March 7, 2019

Latinos’ Incomes Higher Than Before Great Recession, but U.S.-Born Latinos Yet to Recover

Methodology

Most of the estimates in this analysis are based on the Current Population Survey, Annual Social and Economic Supplement (CPS ASEC), jointly conducted by the U.S. Census Bureau and the Bureau of Labor Statistics (BLS). The CPS ASEC is conducted in March of each year. The demographic characteristics of respondents pertain to the date of the survey, but the income data refer to the previous calendar year. For example, the 2018 CPS ASEC captured the demographics of the U.S. population in March 2018 and incomes received in calendar year 2017. For that reason, the demographic trends in this analysis, such as immigration trends, are generally presented for 2008 to 2018, whereas the income trends are reported for 2007 to 2017. The data on income are adjusted for inflation using the BLS’s Consumer Price Index Research Series (CPI-U-RS).

The CPS ASEC conducted in 2014 introduced a redesigned set of income questions. As noted by the Census Bureau, “Approximately 68,000 addresses were eligible to receive a set of income questions similar to those used in the 2013 CPS ASEC and the remaining 30,000 addresses were eligible to receive the redesigned income questions.” The analysis in this report uses the smaller sample of 30,000 addresses that received the new set of income questions in the 2014 survey.

Because of the change in how the government measures income, income estimates for 2013 and later years are not strictly comparable to income estimates for 2012 and earlier years. This affects the interpretation of income trends in the period following the Great Recession. According to the Census Bureau, the redesign had the following impact on median household incomes in 2013: Overall (estimate 3.2% higher), non-Hispanic whites (+3.5%), blacks (+2.1%), Asians (+7.9%) and Hispanics (-3.1%). The changes overall and for non-Hispanic whites are statistically significant. The changes for blacks, Asians and Hispanics are not statistically significant. Because of the redesign, estimated changes in income from 2007 to 2017 should be treated with caution. For example, this analysis finds that the median personal income of American workers overall increased 3% from 2007 to 2017. It is possible that most, if not all, of this increase is due to the redesign of the survey questions and that a “true” financial recovery is yet to kick in.

The term “worker” in this analysis generally refers to people ages 15 and older with work experience in the year preceding the survey date. “Total personal income” is a person’s total pretax income from all sources during the calendar year prior to the survey date. On average, earnings from a job account for more than 90% of total personal income. Income could be negative, zero or positive.

Some estimates, including those related to unauthorized immigrants, refer to people 16 and older in the labor force at the date of the survey or people 16 and older who worked in the year preceding the date of the survey. Estimates for unauthorized immigrants are based on augmented U.S. Census Bureau data. Pew Research Center adjusts Census Bureau data for undercount and reweights the data to take into account population estimates consistent with the 1990, 2000 and 2010 censuses and the most recent population estimates, among other things.

Estimates relating to unauthorized immigrants for 2005 and later years are derived from the American Community Survey (ACS). The ACS is a rolling monthly survey, and the household income data refer to income received during the 12 months preceding the survey month. In other words, a household surveyed in January 2016 is expected to report income received from January 2015 to December 2015, a household surveyed in February 2016 is expected to report income received from February 2015 to January 2016, and so on. Households surveyed in December 2016 report income received from December 2015 to November 2016. Thus, in the 2016 ACS, the income data refer to the period from January 2015 to November 2016, a total time span of 23 months.

Hispanics are of any race. Whites, blacks and Asians include only the single-race, non-Hispanic component of those groups. Asians include Pacific Islanders. Other racial and ethnic groups are included in all totals but are not shown separately.

“Foreign born” refers to people born outside of the United States, Puerto Rico or other U.S. territories to parents neither of whom was a U.S. citizen, regardless of legal status. The terms “foreign born” and “immigrant” are used interchangeably in this report.

“U.S. born” refers to individuals who are U.S. citizens at birth, including people born in the United States, Puerto Rico or other U.S. territories, as well as those born elsewhere to parents who were U.S. citizens.

For some immigrants, estimates of years lived in the U.S. are based on a process of random allocation. The CPS does not report the exact year of entry into the U.S. for foreign-born individuals. Rather, it reports the year of entry in intervals of two years or more. For example, in the 2018 CPS ASEC, the year of entry is coded as 2016-2018, 2014-2015, 2012-2013, and so on. Immigrants with a year of entry of 2014 or later are unambiguously assigned to the category “less than five years in the U.S.” The category “five to nine years in the U.S.” refers to people who entered the U.S. from 2009 to 2013. However, in the CPS, it is only possible to determine whether an immigrant entered in the period 2008-2009. These immigrants were randomly assigned either to the category “five to nine years in the U.S.” or to “10 to 19 years in the U.S.” Similarly, immigrants who are recorded as having entered the U.S. in the period 1998-1999 were randomly allocated to either the category “10 to 19 years in the U.S.” or “20 or more years in the U.S.” Overall, this process of allocation affected about 10% of immigrants in the 2018 sample. A similar process also applies to the assignment of years lived in the U.S. with the 2008 CPS data, affecting about 12% of the immigrant sample.

Where noted, the versions of the data used in this report are the Integrated Public Use Microdata Series (IPUMS) provided by the University of Minnesota. The IPUMS assigns uniform codes, to the extent possible, to data collected over the years. More information about the IPUMS, including variable definitions and sampling error, is available at https://usa.ipums.org/.