Latinos and the U.S. Racial Wealth Divide

Seminar Paper 2007 14 Pages

American Studies - Culture and Applied Geography


Table of contents:


1. Wealth Distribution and the Racial Wealth Divide

2. Who are Latinos?

3. Looking Back

4. Looking at Today

5. Looking Ahead



The purpose of this term paper is to study the minority of Latinos, and to some extent Mexican Americans in particular, the problems they have had and still have to cope with when building wealth.

First, I will introduce into the topic and its relevance in the United States by talking about the “Wealth Distribution and the Racial Wealth Divide” in general.

In chapter two, I will give a definiton of the terms “Latino”, “Hispanics”, and “Chicanos” and then provide some basic information on them.

In order to understand today’s situation of Mexican Americans, one must consider their historical background and the involvement of the government blocking Mexican Americans to build wealth for a long time, which I will be dealing with in my third chapter “Looking Back”.

In my fourth chapter “Looking at Today” I will demonstrate Latinos’ and Mexican Americans’ social, financial, and educational situation today by mentioning and evaluating some numbers.

Finally, in my last chapter “Looking Ahead” I will illustrate the importance of Hispanics in the U.S., examine how they will change or already have changed American society, and try to give an outlook for the future development.

1. Wealth Distribution and the Racial Wealth Divide

Considering wealth distribution and accumulation, America’s current situation is threatening. On the one hand there is America’s super-rich who are getting richer and richer. Confirming this point, one can refer to www.forbes.com which presents a list of the 400 richest Americans every year. This year, for the first time, everyone on this list has at least $ 1 billion. In addition, the collective net worth of the nation’s wealthiest climbed $ 120 billion, to $ 1.25 trillion.[1] The development of wealth accumulation among the richest is significant. In 1976, the top 1% of Amercia’s population held 22% of the total household wealth in the U.S., whereas in 2004, the top 1% increased their share of the wealth pie holding 33% of the wealth now.

On the other hand one must not be very surprised that the remaining 99% of the population are struggling with building wealth. Most severly affected among them and mostly discriminated against considering wealth accumulation are ethnic minorities such as African Americans, Latinos, Asians, and Native Americans.

I asked myself how come that there is such a huge wealth gap between white and colored people. Answering this question, the role of the government plays a significantly important role. There are numerous examples throughout American history of how the government intervenes in building wealth. On the one hand it boosts wealth accumulation for whites by taxing work not wealth. Other related keywords are “GI Bill of Rights”, “Federal Housing Administration”, “Social Security Act”, and “Homesteading”. On the other hand the U.S. government blocks racial minorities to build wealth, e.g. “Loss of Land”, “Slavery”, “Jim Crow Laws”, “Immigration Quotas”, “Bracero Program”, “Predatory Lending”, “Attacks on Affirmative Action”, “Redlining”, “Mass Incarceration”, and “Racist Images”.[2] These examples are just to name a few. I will go more into detail when discussing Mexican Americans’ history.

In this term paper I decided to have a closer look at the ethnic minority of Latinos/Mexican Americans in the U.S. because this huge community seems to be the most disadvantaged group having big problems to build wealth. W.E.B. Du Bois said “To be a poor man is hard. But to be a poor race in a land of dollars is the very bottom of hardship.”[3] This is surely true for the Latino community in the U.S. Looking at numbers and figures surveyed 2004 and 2006, it can be stated that Latinos have the smallest family median net worth of just $18.000 compared to African American ($20.600), and whites ($140.000). U.S. homeownership, another important indicator of wealth, confirms the fact that Latinos are the poorest: Only 48.1% of Latinos own a home, compared to African Americans (49.1%), Native Americans (55.6%), Asians (59.8%), and whites (76.0%). The results of a survey of the per capita income by race/ethnicity in 2003 shows that again Latinos are at the very bottom level of income earning just $13.492, compared to African Americans ($15.775), Asians (surprisingly $23.654), and whites ($26.774). As a consequence, most of Latino families have to live on the edge. The percentage of Latino families whose savings would run out in three months or less is 73%, compared to 38% of white families.

I think these numbers clearly illustrate the importance of further examining the reasons and looking for explanations why especially Latinos, and in specific Mexican Americans, face these problems today.

2. Who are Latinos?

The Latino community in the U.S. is huge. More than forty million Latinos live in the United States. With approximately 67% Mexican Americans/Chicanos represent the majority among the Latinos whereas 4% are Cuban, 9% are Puerto Rican, 14% are from Central and South America, and 6% being classified as “Hispanic or Latino other”.

When talking about Latinos one must distinguish between the following terms: the terms “Latino” and “Hispanic” are used to describe the Spanish-speaking population in the U.S. and can be used interchangeably. The only difference is that “Hispanic” is a term of ethnic origin and that their representatives can be of any race: white, black, Asian, American Indian, or other. I found this very interesting because one does not think of e.g. Asians when using the term “Hispanic” in first place.

Another term which must be explained is “Chicano”. The term came up first in the late 1960s and early 1970s. It is used to describe U.S.-born Mexican Americans and foreign-born Mexican nationals residing in the United States. One interesting aspect is that the term “Chicano” is in a way politically connotated as Cesar Chavez used this term to bring attention to Latino farmworkers and their bad working conditions. As a consequence, “the use of the term ‘Chicano’ indicates a self-ascribed political awareness, continued commitment to social and economic justice through political and community activism, and recognition of the importance of indigenous roots.”[4]


[1] List of 400 richest Americans. Retrieved July 17, 2007 from


[2] cf. Government Boosts and Blocks to Building Wealth. Retrieved July 18, 2007 from

http://www.faireconomy.org/econ/workshops/the_racial_wealth_divide_new. html.

[3] Lui,M./Robles,B./Leondar-Wright, B./Brewer, R./Adamson, R. with UFE. The Color of Wealth: The Story behind the U.S. Racial Wealth Divide. (New York: The New Press, 2006), p. 267.

[4] Lui/Robles/Leondar-Wright/Brewer/Adamson with UFE. The Color of Wealth: The Story behind the U.S. Racial Wealth Divide, p. 137.


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University of Freiburg – Englisches Seminar
Latinos Racial Wealth Divide American Society Today



Title: Latinos and the U.S. Racial Wealth Divide