Beyond the expected fact that incomes continued to rise for Asian Americans and Hispanics at the fastest rate among racial/ethnic segments in the U.S. is a hidden jewel for marketers. SSG’s recent in depth analyses of the Census Bureau’s American Community Survey (ACS) just released for 2015 confirmed that the rate of Household formation among Latino Upscale (Annual Household Income $50-100K) & Latino Affluent (Annual Household Income >$100K) Households further picked up its rate of increase. Hispanics pace is 2.4 times faster than the rate of White Non-Hispanic Upscale & Affluent Household formation (see Chart 1).
First, Hispanic Affluent Households, earning over $100K annually, have expanded at 9.2% annually since 2011, twice the 4.5% rate of Affluent expansion seen by White Non-Hispanics (see Chart 2). Hispanic Affluent growth since 2011 has been consistently higher than that of African Americans (6.9%) and Asian/Other Affluent Households (7.9%) yet these two segments also saw an annual rate of expansion faster than that of White NH Affluents. One in 12 Affluent Households in the U.S. is Hispanic up from one in 16 eight years ago.
Second, looking at middle income Hispanics, that is, “Upscale” households earning $50-100K per year, the pace of increase has been so phenomenal that they accounted for 1 in 2 new Upscale Households formed in the U.S. since 2011 (See Chart 3). One in eight American Upscale homes are now Latino versus 1 in 10 back in 2007. In fact, Hispanic Upscales households grew at twice the rate of Hispanic Mass households with incomes between $30-50K. While there were almost 250K less low income Latino homes earning less than $30K in 2015 than in 2011, there were 700K more Latino Upscale homes and 700K more Latino Affluent homes.
Third, in 2015, the median income for Hispanics rose to $45K, the largest rate of growth after Asian Americans at 3.1% annually since 2011 (see Chart 4). The rise among White NH was driven only by Affluent households as Upscale households were flat and the number of White NH Mass and Low Income households jumped. By contrast, the income rise among Hispanics has been driven by a speedy expansion of Upscale and Affluent homes AND a steady drop in Latino Low and Mass families. As a result, Hispanics somewhat closed the income gap versus White NH.
Marketing Alert. With growing population, wealth, collectivism and connectivity it should not be surprising that Hispanic Upscale & Affluent homes are also exerting record influence in America’s new mainstream. SSG’s longitudinal statistical analyses of GfK MRI revealed that Latino Upscale-Affluents already have significantly higher incidence of influence which also happens to be rising in the following categories: Autos, Finances & Investments, Insurance, Household Furnishings, Interior Décor, Apparel, Shoes and anything Fashion & Beauty, Spirits, Movies, Entertainment, Travel, new Foods, Snacks, Grocery and Cleaning, new Technology, Electronics, Cell Phones, Media in general and Internet.
In other words, if you don’t understand the nuances of Latino Upscale purchase triggers and detractors, per AHAA-Nielsen’s 2013 Upscale Latino’s 2.0: A Renewed Outlook For High-End Marketers study (ahaa.org), you will be outsmarted by some competitors’ high-end and luxury brands. If you assume that Latino Upscale-Affluents are all English Dominant, you will miss nearly half of them. If you don’t understand Latino Millennials, you will miss nearly half of the Latino Upscale-Affluent opportunity. If you think Latino Upscale-Affluents are all are US Born, you will need to readjust your approach to 46% Foreign Born and 64% dual culture Latinos. Bottom line, if you like money, sharpen your plans now because the New Era of Latino Wealth is here now and it might just shatter your expectations!
Pre-register HERE for SSG’s November 16 webinar “Upscale-Affluent Latinos 1.0: The New Era of Latino Wealth.”