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Many African-American and Latino Families in Danger of Falling Out of Middle Class, According to New Report

Landmark Study Based on New "Middle Class Security Index" Finds 3 out of 4 African-American and 4 out of 5 Latino Middle-Class F

New York, NY — As CNN explores many of the aspects of the African-American experience in its "Black in America" series, a new report shows that the vast majority of African-American and Latino families who have entered the middle class are either borderline or at high risk of falling out of the middle class altogether.  The 2008 study by the policy center Demos and the Institute for Assets and Social Policy (IASP) at Brandeis University shows that one in four African-American and fewer than one in five Latino middle-class families in America are financially secure.

Economic (In)Security: The Experience of the African American and Latino Middle Classes is the first comprehensive report to measure the economic stability of households of color in the United States. Based on national government data, Economic (In)Security is the second in a series of reports and briefing papers that utilize the new Middle Class Security Index developed by the non-partisan policy center Demos and IASP/Brandeis. The first report,By a Thread: The New Experience of America's Middle Class, was published in late November 2007 and presents findings on the middle class as a whole.

This Index measures the financial security of the middle class by rating household stability across five core economic factors: assets, educational achievement, housing costs, budget and healthcare. Based on how a family ranked in each of these factors, they were defined as financially "secure," "borderline" or "at risk".

"Financial health eludes the majority of African-American and Latino middle class," said Thomas M. Shapiro, Director of the Institute on Assets and Social Policy at Brandies and one of the co-authors of the report. "Tremendous middle-class gains earned in schools, achieved on the job, and seen in paychecks are eroded by lack of assets, which seriously undermines the financial security of African-American and Latino middle class families."

The Middle Class Security Index shows worrying trends in African-American and Latino households:

  • African-American and Latino families have more difficulty moving into the middle class, and families that do enter the middle class are less secure and at higher risk than the middle class as a whole.
  • Only 26 percent of African-American middle-class families have the combination of assets, education, sufficient income, and health insurance to ensure middle-class financial security. One in three (33 percent) are at high risk of falling out of the middle class.
  • Fewer than one in five Latino families (18 percent) are securely in the middle class. More than twice as many Latino (41 percent) families are in danger of slipping out of the middle class.    
  • African-American middle-class families are less secure and at greater risk than the middle class as a whole on four of the five indicators of security and vulnerability. Latino middle-class families are less secure and at greater risk on all five indicators.

The report also shows that assets and housing costs are among the key destabilizing factors Latino and African-American families face:

  • Only 2 percent of African-American and 8 percent of middle-class Latino families have enough net financial assets to meet three-quarters of their essential living expenses for nine months if their source of income disappeared.
  • About 95 percent of African-American and 87 percent of Latino middle- class families do not have enough net assets to meet three-quarters of their essential living expenses for even three months if their source of income were to disappear.
  • Only 26 percent of African-American and 37 percent of Latino middle-class families spend less than 20 percent of their after-tax income on housing--both are below the national average of 40 percent.

The Economic (In)Security report recommends a set of policies that will help open access to, and strengthen, America's middle class. These policies cover a range of important issues affecting American households, including asset building and debt reduction, making higher education more accessible and affordable, and addressing the healthcare crisis.

"African-American and Latino families, even those who have made it into the middle class, still face very serious barriers to financial security," said Jennifer Wheary, Senior Fellow at Demos and report co-author. "Strengthening the middle class was a theme early in the election cycle. While both candidates seem to have forgotten about the topic, building a strong and inclusive middle class is more important than ever.  Given the forecasts for population growth, candidates who say they are trying to build a better future for America cannot continue to ignore the great disparities, especially in key areas such as assets and housing costs that make the African-American and Latino middle classes financially weaker and less stable than their white counterparts."

The Middle Class Security Index will be updated biennially, with accompanying reports, as new national data become available. PDF versions of Economic (In)Security and the initial By a Thread reports are available for download at or To order a hard copy or to arrange an interview with one of the authors, please see contact information.