Tuesday, November 17, 2009

Hispanic Income Trends: Implications for Marketing

The median income of Hispanic households has lagged behind the overall population of the United States for a long time and does not seem to be getting better. The largest difference since 1980 was in 1996 when the disparity was of $14,465 dollars (in 2008 dollars), according to the U.S. Census Bureau, Current Population Survey, Annual Social and Economic Supplements. Since 1980 the smallest gap occurred in 1981 with a difference of $8,573. The latest figures available are for 2008 show a difference of $12,390, a gap similar to gaps in the 1990's. See the historical trends table on the left.

The current gap probably reflects some of the social and economic issues that resulted from the downturn of the economy between 2007 and 2009. But there are uplifting news. My analysis of the American Community Survey data of 2008 shows that income differences are not evenly distributed in the population as shown below:

It is interesting to observe that the gaps between the overall population median income and that of Hispanics is largest at the higher income levels, and interestingly there are more Hispanics in the middle income categories than in the overall population. This is very revealing because for the majority of consumer products income levels between $25,000 and $60,000 are ideal, and that is the range in which there are more Hispanics proportional to their population. This alone is a very important reason for marketers to pay attention to Latinos.

Clearly, the fact that proportionally Hispanics have some more households in the lower end of the distribution and fewer in the upper end is not desirable. Nevertheless, where the sweet spot of most marketers resides, that is in the middle, Hispanics have higher representation. This is surprising and uplifting, and helps understand that Hispanics are not generally poorer but they are better represented where it counts for marketers.

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Friday, November 13, 2009

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.