Poverty among minorities in the United States: Explaining the racial poverty gap for Blacks and Latinos

The two largest minorities in the United States, African Americans and people of Hispanic origin, show official poverty rates that are at least twice as high as those among non-Hispanic Whites. These similarly high poverty rates among minorities are, however, the result of different combinations of factors, due to the specific characteristics of these two groups. In this paper, we analyze the role of demographic and labor-related variables in explaining the current differential in poverty rates among racial and ethnic groups in the United States and its recent evolution. Our results show, first, that these differentials were largely explained by differing family characteristics of the ethnic groups. Furthermore, we show that while labor market activity of family members and a preponderance of single mothers played a more significant role in explaining the higher poverty rates of Blacks, a larger number of dependent children is more closely associated with higher poverty among Latinos, who also suffer from a larger educational attainment gap and higher immigration rates. Finally, we show that both racial poverty gaps declined during the 1990s, and, in the case of Latinos, the downward trend has continued through the present decade. This reduction in the differentials was fully explained by characteristics, mainly the labor market performance of family heads, while the unexplained differential (conditional racial poverty gap) proved to be more persistent across time.