From the Chicago Tribune

Hispanics hit hardest by recession, new study says

By Alex Rodriguez
Tribune staff reporter

January 25, 2002

The recession will deal its most punishing blow to Latinos, according to a new study that also found the nation's fastest-growing minority group uniquely vulnerable to economic downturns and likely to endure hard times long after the rest of the country has bounced back.

Some economic analysts predict the 11-month-old recession could end as soon as this quarter, but Hispanics are not expected to recover fully from the current slump until 2004 at the earliest, according to the study, released Thursday by the Pew Hispanic Center, an arm of the Pew Charitable Trusts.

Latinos find it more difficult to weather recessions in part because they save less money, the study's authors say. About 26 percent of Hispanics report interest income from savings, compared to 55 percent of whites.

Recession hits Chicago family

Maricruz Betancourt and Gilberto Cervantes illustrate the point. With five children, the Cicero husband and wife have been unable to set aside virtually any money for emergencies. Now they have one: Betancourt was laid off from her $7.75-an-hour assembly line job at a Chicago food processing plant on Jan. 11.

Cervantes, a limousine driver, brings in about $45,000 a year, but his income has been cut in half by the effect of the Sept. 11 terror attacks on travel. Betancourt and other plant workers were told they might be able to return in three to four weeks if business picks up, but a supervisor recently told workers to apply for unemployment insurance because the layoff could last longer.

"I don't even want to think about it," Betancourt said. "It does worry me, because it's my whole life there."

Hispanics struggle to wrest themselves from troughs in the economy for a variety of other reasons, says Roberto Suro, director of the Pew Hispanic Center, which commissioned Princeton University professor Alan Krueger and other economists to do the study.

Demographically, Hispanics are less educated and less skilled, and tend to work in sectors of the economy harder-hit during recessions, such as manufacturing and retail. They are less likely to have health insurance and more apt to be ineligible for unemployment insurance, in part because they often seek part-time work.

The outlook forecast by the report is especially disheartening for Latino leaders emboldened by census data last year that showed a 58 percent surge in the U.S. Latino population in the 1990s, by far outpacing population growth for whites and blacks.

That decade saw millions of new Hispanic immigrants enter the ranks of the middle class. Hispanic households with incomes of more than $40,000 rose by a fourth in the 1990s; the number of Latino businesses increased by nearly a third.

"In terms of that sense of the Latino day having arrived that was quite tangible last year, this [report] clearly has to temper that mood," said Suro.

Study predicts slow recovery

To form the projections released Thursday, Suro and B. Lindsay Lowell relied on forecasts from the Blue Chip Economic Indicators newsletter, which surveys private-sector economists, as well as data showing how Hispanics fared during past recessions.

The study predicted Hispanic unemployment nationally would peak at 8.5 percent during the second quarter this year. The study projects, however, that the jobless rate among Hispanics will not return to prerecession lows until at least 2004, and perhaps not until 2008. Unemployment rates for whites and blacks are expected to return to prerecession lows two years earlier, according to the study.

The study's authors based that projection on data showing Hispanic recovery from the last recession in 1990-91 lagged two years behind the rest of the nation.

One finding that surprised researchers was the recession's impact on second-generation Latinos. U.S.-born and educated, they are experiencing some of the highest unemployment rates among Hispanics, according to the study.

Many of these workers held skilled jobs. Nevertheless, unemployment for second-generation Hispanics is running at about 9.6 percent, compared to 8 percent for Latinos overall. Suro said second-generation Latinos may be more vulnerable than their immigrant parents because, being younger, they are more susceptible to seniority-based layoffs.

"The job losses in the second generation are especially troubling because these young people represent the future of Latino communities," Suro said. "They're the fastest-growing source of new native-born workers for the U.S. economy."

Immigrants not going home

Despite the bleak picture facing Latinos, the recession probably will not drive streams of immigrants back to Mexico and other Latin American countries, Krueger said.

Betancourt's 19-year-old nephew, Jose Betancourt, came from Mexico to find work. In November the Westmont binder factory where he worked laid him off, but he is not planning to return to Mexico.

"The economy is much worse there than it is here," he said through an interpreter.

Leaders of Latino advocacy groups said the report bolsters the argument that the recession's impact on Hispanics should figure more prominently in Congress' debate over an economic recovery agenda.

"In many cases, policymakers have not acknowledged that the labor force has changed dramatically over the last few years to reflect a growing number of Latino workers," said Eric Rodriguez, director of the Economic Mobility Project at the National Council of La Raza.