Unemployment among U.S. Latinos is outpacing that of the nation at large, according to the U.S. government. In October, the Hispanic unemployment rate rose to 8.8 percent, compared to a national rate of 6.5 percent.
What does this means? Are Latinos suffering the crisis more or less than the rest of Americans? Are foreign born Latinos better “prepared” to deal with crisis than US born Latinos? What will the new strategies to be adopted by Latino consumers be?
And, What will happen with immigration? Apparently in the last two years immigration from Latin America drop 42%, is the American crisis a reason for Latinos to go back home? or quite the opposite, will the new economic pressure force more illegal immigrants to cross the border from Mexico?
Your opinion, your experiences, your ideas... POST IT AND SHARE IT BELOW
Crises: According to a business dictionary, the definition of crisis means: a critical event or point of decision which, if not handled in an appropriate and timely manner (or if not handled at all) may turn into a disaster or catastrophe.
While the economic / financial crises are top of mind today, there are other types of critical situations and Latinos in general are familiar with many different forms of them: , including political, financial, public, internal and also “personal”.
A brief review of history in Latino countries during the last 44 plus years can confirm it.
* 1964 / 1985: Brazil lived 21 years of military dictatorship and a huge internal crisis that led to an economic collapse and closing doors to international commerce
* 1972: inflation in Chile surpassed 300%; the country was isolated from the rest of the world commerce and the economy collapsed. A political crisis culminated with President Allende’s suicide taking 15 years for Chile recover itself.
* 1982: International banks refused to lend to the Mexican government, and the government announced its inability to service its debt.
* 1983: Panama faces a political crisis that ended in 1990. Noriega assumed the Panamanian Defense Force (PDF) under accusations of drug trafficking and corruption, in a challenge to the United States.
* 1984: Southern Cone and Brazil tested the “tequila effect”: a huge economic crisis in Mexico, effect of the depreciation of the “peso mexicano”. It took a US $50 billion loan to Mexico provided by the USA and international organizations to stabilize the currency.
* 1992: Brazil witnessed the first Impeachment process of a president in the world. Collor de Mello left the presidential service leaving the country under a huge crisis of reliability
* 1998: Affected by the crisis in Asia and Brazil, Argentina started a long period of all sort of crisis that lasted almost five years:
-- economic: highest rates of unemployment
-- political: a president resignation after his Minister of Economy
-- internal: unions calling nationwide strikes; supermarket looting
-- international: a fear of default put IMF on hold to provide assistance to Argentina
* 1998: Andres Pastrana sworn in as President of Colombia in middle of a huge crisis: high unemployment (during his administration it has risen over 20%), fiscal deficit and the impact of global financial instability. Also, countrywide guerrilla attacks by the FARC and ELN were spreading, as well as a growth of drug production and corruption made it difficult to solve the country's problems.
* 1999: Not totally recovered from the crisis experimented from 1993 and 1998, Ecuador suffered its worst economic crisis in 1999. The crisis involved 16 banks—out of the 40 existing in 1997.
* 2000: Alberto Fujimori resigned after 10 years in power in Peru. He led the country into constitutional crises, and his efforts to remain in power eroded democratic institutions. He left the country under a credibility crisis, corruption scandals and an angry population
* 2005: Ecuador's President Lucio Gutierrez fired the Supreme Court and declared a state of emergency in the capital, in a bid to resolve a political crisis.
The objective of this comment is not to develop an accurate timeline of all crisis situations affecting Latin America during the last 30 years, but to call attention to the fact that a great part of Latin countries suffered not only financial crisis but also political collapses at the same time.
I’m also trying to demonstrate that crisis – from a Latino point of view – is something that affects an entire population per se and not the stock market and the international reserves. It’s something that affects your routine, your rights and your job. These events perhaps have helped shape a more resilient character among Latinos, many of whom have already experienced the need to leave their country, homes or families behind to look for opportunities and leave crisis behind.
Another point of differentiation between Latinos and other people is the way we react to a crisis. Strikes, union movements, street protests and even student demonstrations against the system and a certain dose of aggressive behaviors are very common among Latinos under stress , when it is a reaction to overwhelming situations.
According to reports earlier this year, Latinos started feeling the economic crisis in the U.S. when homes began to slow down since construction jobs, an important source of employment, started to dry up. As opportunities start to dim, some are looking to head back to their country of origin. But for the majority who stays, they at least have some reference to e equipped to face the recession, look for the best way to position their family and assets and continue moving on.
carla eboli
Obama: the promisse of change for Latinos who lost their jobs during USA crisis.
Crisis. What to say that hasn't been said before?
That Latinos are better prepared to face it, because of the situation in LatAm? That applies to Recent Arrivals, maybe, as Juan Tornoe explains below.
But what about Latinos that have been in the US for a long time?
I believe that prices are higher equally to all segments. The way we react to them is pretty similar. So, the main difference could be in the attitude to face adversity. A good friend has always said that "Immigration is not for Wimps". I guess that the current Crisis is a good way to see who's who in that department.
AQ
According to the INEGI (Instituto Nacional de Estadistica y Geografia) in Mexico, “the total amount of people that came to live in Mexico in the third trimester of 2007 surpassed, for the first time, the number of people who left the country to live abroad.” The most likely cause is the state of the US economy. On my recent trip to Mexico City, I was discussing this topic with a taxi driver. “If people that can’t find a job in the US, they have no choice but to come back” he mentioned. “At least over here you can sell products on the streets if you need to.” He brought a very interesting point. The informal economy in Mexico (businesses/entrepreneurs that are not incorporated and don’t pay taxes) is very common. While it may not provide the same quality of life that a job in the US would, it may be their only choice. For many of these folks this move might only be temporary until things get better. For others, it might be a fresh start and the belief that they should never have left in the first place.
AMM
Juan Tornoe | BIO
Hispanic Trending
Recently I’ve been pondering about how will Hispanics, specifically Hispanic immigrants, be affected with the current crisis, how will their buying habits shift, and most importantly to you, how will this affect all those marketing to Latinos.
A few weeks back I received a message asking how to “build the case for continued Hispanic market outreach in these times of economic crisis.” Then I participated on an online forum where we discussed, among other things, “the financial value of the Hispanic Segment”. Right after that I received another invitation to participate in a panel where we will discuss “Investing in the Hispanic Market.” You can tell that this is a hot topic for everyone (you, me, and the guy in the cube or office next to you), so I decided to share with you my thoughts on this “Hot Issue”.
As you’ve heard me say before, the Latino community is way too diverse to gather them into one single group and come up with a rational, practical and true conclusion. It is a completely different reality for a 3rd Generation Latino Baby Boomer living in Santa Fe, NM than for an immigrant in its early 30s who’s starting a family in Houston, TX. The former’s experience is way more similar to that of the “average American” that the latter’s will ever be.
I have purposely focused this analysis on Latino Immigrants.
First, let’s get one thing out on the open, documented or not Hispanic immigrants came to America in search of a better future for them and their families that for whatever reasons their native country could not offer. For the most part, they bet all their chips on the United States believing it is The Land of Opportunity. So, the U.S. is going through a rough patch right now… Seriously, this is NOT a big deal if you have lived in Latin America for a good part of your life. Most Latinos will have a “been there, done that” attitude towards it, tighten up their belts, and face the crisis diving head first into it in comparison to the average American who’s been living in abundance (relatively, at least) for their entire life and now are facing vast uncertainty.
Let’s take a look at some of the stumbling blocks brought by the current economic crisis:
The Crumbling Stock Market: To which many of my fellow Latino immigrants are immune to and ask, like I did the first time I heard the term, “401 ¿Qué?” Seriously, Hispanic immigrants were not heavily invested (if invested at all) in financial instruments that have nosedived in recent months: 401Ks, IRAs, Mutual Funds, Stocks, Bonds, CDs. They have not seen a sudden and dramatic loss in equity as the average American is experiencing.
Looming Credit Card Debt: It has been widely reported in the news that Latinos are not big credit card users. According to recent data from Experian Consumer Research 58% of the Hispanic population have not used a credit card in the past 30 days, 42% of Latinos don’t like the idea of being in debt, and 31% often pay cash for the things they buy, (and these numbers take into consideration ALL Latinos, not only immigrants). You can be sure that credit card debt is not at the top of the list of problems stressing out Hispanic immigrants.
Problem Banks Rising to a 13-Year High: For as long as I’ve followed trends in the Hispanic market banks have been striving to gain more Latino Customers. A recent report from Synovate indicates that nearly 23% of all Latino families lack any type of bank account, while the National Council of La Raza says that up to half do not have a checking or savings account. Again, these numbers represent the entire Hispanic population; for Latino immigrants the percentages, I assure you, are higher. So as many Americans are losing their sleep over the banking crisis, many Latino immigrants are comfortably resting on their very own “Mattress” bank. For Hispanic immigrants it is mostly a cash economy, banks and credit cards companies are not part of their everyday life.
Rising Unemployment Rates: According to a June 2008 Pew Hispanic Center report, “the unemployment rate for Hispanics in the U.S. rose to 6.5% in the first quarter of 2008, well above the 4.7% rate for all non-Hispanics mainly due to a slump in the construction industry.” Absolutely true, but contrary to your average gringo (and I say this in the nicest possible way), losing your job is not uncommon or a big deal in the reality Latino Immigrants lived before coming to America. If they lose their job, they look for another one, even if at a lower wage, in a different industry or in the underground economy. According to a late 2007 study commissioned by the Federation of Latin American Banks, “… although 70 percent of migrant workers reported increased difficulty finding employment in today’s economy, only 10 percent reported unemployment, and 68 percent found jobs within three months.” The fact that the Pew Hispanic Center reports that the leading sources of jobs growth for Hispanics were business services and hospital and other health services supports these statements and shows the resilience of the Latino workforce.
The Mortgage Crisis: According to the latest figures from the Bureau of Labor Statistics’ Consumer Expenditure Survey (2006), half of Latinos rent vs. owning their homes, compared to 30% of non-Hispanics. While more than half of General Market consumers hold a mortgage, only 26% of Latinos do (Synovate, 2008). Although it most certainly sounds alarming that, as reported by the Center of Responsible Lending, about 40% of all subprime loans were issued to Latinos and that 1 in 12 mortgages to Hispanics will end up in foreclosure, these facts lose impact when, as deducted from the numbers above, you take into account that only 24% of the entire Latino population holds a mortgage. Again, if you focus on Hispanic Immigrants, who are more likely to rent than to own their dwellings, this situation’s impact is even less dramatic.
Remittances going Down: More than half of Hispanics send money to their family and friends outside the U.S., almost a third of them send it at least on a monthly basis. Given the current economic crisis, it has been estimated that remittances could contract between 3% and 8% in 2008; signaling a temporary redistribution of remittances money while employment patterns recover. Which means Hispanics will send probably less money, less often, to their loved ones in order to be able to continue functioning in this society. The message to their families will be, “Less is better than nothing” given the fact that, as the director of the University of California, San Diego’s Center for Comparative Immigration Studies, Wayne Cornelius said, “… immigrants who have lived in the U.S. a few years will stay put because the job prospects are worse back home…” Furthermore, the remittances contraction might not even reach the mentioned numbers, given that Latinos will seek informal channels to transfer money back home, with options such as sending pre-paid cards to family members, a less costly alternative which yet offers more safety than cash to those at the receiving end.
Immigration Slowdown: Even though there are clear signs that the United States has become less appealing given the current economic downturn and the increase in raids against illegal immigrants, the pressure to seek job opportunities in America is not winding down. It is certainly true that there are less Latin American Immigrants coming to U.S. (Mexican emigration has dropped 42% over the last two years), yet the fact is that they are still coming, in lesser numbers than before, but they keep coming nonetheless. For those who continue coming, staying behind would be even worse… for them and well as for their families. All in all, immigration numbers will be lower until the benefits of coming to the U.S. outweigh the risks for those who are currently thinking it twice before heading north.
Concluding, I am in NO way trying to imply that Hispanic Immigrants are immune to an economic recession. They are feeling and will certainly feel the squeeze in the months to come, just the same as they’ve felt it in the past while living in their home countries. It won’t be a novelty in their lives. They’ve survived through various crises and have successfully emerged from them. To a certain extent they know what to expect, know how to react, and know that they won’t last forever. This gives them a somewhat more positive perspective regarding current events, which in turn means that they will hold back less, in comparison to the Average American, when considering acquiring new products or services.
So, to answer the question in the mind of many, “Should I be marketing to Latinos right now?” I respond with an emphatic “YES!” as well as with a couple questions of my own, “Why haven’t you started doing so?” or “Why did you stop?” depending on your situation. As many companies withdraw into their trenches, this is the perfect opportunity to make your brand the one that Hispanic immigrants think of first and feel the best about whenever they have a want/need of your product or service category.
Latino Immigrants, for the time being, will be buying less of everything, but in comparison they will be buying more that their non-Hispanic counterparts. From where I stand, it makes perfect sense to reach out to them right now.
I concur. Although, I personally feel it is the most over used word of current.
Crisis defined - A crisis (plural: crises) may occur on a personal or societal level. It may be a traumatic or stressful change in a person's life, or an unstable and dangerous social situation, in political, social, economic, military affairs, or a large-scale environmental event, especially one involving an impending abrupt change. More loosely, it is a term meaning 'a testing time' or 'emergency event'.
Since they are all connected, this is a societal and personal crisis that is both traumatic and stressful and is changing lives daily. It is impacted by the political, social, economic and military affairs choices we make. This is truly a testing time.
Just FYI, when you google Latino crisis you will find – Economic, Health, Representation and Education Crises
Another article, really interesting, shared with us by our taiwanese friend Jeff Linn from Admerasia about crisis and chinese people. A lot of commonalities with the article from Tornoe
Why China will recover first
With a high savings rate, sensible mortgages and heavy reliance on cash, the Chinese are suffering less amid the credit meltdown. And a huge reserve of dollars doesn't hurt.
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By Bill Fleckenstein
Recently I traveled to China to deliver a series of speeches. During visits to Beijing, Shanghai and Hangzhou, I was fortunate enough to meet with some people who know a lot about how the country functions. In this week's column, let me share the highlights of what I learned.
I think the most important thing for folks to understand is that China has not suffered the epic credit binge that much of the rest of the world has. China's savings rate is high. Mortgages require sensible down payments. Credit is something that hasn't quite come to China yet (although I understand that credit cards have recently become more available, especially in the big cities).
People pay cash for most things, though they do use debit cards. From a credit standpoint, it seems similar to how life in America was back when "Leave It to Beaver" ruled the airwaves. Meanwhile, the people I met were very industrious and their enthusiasm seemed quite high. (As a traveler, I was happy to discover that the airports were new and the bags arrived quickly.)
The biggest problem China faces is its dependence on exports. A large part of the export issue is the fact that China has roughly 150 million itinerant/migrant workers -- yes, you read that number right -- in the south who've moved there from the west. (Away from the big cities, life is difficult and people are poor.)
But China understands this problem. (I have left out many others and don't mean to gloss over them.) They are working overtime to stimulate the domestic economy, and there's a lot they can do. More importantly, as a country that has accumulated a couple trillion U.S. dollars, China has the reserves with which to do so. Relative to the problems faced by most countries, China's seem at least manageable and do not stem from having borrowed and spent like mad.
Opportunity in its infancy
The other thing to note is that the "capitalistic" progress they've made is really only 15 to 20 years old. China's cities are modern, and their infrastructure is very new. But from a socioeconomic standpoint, much of what I saw leads me to conclude that China is more like America was in the '50s and '60s. It is very early in the "China miracle," if you will. But I have reached the completely obvious conclusion, as have so many folks, which is that China is the wave of the future.
For anyone who'd like to learn more, I recommend a book titled "Mr. China: A Memoir" by Tim Clissold. (After being introduced by a friend, I was lucky enough to spend a couple of hours talking with Clissold during my visit.)
THE PEW HISPANIC CENTER/ IMMIGRANTS AND RECESION
A small but significant decline has occurred during the current recession in the share of Latino immigrants active in the U.S. labor force, according to a new analysis of Census Bureau data by the Pew Hispanic Center, a project of the Pew Research Center. Workers who are employed or looking for work are said to be active in the labor market.
The proportion of working-age Latino immigrants active in the labor force has fallen, at least through the third quarter of 2008, while the proportion of all non-Hispanics as well as of native-born Hispanics has held steady. Among Hispanic immigrants, the decrease is sharpest among those from Mexico and those who arrived in the U.S. since 2000. Also, the increase in the number of foreign-born Latinos in the labor force is much smaller than previous years.
The labor market data do not paint an unrelentingly negative picture for Hispanic immigrants. The estimated increase in their unemployment rate is not as high as the increase for native-born Hispanic workers. Also, median weekly wages fell for native-born Hispanics but not for foreign-born workers. These developments, however, could be an artifact, a consequence of the likely withdrawal of low-wage foreign-born Hispanics from the labor force.
The report, "Latino Workers in the Ongoing Recession: 2007 to 2008," authored by Rakesh Kochhar, Associate Director for Research, is available at the Pew Hispanic Center's
"Crisis" also envelops social fears such as xenophobia during financial hard times. See article below:
http://www.mydd.com/story/2008/12/11/125014/28
CAC
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