The Latino Community Continues To Face Financial Obstacles A Year On From Pandemic

The recent pandemic has affected the entire country - particularly the Latino community. Latinos are the largest minority group in the U.S., and the impact of the last year has been widely felt in the community. According to a poll by NPR and the Robert Wood Johnson Foundation, 72 percent of Latino households are facing significant financial difficulties. This is compared to 60 percent of Black households, and 55 percent of Native American households. For Asian and white households, the number is significantly lower at 37 and 36 percent. Over a year from the onset of the global pandemic, Latino families are reeling from the financial roadblocks they have experienced.

Latinos Hit Hard By Spiking Unemployment Rate

Latino families have been hit hard in the employment arena. Over 60 percent of Latino households have experienced either job loss, furlough, or reductions in their wages. In those households that experienced job loss, 90 percent of them are facing financial roadblocks. More worrying, while the economy and unemployment rate have begun to recover, the job market for Latinos has been slower to rebound. According to the Bureau for Labor Statistics, the unemployment rate for Latinos rose to 18.9 percent - or more than one in five Latinos. For Latino families, this has placed a strain on their household finances.

A Lack Of Savings Drives Latino Households To Credit

The lack of savings is the most commonly reported financial hurdle being faced by Latin Americans. According to the poll by NPR, 46 percent said they had depleted most or all of their savings, while 15 percent of them lacked savings even before the pandemic. The Latin community has had a well-documented history of saving less in past years. For many of them, the lack of savings comes down to their lack of trust in the financial system and poor financial literacy in the Latino community.
Many Latinos also shy away from banking and tools like checking accounts, or pay more in banking fees. The good news is, there are now more financial institutions that offer checking accounts without running credit verification. So even if you have negative marks on your ChexSystem report, you can still qualify for a checking account or other alternatives like prepaid credit cards. According to the TIAA Institute-GFLEC Personal Finance Index, U.S. Latinos have lower financial literacy levels across all demographics, except in the 18-34 age bracket. The result is that Latin families now have no retirement savings, and in tough economic conditions like the pandemic, they have found themselves having to turn to credit to stay afloat.

Latino Business Owners Half As Likely To Receive Federal Assistance

The Latino business community has always been seen as a thriving cornerstone of small businesses in the U.S. In recent years, the Latino community has had higher than average entrepreneurial rates. Unfortunately, during the lockdowns, Latin business owners were amongst the first - and hardest-hit - businesses. In a report from the Stanford Latino Entrepreneurship Initiative, 86 percent of Latino businesses immediately felt the negative effects of the pandemic, including loss of income. Additionally, it has become much more difficult for them to recover, due to having less cash and reduced access to financial aid. When it came to lifelines like PPP loans, they were also half as likely to receive federal loans.

The financial hurdles being faced by the Latino community will be ongoing for some time. With the economy's rebound set to be a slow and evolving progress, Latino families will continue to face financial hurdles in their way. However, improving their levels of financial literacy and becoming aware of the dedicated resources out there to help is a good first step.