Financial Rewards of a College Degree
Gustavo A. Mellander |
The Hispanic population in the United States, despite facing challenges and hardships, has experienced significant growth, with education as a key driver of their economic success.
Hispanics represent 19 percent of America’s population. Many are struggling. But many, more than most realize, have broken through to high paying professions and, indeed, wealth. Their secret? College degrees.
The Federal Reserve Board reports Hispanic households control 12.8 trillion dollars of household net worth. Affluent Hispanic households have an annual household expenditure that is 16 percent higher than non-Hispanic households. Given their size and productivity, Hispanics’ influence is expected to grow in the years ahead.
Ipsos published “Hispanics gaining wealth in America,” which reiterates the same.
It noted, “it is hard to ignore the size, value and impact Hispanics overall are having on this country. Affluent Hispanics, with their growing numbers, distinct consumer behavior across categories, and their youth are poised to be a force to be reckoned with.”
• Hispanics are a growing affluent group, with particular growth among the younger generations. That is a direct consequence of increased Hispanic college graduates in the last twenty years.
• One in five affluent Gen Zs, born between 1997 and 2012, are Hispanic, compared to one in fifteen affluent boomers born between 1946 and 1964.
Wealthy Americans hold 70 percent of the country’s net worth, despite representing only 20 percent of the population. One in five Hispanic American adults are considered affluent - that’s 20 percent.
A Significant Economic Contribution
The 2023 U.S. Latino GDP Report notes that Latino progress continues to be very significant. Their total economic production (GDP) in 2021 was $3.2 trillion, up from $2.8 trillion in 2020, and $1.7 trillion in 2010. (There is a data-lag; the 2023 Report is based on 2021 data.)
The report adds that “if Latinos living in the United States were an independent country, the U.S. Latino GDP would be the fifth largest GDP in the world, larger than the GDPs of India, the United Kingdom, or France.” That’s impressive. Equally encouraging, this trajectory is growing exponentially.
The U.S. Latino GDP was the third fastest growing from 2010 to 2021, while the broader U.S. economy ranked fifth. Over that entire period, the compound annual growth of U.S. Latino GDP averaged 3.5 percent, compared to only 1.6 percent for Non-Latinos. So, in plain English, for more than a decade, Latino GDP grew nearly 2.5 times faster than Non-Latino GDP.
Many American companies know there is an expanding Hispanic market, a market to be served. In 2021, Latino consumption stood at $2.14 trillion. At 68 percent of U.S. Latino GDP, that is nearly identical to the broader U.S. GDP. “More striking is that Latinos in the United States represent a consumption market larger in size than the entire economy of nations like Italy, Canada, or Russia,” the report adds.
During the past ten years, Latino real income grew nearly 2.5 times faster than the income of non-Latinos. Much is directly attributable to the significant growth in Hispanic college graduations.
Earning a bachelor’s degree grew three times faster for Latinos than non-Latinos between 2010 and 2021. In 2021, Latinos were six percentage points more likely to be actively working or seeking work than non-Latinos. They are a major driver of economic growth in this nation.
Resilience par excellence
The performance of Latinos during the pandemic was dramatic. Latinos had the second fastest growing GDP among the ten largest GDPs in the world - only China’s GDP grew faster. In 2021, COVID’s second year, Latinos propelled the overall economy forward, since Latino GDP growth was 7.1 percent -a full 2 percentage points higher than non-Latino growth. Further, during the pandemic, the compound annual growth of Latino GDP averaged 3.3 percent, very close to the average growth rate of 3.5, which prevailed during the decade before the pandemic. Meanwhile, Non-Latino GDP grew by an average of only 1.6 percent.
Many will be surprised to read that over the pandemic, Latino real wage and salary income increased by 7.2 percent, in contrast to non-Latino income, which declined by 1.7 percent.
In other words, Latinos’ hard work and persistence boosted the nation’s economy during the horrible pandemic. They now drive the economic recovery that is underway, in spite of the fact that Latinos were among the hardest-hit groups. Their experiences were brutal. For example, in 2021, age-adjusted mortality from COVID was more than 60 percent higher for Latinos than non-Latinos. Latino life expectancy declined by 4.1 years over 2020 and 2021, compared to only 2.4 years for non-Latinos.
The 2023 GDP Report extolls “the sacrifices made by Latinos and illustrates just how vital Latino strength and resilience are for the nation’s economy.”
Starting Salaries for Class of 2022
More good news: In 2022, the overall average starting salary for graduates with bachelor’s degrees increased by 7.4 percent, according to the National Association of Colleges and Employers.
The five highest-paid majors retain the same order as the Class of 2021: computer and information sciences topped the list at a starting salary of $86,964; this was followed by engineering, $76,249, and mathematics and statistics, $76,186.
With regard to master’s degree graduates, STEM and business disciplines headed this list. Computer and information sciences graduates were the highest paid, with an average starting salary of $105,894, up 3 percent.
Engineering ($98,036) and engineering technologies ($90,607) followed.
If we consider that the average household annual income has dropped to below $50,000, these starting salaries are enticing. May they motivate more Hispanics to pursue higher education.
Many Hispanics lead a harried existence. Over fifteen percent live below the poverty line; many parents work more than one job. Hispanic children, as covered in a previous column, are abused, hired in violation of Child Labor Laws to work in dangerous jobs. Many youngsters struggle in inadequately funded schools and half never finish high school.
But I have chosen to present some good news in hopes of encouraging more to finish college.
In the last ten years, the efforts of thousands to help Hispanics/Latinos to graduate from college have borne fruit. More Hispanics are affluent than ever before. As more Hispanics finish college, more successes will emerge.
A salute to all of you who have cared and acted.