The Ascent of Latino Economic Power in America

In Brief:

• Latino incomes and wealth have grown far faster than those of non-Latinos over the past decade.
• Latino economic power is evident across income levels and regions, with especially strong growth among high earners.
• The Latino community is forming households and acquiring housing at a much faster rate than other groups.
• Latino consumer spending is on the rise, with large increases in categories like household rent.

The Data Shows Impressive Gains for Latinos

Evidence of economic progress by members of the Latino community is abundant. Data reveals that the share of Latino wage and salary income as reported in American Community Survey statistics has risen sharply over the past decade. The share has risen from just over 10.3% of total U.S. income to 13.3%—a 29% increase in share. Examined on an average annual basis, this demonstrates that inflation-adjusted incomes of the Latino community have grown twice as fast as those of non-Latinos between 2011 and 2021. Latinos' incomes grew at 3.7% per year compared with only 1.8% for non-Latinos.

The share of households in the United States identifying as Latino has also risen substantially, from 11.6% in 2010 to 14.4% in 2021. Analysis shows the growth rate of Latino households has been much faster than that of non-Latino households over the past decade. Annual Latino household growth generally ranged from 2% to 3%, never dropping below 1%. However, in the last two years, this growth has accelerated to nearly 5% per year. This contrasts starkly with non-Latino household growth, which remained at or below 1% for most of the decade, only slightly increasing to 1.5% in recent years.

Household formation is a crucial factor in assessing the Latino community's economic impact. The decision to construct housing, both single and multifamily, depends on current and expected housing demand. Latinos are fueling this demand, which is then incorporated into estimates of their share of residential investment—a component of GDP.

Latinos Lead Housing and Consumption Growth

Data on consumer spending reveals that Latino households typically allocate more funds toward rent compared to other groups. Despite having lower homeownership rates, Latinos' rate of home acquisition has grown noticeably faster.

Further analysis emphasizes that Latino income growth extends beyond low- and middle-income earners. Reviewing high-income earners (those in the 95th percentile and above) shows the average annual growth rate among high-earning Latinos is approximately 10 times greater than for high-earning non-Latinos.

Geographic Spread of Latino Economic Power

The rise of Latino economic clout is not limited to traditional settlement areas like California, Florida, and Texas. While those states have seen dramatic gains, the data reveals surging Latino prosperity across the country.

In the Midwest, metro areas like Chicago, Detroit, and Indianapolis have experienced Latino income growth rates far above national averages. Even non-traditional destinations in the Great Plains like Kansas City and Omaha have enjoyed steep rises in Latino incomes.

The Southeast has become another hotspot of Latino economic energy. Cities including Atlanta, Charlotte, and Nashville have all seen their Latino communities prosper.

And parts of the Northeast U.S. have also tapped into the dynamism of Latinos. The Latino population has grown substantially in places like Philadelphia, Boston, and throughout New Jersey. Their incomes have risen right alongside.

Conclusion: An Economic Force Reshaping America

The message from the data is clear - Latino economic power has ascended swiftly over the past decade and is radically transforming the U.S. economy. Latinos have outpaced non-Latinos in income growth at all levels. Their rate of household formation and housing investment far exceeds that of other groups. And their consumer spending is fueling growth in rents, mortgages, and everything in between.

This burgeoning Latino prosperity is evident not just in traditional Latino strongholds but across geographic regions and cities. It is remaking local economies large and small. The rise of Latino economic might seems poised to continue reshaping the financial landscape of America for decades to come.