Latino Labor Force’s Retirement Burden
As the U.S. Department of Labor video above makes clear, the population of Latino workers is exploding.
By 2024, nearly 33 million Latinos will be working in this country – they will have doubled their labor force share to 20 percent, from just 10 percent in 1995.
Despite their expanding presence in the labor market, Latino-Americans face significant retirement challenges.
Chief among them is that they don’t have the same access to traditional pensions and retirement savings plans that white Americans have, primarily because of where Latinos tend to work. Two out of three Latino workers – many people prefer the term Hispanic – lack a 401(k)-style plan in their jobs, the U.S. Social Security Administration and other sources report.
The National Hispanic Council on Aging recently called the older Hispanic population “the least prepared for retirement of any ethnic group.”
One reason cited is that they are more likely to work for small businesses, which often don’t set up a plan. Latinos are also disproportionately employed in low-paid cleaning, landscaping, and food services occupations, and a mere 12 percent of all low-income older individuals are saving for retirement. Median earnings for Latino-Americans, at $45,000 per year, are about one-third lower than median earnings for whites, according to the U.S. Census.
Things are rapidly changing, however: more Latino-Americans than ever are attending college and completing their degrees, which will improve financial security for this college-bound group and their families.
But while Latinos have, like past waves of immigrants, fully integrated into American society in recent decades, many have not yet integrated into the mainstream institutional structures that support retirement. Until that happens, the lack of access will create greater financial challenges for the Latino community.