy interventions can create profound economic change. In 2015, there were 3.5 million fewer Americans living in poverty. The Latino community, in particular, saw immense improvements in health and economic stability, including a rise in household income from $42,491 in 2014 to $45,148 in 2015.

One program that lifted 27.5 million working families above the poverty line in a single year is the Earned Income Tax Credit (EITC). It fights poverty by decreasing low- and moderate-income workers’ federal taxes and provides a refund when workers’ tax obligations fall below $0. The EITC is a critical infusion of cash for many hardworking families, helping them pay rent, put food on the table, and pay down debt.

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Analizando los datos del Censo: buenas noticias para los latinos, pero no lo suficiente para cerrar las brechas

Yuqi Wang, analista de política económica del Proyecto de Política Económica de NCLR

En 2015, los latinos tuvieron mayores ingresos, menos probabilidades de vivir en la pobreza y más probabilidades de tener una cobertura de salud que en 2014. Estas buenas noticias se obtuvieron de los datos de la medición de ingresos y pobreza de 2015 que recién se dieron a conocer. A continuación se exponen algunos puntos positivos de los datos de la Oficina del Censo de los Estados Unidos:

  • El ingreso de una familia latina promedio creció de $42,491 en 2014 a $45,148 en 2015. Las familias latinas no habían tenido tanto dinero en sus bolsillos desde el año 2000 cuando el ingreso medio familiar llegó a los $45,649. Esta subida del 6.1 % del año pasado superó el crecimiento del 5.2 % del ingreso familiar promedio a nivel nacional.
  • Un millón menos de latinos vivieron en la pobreza en 2015. El porcentaje de latinos que vivió en la pobreza cayó un 2.2 % entre 2014 y 2015, mientras que el índice de pobreza a nivel nacional disminuyó un 1.2 % en el mismo periodo.
  • Los latinos registraron el mayor aumento de seguro médico. La tasa de cobertura de seguro médico aumentó un 3.6 % en 2015, la mayor subida de cualquier grupo étnico o racial.

povertyNCLR destacó estos y otros logros positivos de millones de latinos en 2015 en una hoja informativa (disponible en inglés) que resume los nuevos datos de la Oficina del Censo.

Estas tendencias son la prueba de la perseverancia de la comunidad latina después de años de crecimiento lento.

“Este progreso es la demostración de que el trabajo duro de la comunidad latina, junto con las políticas sensatas que promueven la prosperidad de esta comunidad a largo plazo, están funcionando”, dijo Eric Rodríguez, vicepresidente de la Oficina de Investigación, Defensa y Legislación de NCLR.

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Breaking Down the Census Data: Good News for Latinos But Not Enough to Close Gaps

By Yuqi Wang, Economic Policy Analyst, Economic Policy Project, NCLR

Demonstrators joined our Affiliate, Latin American Coalition, in North Carolina last week for a DAPA Day of Action, part of rallies that happened all across the country.

In 2015, Latinos were earning more, less likely to live in poverty, and more likely to have health insurance coverage than they did in 2014. This good news came from the recently released 2015 income and poverty data. A few bright spots in the data from the U.S. Census Bureau include:

  • The income of a typical Latino household income grew from $42,491 in 2014 to $45,148 in 2015. Latino households have not had this much money in their pockets since 2000 when median household income reached $45,649. This 6.1% jump from last year outpaced the 5.2% growth of the typical national household income
  • There were one million fewer Latinos living in poverty in 2015. The percentage of Latinos living in poverty fell by 2.2% between 2014 and 2015 while the national poverty rate decreased by 1.2% during the same time. 
  • Latinos saw the highest increase of health coverage. Health coverage grew by 3.6% in 2015, the most growth out of any racial or ethnic group.

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Financial Access and Services Are Essential for Immigrant Integration

By Lindsay Daniels, Manager, Wealth-Building Initiative, NCLR

Labor-Day-Banner-Photo-4Latinos have represented the fastest-growing segment of the U.S. population in recent decades. Significant growth is expected to continue—the Census Bureau estimates the Hispanic population will increase by 86 percent between 2015 and 2050, amounting to 119 million or one in four Americans, by 2060.

Given this tremendous population growth, the health of the U.S. economy is deeply tied to the status of Latino financial health. Access to safe, affordable, and cross-cultural financial products and services is essential for Latino individuals, families, and entrepreneurs to fully participate in the banking system.

Yet today, too few Latinos understand the banking system and have financial institutions they turn to for financial advice. Many Hispanic families lack access to safe and affordable credit or know their credit score, which often results in people seeking high-cost alternative financial services like check cashing or payday loans or relying on family and friends for financial help. Too much emphasis on technology without considering clients’ preferences leaves behind those who still rely on bank branches and have limited internet access.

These are the findings of a series recently published by NCLR. Profiles on Latinos and Banking takes a deeper dive into the data from the previously published report Banking in Color: New Findings on Financial Access for Low- to Moderate-Income Communities. The profiles, produced with support of the Ford Foundation and Citi Community Development, pay particular attention to how Latinos save, access credit, utilize banking technology, and the linkage between citizenship and participation in the financial sector.

Key findings include:

  • Despite saving regularly, Latinos have a limited financial safety net. One in three respondents reported they had trouble paying bills or needed emergency cash during the past year.
  • Several factors, including education, income, and language ability can affect access to and understanding of credit. For Latinos earning less than $30,000 per year, only 36 percent reported using a credit card, compared to 70 percent of those earning $50,000 or more.
  • Technology has been viewed as a vehicle to increase access to and awareness of personal financial information. However, only one-fifth of survey respondents reported having used mobile banking.
  • Citizenship is an asset that aids the integration of Latinos into the financial mainstream, yet many barriers exist that prevent noncitizens from fully participating in the system. Noncitizen Hispanics were less likely to own a bank account or save money than their citizen peers. Sixty-seven percent of noncitizens reported having a bank account, compared to 82 percent of citizen respondents. More than half (54%) of noncitizen respondents lacked a credit card compared to only 38% of citizen respondents.

These findings shed light on the barriers Latinos face to full financial access and inclusion. As Latinos and other communities of color grow, financial products and services must also expand and adapt to meet the needs of these consumers. Financial institutions must innovate with a goal of helping integrate new immigrants into the financial mainstream. Policymakers must examine and regulate high-cost and predatory financial products that strip wealth from communities of color. After all, there is a huge economic opportunity and benefit for both the public and private sector to better serve this rapidly expanding Latino market of the future.

Measuring Latino Poverty

By Daniel Salgado, NCLR Legal Fellow

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Photo: Ernesto Cruz

We are hearing a lot of good news about the economy these days. In 2014, the U.S. economy recorded the largest job growth since 1999, while gas prices declined for a record four consecutive months. The Latino poverty rate is also steadily declining. In fact, Latinos are the only racial or ethnic group to show a significant drop in poverty rates over the past few years— from 25.6 percent in 2012 to 23.5 percent in 2013.

This decrease in poverty could be a sign that the economic recovery is finally reaching Latino communities, though it should be noted that the poverty rate for Latinos remains above its pre-recession level of 20.6 percent. In order to accurately track how far Latinos have to go to make up for the damage of the Great Recession, it is important to take a closer look at how poverty is measured. That requires examining the Supplemental Poverty Measure (SPM), which provides a more comprehensive measure of poverty taking into account the effects that government programs and tax credits, for example, have on a family’s income. Unfortunately, the SPM shows that the Latino poverty rate has actually remained relatively stagnant at 26 percent, significantly higher than the rates of poverty in White and Black communities.

Two Ways of Measuring Poverty

The Official Poverty Measure (OPM), which is the source used for determining eligibility for federal government programs, is calculated by comparing cash income before taxes to the poverty line, which was $23,834 for a family of four in 2013. Since the Census Bureau began tracking the OPM, the Latino rate has been the second-highest in the United States, only slightly lower than the Black poverty rate (see Figure 1).

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Figure 1. The OPM Rates by Race/Ethnicity since 2000. Source: U.S. Census Bureau, “Historical Poverty Tables.” Current Population Survey. Washington DC, 2014,http://www.census.gov/hhes/www/poverty/data/historical/people.html (accessed January 2015), Table 2.

However, in recent years, the Census Bureau acknowledged that the OPM does not paint a complete picture of poverty. By counting only cash income before taxes such as salary, workers compensation, Social Security, and public assistance, the OPM fails to consider noncash government programs such as nutrition assistance and housing subsidies. Also, the OPM overlooks the impact of refundable tax credits like the Earned Income Tax Credit and the Child Tax Credit.

That’s where the SPM comes in. The SPM calculation includes noncash government benefits and tax credits. It also considers tax payments and work expenses (see Figure 2). As a result, the SPM provides a better understanding of the impact of government programs on reducing poverty. Using the SPM, the census finds that Latinos actually have the highest poverty rate, 26 percent (see Figure 3). This has been the case ever since the census first started measuring the SPM in 2011.

The SPM paints a less rosy, albeit more complete, picture of Latino poverty, but it is a critical alternative measure to understand if we are to interpret the economic progress of the Latino community.

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Figure 2. Components of the Supplemental Poverty Measure. Source: Kathleen Short, The Supplemental Poverty Measure: 2013 (Washington, DC: The U.S. Census Bureau, 2014).

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Figure 3. The SPM Rates by Race/Ethnicity since 2009. Source: U.S. Census Bureau, “The Supplemental Poverty Measure: 2013,” Current Population Survey. Washington, DC, 2014.; U.S. Census Bureau, “The Research Supplemental Poverty Measure: 2011,” Current Population Survey. Washington, DC, 2012.; and U.S. Census Bureau, “The Research Supplemental Poverty Measure: 2010,” Current Population Survey. Washington, DC, 2011.