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Hispanic Market Update by Roger Selbert, Ph.D.

Posted by Elena del Valle on July 15, 2005

The Coming Age of Native-Born Latinos

Hispanic Americans are not just the largest ethnic group in the United States  they may well be the most dynamic, vital force shaping America¹s future.  So write the editors of Hispanic Trends magazine (March/April 2005). 

Exerting an ever-increasing influence on American media, music, fashion and cuisine, Hispanics are themselves in flux, retaining much of their cultural heritage as they adopt American habits and mores.  The key to Hispanic American influence might well lie not in the constant stream of immigration, but in the coming of age of the second and third generations that will swell the ranks of US Latinos in coming decades.  Young, US-born and educated, and primarily English speakers, Hispanics are poised to bring about the next American cultural and social revolution.

Younger than other population groups and rapidly gaining economic and political clout, Hispanic Americans are a vibrant mix of immigrants and families encompassing several US-born generations; the second-largest group in the US labor force, after non-Hispanic whites; evidencing an entrepreneurial bent that is helping to fuel US economic growth; and projected to account for 46% of total US population growth over the next two decades.  Consider the following statistics, drawn from various sources:

As of March 2004, US Hispanics numbered 40.4 million (14% of the total US population).  That number is expected to reach 47.7 million by 2010, and 60.4 million by 2020.  Average Hispanic family size is 3.87 people; the national average for all families is 3.19.

Hispanic economic clout is growing at an annual compound rate of 8.2%, nearly twice the 4.9% rate for non-Hispanics, and is projected to reach $1 trillion annually by 2010.

In 2004, 31% of all US Hispanic households  nearly a third  had incomes over $50,000.

Hispanics made up 4% of the 7.7 million US business owners with paid employees in the 2002 Economic Census.  Self-employment by Latinos grew 41% between 2000 and 2003 (while overall self-employment grew 6.2%).  The number of Latina-owned businesses surged 62.4% for the seven years ending in 2004 (vs. 9% for all businesses).

Of the 3.4 million immigrants aged 25 or older who arrived in the US from 2000 to 2004, 34.3% had a bachelor¹s degree or higher, compared with 32.5% in the 1990s.  Of foreign-born Hispanics in that category, 13% had college degrees, compared with 9% in the 1990s.

According to the US Census Bureau, 49.7% of US Hispanics are homeowners, up from 47.3% a year ago.  (The homeownership rate for non-Hispanic whites increased from 75.5% to 76% over the same period.)
Reaching the Hispanic Market in English or Spanish: The Debate Continues

We¹ve been writing about this debate for years, because it has been evident for years that the numbers of bilingual, English-dominant, and even English-only Hispanics would continue to grow rapidly, especially among younger and US-born Hispanics.  According to Global Insight, by 2025 nearly one-third of Hispanic households will not speak Spanish at all, and only 15% will speak Spanish exclusively (down from 21% today).  In the same time frame, the total Hispanic population is expected to grow to 70 million.

The increasing English-speaking and bilingual Hispanic population is already reflected in the changing media landscape.  When watching television, Hispanics spend about 65% of their time with English-language TV, according to Nielsen Media Research.  Among Hispanic kids and teens, the figure is about 75%.  Thus, advertising campaigns geared to bilingual Hispanics  commercials that use both languages, running in both Spanish and English media outlets  are becoming more prevalent.

According to Kevin Downey, writing in Marketing Y Medios (February 2005), total ad spending directed at the Hispanic market is projected to grow 38% by 2008, from $3.3 billion last year to $4.6 billion.  Of that amount, perhaps as much as 10% will be used to reach English-speaking and bilingual Hispanics.  Hispanic and general-market agencies will be vying to cope with these developments.

With that in mind, a group of Latino marketing professionals has founded the New Generation Latino Consortium, whose mission is to educate the business world about the critical role this hot demographic will be playing in media, marketing and entertainment.  Primarily comprised of U.S.-born Latinos, New Generation Latinos are 12-to-34-year-olds who are English-dominant or bilingual, lead largely bicultural lives, and predominantly consume English-language media.  According to David Chitel of LatCom, these early-adoptive, trend-setting, more educated Latinos are an upwardly mobile US Hispanic segment whose spending power has been estimated at $400 billion.  They are evidence that the US Hispanic market is both growing and evolving.

The New Hispanic Market 

We have written many times over the years about the size, growth and importance of the Hispanic market ($1 trillion by 2010), and the significance of the Hispanic youth market as a bellwether, leading-edge group.  In issue #945 (September 2002), we reported on several sources of research that suggested a trend toward English preference among a large majority of US Hispanic youth in terms of media usage (TV, radio, print media, film and Internet).   That trend appears to be accelerating.

According to a recent study conducted by researchers at the State University of New York (SUNY), English remains the language of choice among the children and grandchildren of Hispanic immigrants, despite continuing waves of migration from Latin America.  In contrast to concerns from some analysts that English may be losing ground to Spanish in some parts of the United States, the study finds the majority of Hispanic Americans moving steadily toward English monolingualism.  Among third-generation Hispanics, the fastest-growing segment of the US Latino population, 72% speak English exclusively.

Further, the study finds that this trend has generally continued among Mexican-Americans, the country¹s largest immigrant group, even during the immigration boom of the 1990s.  Even for Hispanics in Los Angeles, a magnet for immigration from Latin America, the pattern of language shifts across generations remains similar to those among Hispanics nationally.  The report suggests that many other researchers and analysts have underestimated the pressures of assimilation, and are missing its contemporary signs.

Who We Are, What We Are Becoming

For example, Samuel Huntington, a professor of political science at Harvard, touched off a furor last year by warning in his book, Who Are We: The Challenges to America¹s National Identity, that continuing high levels of Hispanic immigration might ³eventually change America into a country of two languages, two cultures and two peoples.²   He is quoted in the International Herald Tribune as saying that the SUNY study reflects the experience of current third-generation Hispanics, but does little to predict the experience of future third-generations.

Richard Alba, director of the SUNY study, counters that available statistics do not suggest a substantive change in historical patterns.  His view is echoed by Ruben Rumbaut of the University of California, co-director of the largest multiyear survey of children of immigrants, whose findings show that continued bilingualism among Hispanics does not occur at the expense of English.  Even among Mexican-born young people who came to the US as young children and are living on the border, the UC survey finds, English is still overwhelmingly preferred.

What¹s behind this English preference trend?  Although not generally understood or appreciated, Hispanic immigration to the US, as well as the share of the US Hispanic population that is foreign-born, both peaked years ago.  Migration to the US will decrease even further after 2010, according to University of California professor Philip Martin, due to a drop in Mexico¹s birthrate.  Hence, the explosive growth of the US Hispanic population in the coming decades will be fueled more by natural increase (native births) than by immigration.  This will speed the processes of assimilation, acculturation and English-proficiency.

Spanish is certainly not going to fade away in the regions of the country that serve as gateways to new immigrants.  The sheer size and continuous nature of Hispanic immigration, the proximity of Latin America to the US, and the availability of Spanish options in media, business and government services guarantee the continued proliferation of Spanish usage in the US.  But it¹s not what the kids are doing: young Hispanics may be very proud of their heritage, but English is the language of that powerful machine known as American culture.

According to the Latino Intelligence Report, a national survey of Hispanic teens conducted by a division of Creative Artists Agency, Hispanic teens watch more television than their general-market counterparts and cite MTV, Fox and Comedy Central as their favorite TV networks.  While only 8% of those surveyed said they speak Spanish better than English or Spanish only, 48% said they speak English and Spanish equally well.  Interestingly, however, only 20% of those responding to telephone interviews volunteered to take the survey in Spanish.  In other words, Hispanic teens overreport their Spanish-speaking ability.

Growth Strategies Implications

Note well: while assimilation and acculturation to the mainstream is still the paradigm of ethnic minorities in the US, what is different and unique about Hispanics is how much they have changed, and are changing, the mainstream in the process.  Every facet of American culture, every aspect of American society, now includes and is transformed by Hispanic influences, and young Hispanics are driving the trend (a very current example would be Spanglish rap songs).

Juan Faura, president of Hispanic advertising agency Cultura, agrees that Hispanic culture has evolved into an integral part of the overall pop-culture fabric in the US.  He writes in Marketing Y Medios that he has come to realize, after many years in the industry, that the Hispanic market is not so much a mix of two cultures as an emerging third culture:

This third culture is unique to its time in history.  It is a culture rich in tradition and pride, but defined by its own values, values forged over generations in this country.  It is defined more by the expectations of the future than the memories of the past.

Andrew Erlich of Erlich Transcultural Consultants agrees, writing that bicultural youth are individuating and creating their own new culture, which they express and experience in just about all aspects of their daily lives.  Appreciating the experience of bilingual youth, he concludes, will give marketers a window to understanding the Latino market and a key to designing successful strategies for today and tomorrow.

Dr. Roger Selbert is one of the best-known and most respected trend experts in the United States.  He is a principal of The Growth Strategies Group, editor and publisher of Growth Strategies, and a senior fellow at the La Jolla Institute.  As a business futurist, his 20-year track record of economic, social and demographic foresight is unequalled. He is a contributing author of the upcoming Hispanic Marketing & Public Relations (Poyeen Publishing $49.95).