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The Language of Money
Michele Wucker
04/01/2004
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Businesses’ main immigration priority in the past has been to guarantee a
steady supply of workers to ensure jobs were filled and wages did not rise too
quickly. President George W. Bush’s “guest worker” proposal in January, which
would match illegal aliens with employers and grant them three-year work visas,
pursues this traditional goal. Yet its focus on guest workers fails to
acknowledge a powerful new business opportunity, recognized first by the
financial services industry, to legalize immigrants and help them integrate into
American society.
The main driver of this new way of thinking is the combined
economic power of the Hispanic (as the government likes to call it) or Latino
(as you are more likely to hear it called on the street) population. Together,
America’s 39 million Latinos have a combined purchasing power of nearly $600
billion. This number is growing rapidly; Latino incomes are rising at 18 percent
per annum, or double the national rate. By 2007, U.S. Hispanic purchasing power
is expected to reach $1.3 trillion annually.
Statistics also explode the
stereotype of immigrants as solely low-to-middle income. Between 1991 and 2000,
the number of Hispanic households earning six figures grew by 126 percent, far
outpacing the 77 percent in the general population. Hispanic Business magazine
estimates that the wealthiest 75 Hispanics represent a combined net worth of
$11.4 billion. This market has caught the eye of brokers such as Merrill Lynch
and Charles Schwab, as well as traditional banks, which are eager to secure
these individuals as clients.
An Underserved Market
Two out of five Latinos in the United States are
foreign born; an estimated 6 million to 8 million are undocumented. That is part
of the reason that only 45 percent of U.S Hispanics have checking accounts,
compared with 80 percent of the general population, according to a recent Celent Communications study. Only 50 percent have credit cards, compared with 70
percent of the general population.
For some time, financial services in the
Latino community focused on the money-transfer market for the remittances that
nearly half of adult immigrants send home to their families—last year, roughly
$30 billion, according to a recent Pew Hispanic Center study. Seven out of 10 of
these transactions still occur through wire-transfer companies such as MoneyGram
and Western Union.
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