OPINION: Understanding Hispanic Purchasing Power
With the US dollar giving away ground to all of the major currencies world-wide, there may be a saving grace along the way, namely, the ‘Hispanic Dollar’. No, I am not referring to a new currency, but rather the US dollars earned and spent by Hispanics working and living in the US.
For many of us the first impression that comes to mind when the terms ‘Hispanic’ and ‘dollars’ are mentioned together is the $53+ billion of cash transferred from the US to Latin American countries every year. This enormous
amount of money may be cause for alarm, but when measured against the overall income generated by Hispanic workers in the US, it actually represents less than 10% of their total earnings.
With this new information, one might ask, “How powerful is the ‘Hispanic Dollar’ in today’s economy, and how strong will it be in the years to come?” Let us examine some of the recent data to see if we can spot a trend.
Of the 45 million people who make up the Hispanic population in the US today, 60% are considered children or young adults with an average age of 13, (according to PEW Hispanic Research). After adjusting for unemployment, the total number of eligible wage earners is less than half of the total population or about 17 million adult workers. These 17 million wage earners are responsible for generating nearly $700 billion in purchasing power, which amounts to approximately $41,000 per worker a year! If you calculate the income plus access to credit for a typical Hispanic household with 3 to 4 active wage earners, the average purchasing power per household is about $143,000.
What marketers and employers should note is the multiplier effect that will dramatically increase these numbers in the next few years as the younger Hispanic population enters the work force and gains access to credit. Simple calculations show that by 2010 the Hispanic purchasing power will surpass the $1 trillion mark due in part to the growing integration of Hispanic professionals and entrepreneurs into the US economy. At these alarming growth rates, marketers can not afford to ignore Hispanic consumers and should make every effort to understand their likes and dislikes.
To attract these appreciating ‘Hispanic Dollars’, management should allocate funds for a long term marketing strategy supported by ongoing primary market research. With ‘live’ feedback collected directly from their culturally diversified consumer base, companies will be able to monitor changing buying trends on a per market basis and identify the adjustments needed to capitalize on this soon to-be, historic event.
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