We are supposed to imagine that the vast immigration from Mexico to America is an investment in our future. But in Greater Los Angeles, where the future already has happened, the median Mexican family has set aside $0.00 in liquid assets and $5,000 in nonliquid assets.
A publication of the Federal Reserve Bank of San Francisco about the Los Angeles Metropolitan Statistical Area (population 13 million, or pretty much everybody within a 90 minute drive of downtown LA) shows that Mexicans aren’t really working out.
… White households in Los Angeles have a median net worth of $355,000. In comparison, Mexicans and U.S. blacks have a median wealth of $3,500 and $4,000, respectively. Among nonwhite groups, Japanese ($592,000), Asian Indian ($460,000), and Chinese ($408,200) households had higher median wealth than whites. All other racial and ethnic groups had much lower median net worth than white households—African blacks ($72,000), other Latinos ($42,500), Koreans ($23,400), Vietnamese ($61,500), and Filipinos ($243,000).
Racial and ethnic differences in net worth show the extreme financial vulnerability faced by some nonwhite households. U.S. black and Mexican households have 1 percent of the wealth of whites in Los Angeles—or one cent for every dollar of wealth held by the average white household in the metro area. Koreans hold 7 percent, other Latinos have 12 percent, and Vietnamese possess 17 percent of the wealth of white households.
The median value of liquid assets for Mexicans and other Latinos is striking, zero dollars and only $7, respectively, whereas, the median value of liquid assets for white households was $110,000. This not only implies possible financial hardship in the long term, but it also makes short-term financial disruption much more likely.
Japanese households had by far the highest median total value of assets at $595,000. Asian Indians ($460,000), Chinese ($408,500), and white households ($355,000) were also among those with high median values of total assets. Filipino and African black households fall in the middle of the distribution—$243,000 and $152,000 respectively. Median total asset values for all other racial and ethnic groups were significantly lower—U.S. black ($30,000), Mexican ($5,000), other Latino ($43,000), Korean ($28,400), and Vietnamese ($40,000) households. The data reveal an astounding racial wealth divide in the Los Angeles metropolitan area.
Mexicans were the least likely to be banked and most likely to lack financial savings. In the NASCC sample, Mexicans (47.1 percent), other Latinos (54.6 percent), U.S. blacks (68.1 percent), and Vietnamese (54.8 percent) are far less likely to own checking accounts than white (90.1 percent) and Japanese (93.3 percent) households. Mexicans, other Latinos, and Vietnamese also owned savings accounts at a lower rate than white households—39.8 percent of Mexicans, 44 percent of other Latinos, and 37.4 percent of Vietnamese owned a savings account compared with 71.9 percent of whites. Fifty-six percent of U.S. black and 57.8 percent of Korean households held a savings account.
Wealth differentials across racial groups in the Los Angeles NASCC survey are far more pronounced than income differentials. White households (40.7 percent) were far more likely to hold assets in stocks, mutual funds, and investment trusts. Only 18 percent of African black, 21.5 percent of U.S. blacks, 7.6 percent of Mexicans, 7.3 percent of other Latinos, 23.6 percent of Korean, and 9.9 percent of Vietnamese owned stocks, mutual funds, or other investments or trusts. The percentage of Chinese, Japanese and Asian Indian that have these types of financial assets was much higher when compared with whites—48.8 percent, 60.8 percent, and 58.6 percent, respectively.
The racial and ethnic disparity is large across all asset types and even larger across private retirement assets. Sixty-four percent of white households have an IRA or private annuity compared with 8.2 percent of other Latino, 15 percent of Mexican, and 17.7 percent of Vietnamese households. Japanese, Filipino, African black, and Chinese households were also likely to own an IRA although at lower rates than whites—62.3 percent, 55.6 percent, 48.5 percent, and 48.3 percent, respectively. The nonwhite groups less likely to own an IRA included Koreans (27 percent), U.S. black households (37.9 percent), and Asian Indians (38.6 percent). The results suggest that many households, especially black, Latino, and some Asian ones, would have virtually no financial assets of their own at retirement if not for federal insurance provided by the Social Security program.