V. Economic Well-Being

The economic well-being of any group of youths ages 16 to 25 depends in part on the economic status of the households in which they live and in part on their own personal engagement with the labor market. On both fronts, Latino youths lag well behind white youths. But they surpass black youths on most measures of economic well-being and are more active in the labor market than Asian youths.

Among Latino youths, there are significant differences on most of these measures by nativity. Foreign-born Latino youths on average live in households with lower incomes than those of the native born. The foreign born also are more likely than the native born to live in poverty, less likely to live in owner-occupied homes, more likely to lack health insurance and more likely to have a lower-skill job.

But compared with native-born Latino youths, foreign-born Latino youths are more active in the labor force and a smaller share is unemployed. This is partly because foreign-born Latino youths are relatively older (they skew more toward the upper end of the 16-to-25 age range) and less likely to be enrolled in school.

Household Well-Being

Latino youths are more likely than other youths to live in families whose income is below the poverty level. The U.S. government calculates poverty based on a combination of household income and the number of people living in the household. For instance, a family of four, including two related children, with an income of less than $21,834 in 2008 was defined to be living below the poverty threshold.¹¹

Some 23% of Latino youths lived in families whose income was below the poverty level in 2008. That was less than the share of black youths (28%) who lived in poverty but was well above the shares of white (13%) and Asian (18%) youths who lived in poverty.

Another yardstick of well-being is household income. In 2008, more than half of Latino youths (53%) lived in households with incomes less than $50,000, compared with 34% of white youths, 38% of Asian youths and 60% of black youths. Some 15% of Hispanic youths lived in households with incomes of $100,000 or more, about the same as black youths but much below the shares of white (31%) and Asian (30%) youths.

Likewise, Latino youths are less likely than average to live in owner-occupied homes—47% versus 59% of all youths—and more likely than average to lack health insurance—41% compared with 26% of all youths.

Among Latino youths, the household well-being of foreign-born youths lags behind the household well-being of native-born youths by wide margins. Some 29% of foreign-born Latino youths lived below the poverty line in 2008. That is markedly higher than the poverty rates among the second generation (19%) or the third and higher generations (21%).

Similar outcomes are evident with respect to household income, homeownership and health insurance. Six-in-ten (61%) of foreign-born Hispanic youths live in households with incomes of less than $50,000, compared with 48% of native-born youths. Only 30% of the foreign born live in owner-occupied homes, compared with 56% of native-born Latino youths. And 61% of foreign-born Latino youths lack health insurance, compared with 31% of the native born. The differences between second- and third-generation youths are not large.

Labor Market Outcomes

The Great Recession has been hard on young workers, and Latino youths are no exception. The unemployment rate for Latino youths reached 20.4% in the third quarter of 2009, three points higher than the rate for all youths (17.5%).¹² The national unemployment rate at the same time was 9.6%.

Underneath the aggregate statistic are notable differences in labor market experiences between foreign-born and native-born Latino youths. Those who are foreign born are more likely to be active in the labor force, and a smaller share of them is unemployed. That is because they are relatively older and less likely to be enrolled in school. But young foreign-born workers are concentrated in a handful of lower-skill occupations, a likely consequence both of their low levels of education and of the fact that more than half are in the country illegally.

This section explores the labor market outcomes of Latino youths during the third quarter of 2009, more than 1½ years into the ongoing recession. The unemployment rate (or the share of the labor force that is looking for work) is but one indicator of labor market outcomes. Two other key indicators examined in this section are the labor force participation rate—the share of the population that is either employed or looking for work—and the employment rate—the share of the population that is employed.

Latino youths are nearly as active in the labor market as all youths. Some 58.9% of Latino youths participate in the labor market, compared with 61.5% of all youths. Labor force participation among young Hispanics exceeds that among blacks and Asians but falls short of the rate (65.6%) among whites. Consistent with these trends, a greater share of Latino youths (46.9%) is employed than black (37.4%) or Asian (41.0%) youths. However, the employment rate among white youths is higher (56.0%).

With respect to unemployment, the rates for black youths tend to run much higher than those of others groups, and this is true both in good and bad economic times. The unemployment rate for black youths (28.1%) in the third quarter of 2009 is well above that of Hispanic (20.4%), Asian (15.8%) and white (14.7%) youths.

Among Latino youths, labor market outcomes for the foreign born appear better than for the native born by most measures. In the third quarter of 2009, the unemployment rate for first-generation Latino youth—16.7%—was six percentage points less than the rate for native-born youth—22.6%.

Foreign-born Latino youths are also more active in the labor market than their native-born peers. Of the 7.6 million Latinos ages 16 to 25, some 58.9% were active in the labor force in the third quarter of 2009.¹³ However, 64.2% of foreign-born Latino youths were participating in the labor force, compared with 56.1% of native-born youths. Likewise, a greater share of the foreign-born Latino youth population is employed—53.5% for the foreign born, compared with 43.4% of the native born.

The greater engagement of foreign-born Latino youths with the labor market is most likely a result of their age and school enrollment—they are both older and less likely to be in school. With respect to age, the majority of foreign-born youths in the 16-to-25 cohort—54.1%—are ages 22 to 25, compared with only 34.7% of native-born youths (Table 2.2 above). As shown in Table 5.5, labor market outcomes improve steadily with age, for Hispanic youths as well as for all youths.

With respect to school enrollment, foreign-born Latino youths are less likely to be enrolled in high school or college than are native-born Latino youth—34.3% versus 58.9% in March 2009 (Table 6.2 below). That gap also contributes to observed differences in labor market outcomes because those enrolled in school, especially those enrolled full time, are less engaged with the labor market.

For example, only 18.2% of Latino youths enrolled full time in high school in the third quarter of 2009 participated in the labor force. That compares with participation rates of 41.8% among part-time high school attendees, 46.7% among full-time college enrollees and 79.5% among those attending college part time. The participation rate among Latino youths not enrolled in either college or high school is 70.1%. Because native-born Latino youths are more likely to be of high school age and more likely to attend school than foreign-born youths, they are more restrained in their labor market activities.

Foreign-born Latinos differ from native-born youths in one other important aspect—their occupational status. While they are less likely to be without a job, the majority of foreign-born youths with a job—52.4%—are employed in only four lower-skill occupations—food preparation and serving; building and grounds cleaning and maintenance; construction and extraction; and production.¹⁴ Lower levels of education and unauthorized status are likely reasons that foreign-born Latino youths face a limited choice of jobs.

In contrast, native-born Latino youths are more dispersed across occupations, including in white-collar occupations. The occupational distribution of native-born Latino youths closely resembles the occupational distribution of all U.S. youths. Sales and related occupations are the most popular choice for both cohorts of employed youths. And native-born youths, in general or Latinos in particular, are much less likely than their foreign-born peers to work in construction or production occupations.

Within the population of native-born Latino youths, there is little difference in labor market outcomes between the second generation and the third and higher generations. The second generation of youths is somewhat less likely to participate in the labor force—53.8% versus 59.0% for the third and higher generations. Consequently, a smaller share of the second generation (41.4%) is employed compared with the third and higher generations (46.0%). However, the unemployment rate across these generations is virtually identical—23.0% for the second generation and 22.1% for the third and higher generations. Overall, the differences between native-born and foreign-born Latino youths are more acute than are differences across native-born generations.