Data from the last recession in the 1990s indicates that Latinos are not usually as affected by recessionary trends as is the general market. The same will prove to be true for this decade as we currently face a stagnating economy. Referring to my specific experience with product categories such as automotive, banking, insurance, telecom and money transfer, I can testify to the fact that Hispanics’ income continued to increase, as did their spending, during economic downturns in the past.
Hispanics have enjoyed a relatively low unemployment rate vis-à-vis the population at large. In fact, the Hispanic unemployment rate has fallen faster than the overall rate. While total U.S. employment declined by .8 percent between ’90 and ’92, employment of Hispanics increased by 1.9 percent (Bureau of Labor Statistics, Employment and Earnings, Current Population Survey). Below are some important reasons why:
Service Industries Are More Secure: The industries in which many Hispanics are employed tend to be "recession proof" or, in other words, not as affected by economic slowdowns. During the last recession, between ’90 and ’92, Hispanic employment in clerical and service occupations increased more than five times faster than the overall employment in these occupations (Bureau of the Census, Current Population Survey, Standard and Poor’s DRI analysis of public-use data file). Finding work and remaining employed is very important to Hispanics, and they are flexible as to the kind of work they will take on in order to remain employed.
More Employed People Per Household: In addition, more family members are employed in Hispanic families than in the general population. So when one member of the family is out of work, it does not have as much financial impact on the family’s overall spending (Bureau of the Census, Money Income in the United States). According to the Bureau of Labor Statistics, the percentage of Hispanic families with employed member(s) remains consistently higher than that for families in the general population: In ’98-99, 84.7 percent of Hispanic families had one or more employed member, compared to 82.6 percent of all American homes (Bureau of Labor Statistics, Labor Force Statistics for the Current Population Survey).
Advertising Budgets Remain Stable: As a potential business slowdown looms on the horizon, it is important to question what role an economic contraction would play in marketing to various multicultural market segments, such as Latinos. The evidence suggests that when the economy is sluggish, lower unemployment rates for Hispanics correlate with increasing spending levels compared with those of the general market. In the ’90s, some savvy marketers at Fortune 500 companies started to note this trend, and began increasing Hispanic marketing budgets while decreasing general marketing budgets. This resulted in continued growth in sales for companies that marketed to Hispanics.
Case Study—American Honda: The automobile industry, in particular, illustrates realized incremental bottom-line profits from such a strategy. La Agencia de Orcí has worked with American Honda since ’89. During the course of this relationship, Hispanic Honda sales have increased 270 percent. Each year Hispanic Honda sales continuously increased, even through the last recession in the early ’90s, when Honda sales to the general market slowed.
