The Hispanic population has grown from 14.6 million in 1980 (6.4% of the U.S. population) to 50.4 million in 2010 (16.3% of the U.S. population), fueled by high fertility rates, according to Barbara Robles, senior community affairs research liaison for the Federal Reserve Bank.
“This is driven not by immigration but by national fertility rates,” she says.
That’s important because, regardless of changes to immigration policies, the Hispanic population will continue to grow for generations. And credit unions need to plan accordingly.
“Fertility rates tell us this will be the new market,” she says.
The top five metropolitan areas in terms of Hispanic population are New York, Los Angeles, Houston, San Antonio, and Chicago.
Latinos are a young group, by and large, with a median age of 27 (versus 42 for whites). More than one-third (35%) of Hispanics are under the age of 18 (versus 23% for whites).
Many Hispanic households are experiencing a “boomerang” effect, where relatives of all ages live together due to the struggling economy. “We’ve seen the highest growth in multigenerational households since the 1940s,” Robles says. “That opens the window for multigeneration financial services. We need to determine how these households pool their resources, and what products and services to offer these households.”
Despite recent economic difficulties—including a staggering unemployment rate among young Hispanics of 32.2%—Latinos’ buying power has grown from $210 billion in 1990 to $1.7 trillion in 2012, Robles reports. That’s an increase from 5% to 11% of the total U.S. consumer market.
States with the Fastest-Growing Hispanic Populations
1. North Dakota
Source: Federal Reserve
Despite this dramatic increase, many financial institutions are ill-prepared, she says. “What’s disturbing about financial institutions is the belief that language is the only piece of the puzzle. You need a cultural competency piece. Financial education is significant, but not the only piece. We need familiarity with the market and financial institutions.”
The financial services industry also needs place-based initiatives to better integrate Hispanic communities into the financial mainstream, she says.
Robles outlined several principles of community engagement:
“Volume is the biggest seller of the need to serve this market,” Robles says. “If you had the biggest population in your pocket, think what you could do. It’s a huge and loyal market.”