Hispanic Affluence by State - Implications for Marketing

The American Community Survey (ACS) of the US Census Bureau provides important insights into the lives of Americans. Friends of mine frequently ask me about the level of affluence among US Hispanics. Those households with incomes of $75,000 or higher are generally considered to be affluent. What states have higher percentages of affluent Latinos?  How do Latinos compare with the overall population in terms of affluence across States?

In order to try to answer these questions I obtained 5 year estimates from the ACS (2006 - 2010) for household income and compared Hispanics with the overall population by State, then created an index of Latinos as a percentage of the overall population in terms of household income. The latter index I thought would help us visualize which States have a larger gap as compared with others.

The following Table contains the States, including the District of Columbia and Puerto Rico, with the lowest disparities in terms of the percentages of Latino households with incomes of $75K+, compared with the corresponding percentages for the overall population for each State.  The last column represents an index of disparity.  The larger the index the better, comparatively, Hispanics do in that State.  The index was created by dividing the Latino percentage over the overall percentage of those with household incomes of $75K +.



The above table shows that the States with lower disparities of percentages of households with incomes of $75K per year or more are either those that have generally lower incomes, or those that have unusual economies with higher incomes overall such as Alaska, and Hawaii. Regardless of overall economic trends in these States, it is interesting to observe that Hispanics are generally doing quite well across the board as the proportion of affluent Latinos suggests that generally about 25% of their households earn significant incomes.

The table below shows the States with the largest disparities.




The States with the largest disparities between Latinos and the overall population show a trend similar to that in the above table. In States with higher proportions of high earner households overall, Latinos tend to do proportionally less well, for example California, Arizona, Delaware, Texas and Utah. At this lower end of the disparity distribution, however, even those States that have lower proportions of affluent households also show a sharp contrast when compared with their Hispanic household component. These States are exemplified by Alabama, South Carolina, Tennessee, Montana, Kansas, Arkansas, Oklahoma, and Idaho.

The big lesson is that generally speaking Hispanics seems to be doing quite well in terms of having a relatively high representation of high earning households overall.  There are gaps that are due to economic conditions and opportunities but for marketers, the lesson is clear. High earning Latino households are abundant and their significant presence points to their potential for enhancing the bottom line of many marketers that realize their potential. Be these opportunities cars, homes, recreational vehicles, vacations, travel, education, restaurants, etc. savvy marketers can start taking action when they see that they may not be culturally addressing an important part of the potential customer base.

The 2010 Census Count: Marketing to Latinos

Many marketers are waiting for the results of the 2010 US Census to learn about the growth of the ethnic/cultural segments they target. That expectation will be met when the Census releases that data by about March 2011.

We can expect to learn about the age, gender, household role, Hispanic/Latino origin, and race of theoretically every person living in the United States on April 1, 2010. We will learn about how many Hispanics there are in the US, and the number is likely to be surprising and revealing even though there are always issues in counting those who do not have documents and others who simply do not want to be counted. Most likely the official number will be around 50 million Latinos. We need to remember that there were many social, political, and economic issues that influenced the residency of Hispanics in the last 10 years, when many decided to return to Latin America and others just did not feel like being counted.

The US Census form was simple and contained only 10 questions. The results of this form will tell us the very important story of how many people of different backgrounds and demographics live in the United Stated. The findings will provide information for the allocation of congressional representation and for the allocation of Federal budgets to States, and will give us an important overall picture of the composition of the country.

But there are many issues that the decennial US Census will not address because of the use of the short form. Thus, many important questions that marketers have will not be answered by this count. Many may not be aware but marketers do not have to wait for decennial census reports to obtain valuable information about their customers. That is because the US Bureau of the Census collects data from very large samples every year the main one of which is the American Community Survey (ACS) that addresses specific issues such as language use at home and ability to speak English.

For many years the US Bureau of the Census has provided 1 and 3 year average estimates of many measures based on the ACS. The most recent ACS data currently available is for 2009, which for practical purposes is pretty much as good as it will get for a while. Yearly estimates do not vary dramatically. Marketers are encouraged to become familiar with the data available from the ACS as it can make important contributions to their decisions. And again, these data come out every year with about a one year lag. Not bad at all.

In doing some analysis of the 2009 ACS data I came up with some figures that are quite interesting regarding language use. For example I found out that California, Texas, Illinois, and Colorado, each respectively have 26% of Hispanic household that can be considered linguistically isolated. That means that in those households there is no person age 14 years or over who speaks only English or who speaks English "very well." These are households who likely depend on Spanish language communications quite substantively.

Further, in doing more digging I found in the 2009 ACS that approximately 70% of Hispanics speak Spanish at home. The amount of time they speak Spanish is not known but this is an important figure that has been relatively stable over many years. Perhaps more surprising, estimates from the 2009 American Community Survey show that about 54% of those who speak Spanish also speak English “Very Well” or “Well.” And that approximately 77% of all Hispanics Speak only English or speak it “Well” or “Very Well.” Now, remember, these are not households as in the case of linguistic isolation but individuals. The implications are quite interesting in that they confirm that targeting Hispanics in English is increasingly more feasible. This, however, does not mean that the cultural insights that will resonate with Latinos can be ignored. In fact, it is perhaps more important now than ever because connecting culturally is probably the most powerful tool available to marketers in an environment where language is not as determinant a differentiator as it was some time ago.

The moral of the story is that the 2010 Census will be very important but that many of the details about consumers are now available every year and that a 10 year wait is not necessary, or even possible because the decennial Census contains just 10 questions. Further, it is important to dig deeper in these data since numbers out of context can tell a story that is just not the complete story. Our upcoming book "Hispanic Marketing: Connecting with Latino Consumers" will address many of these issues and it is expected to be published by August 2011.

Magnet States for Hispanics in 2008: Marketing Implications

My analysis of the American Community Survey of the US Census Bureau for 2008 reveals that there are key states that experienced net in-migration of Hispanics from other States in the prior year. This is the most up-to-date information of what States Hispanics are moving to, and what States Hispanics are leaving behind. At the top of the gaining list are Texas, Colorado, Utah, North Carolina, Washington State, New Mexico, Oklahoma, South Carolina, Mississippi, Pennsylvania, Louisiana, Virginia, Arizona, Missouri, Indiana, Iowa, Massachusetts, Kentucky, Maine, and Maryland, in that order.

The States with the largest out-migration of Hispanics, in order of loss to other States, were: California, New York, Florida, New Jersey, Alaska, Illinois, Michigan, Rhode Island, Connecticut, District of Columbia, Nevada, Georgia, Ohio, Delaware, Nebraska, and New Hampshire.

These trends appear to confirm the continued dispersion of Hispanics throughout the United States to places that were not typically attractive to Hispanics in the recent past. Growth in States like Utah, North Carolina, Oklahoma, South Carolina, Mississippi, and Louisiana seems to uphold the trend that Hispanics are moving to States that offer job opportunities and a reasonable cost of living, even if these States were not atop of the Hispanic agenda in the past.

Those States losing Hispanics to other States are those who have experienced severe economic difficulties in the recent recession and/or are also expensive to live in, for example: California, New York, Florida, New Jersey, Nevada, Alaska, Illinois, and Michigan.

This analysis, however, does not include in-migration from other countries. Thus, one can not conclude from these data that there is no actual Hispanic growth in some States that are losing Hispanics to other States. The problem in conducting this type of analysis is that the American Community Survey does measure people coming in from other countries but not people leaving the country. That is because the US Census Bureau only interviews or administers questionnaires to people in the United States.

The list of States with largest in-migration, and that with the highest out-migration, with their respective net gains and losses are found below.

These tables can be reproduced and circulated but the analysis must be credited to this author.

Top Hispanic Gaining States from Other States

Top States Losing Hispanics to Other States

The implications for marketers are that marketing efforts dedicated to Hispanics will continue to be more at a National level instead of in just a few major markets. While those major markets are still large and worthy of much attention, smaller emerging Hispanic enclaves need to be considered and planned for. Further, as Hispanics continue to disperse in the United States their tastes and preferences will further contribute to the Latinization of the US. At the same time, however, more of these important consumers will be establishing contact with members of non-Hispanic communities and being exposed to touch-points that they did not attend to before.

Also, it should be noticed that States that welcome Hispanics will continue to benefit from their hard labor and work ethic. Those States who have ostracized them under the pretext of undocumented immigration are likely to continue to lose their attractiveness and the benefits that Hispanic presence brings.

While the culture and in many cases the language of Hispanics will continue to be of great importance to connect with these consumers, marketers will also need to understand the dynamics of evolution and change in the Hispanic community.