How immigrants are redefining 'American' in Southern California

How immigrant families become middle class, and what gets in the way

Photo by moooster/Flickr (Creative Commons)


Several reports lately have addressed minorities and wealth, and their increasing lack thereof in these hard economic times. Recent reports have shown minorities disproportionately losing their household wealth in the housing market collapse, and immigrants having a harder time moving up the economic ladder in the current crisis, which threatens a long tradition of upward mobility.

But how do people starting out on the lower economic rungs, here or abroad, amass wealth in the United States in the first place? And how do they pass it along to their families while paying bills and supporting relatives? For those who are foreign born, along with their U.S.-born children, how much does immigration status and other mitigating factors matter?

Sociologist Jody Agius Vallejo of USC’s Center for the Study of Immigrant Integration has spent the past few years studying Los Angeles’ Mexican American middle class, a group much larger - and richer - than some might imagine. In a paper two years ago, she wrote that of a sample of respondents with household incomes over $100,000 a year, well over the national and local median, 70 percent described having grown up in disadvantaged communities. Vallejo is now writing a book on the Mexican American middle class for Stanford University Press.

M-A: You wrote in your paper on the Mexican American middle class in L.A. that regarding the 1.5 and second generation, “their intergenerational mobility, from poor to middle class in one generation, is remarkable considering that their parents have less than a sixth grade education on average.”

In a nutshell, how did these parents move up the economic ladder? And what kind of wealth, and how much, are we talking about?

Vallejo: Traditional markers of middle-class status includes employment in white-collar occupations, household incomes over the national median, a college degree, and homeownership. In my study of middle-class Mexican Americans, most of the respondents have graduated from college, the majority own homes, and they are employed in professional careers such as teachers, architects, lawyers, engineers, or they own businesses. The median household income for my respondents is $100,000, well over the median household income at both the national ($52,029 in 2008) and local ($55,700 in 2008 for Los Angeles) levels.

On the surface, middle-class Mexican Americans appear to be a homogenous group, but there are important differences within this group that shape their experiences in the American middle class. One of these is class background. Some middle class Mexican Americans grow up poor in disadvantaged communities (70% in my sample characterize their class background as either “poor” or “lower middle class”) and are the first in their family to enter the middle class. This segment of the population, the socially mobile, retain strong ties to poorer kin, especially parents, who often continue to toil in low-wage, back breaking jobs. These parents might own a home, but often they lack retirement accounts or other assets to pass on to their children.

On the other hand, some middle-class Mexicans grow up economically secure in middle class households and neighborhoods. Among these respondents, legal status is the critical mechanism that allows parents to move up the economic ladder and provide a middle-class life for their children. The parents of those raised in middle-class households were more likely to have legal status upon arriving in the U.S., or they were able to regularize their status shortly after arrival.

Legal status allows parents to move out of the margins of society and obtain well paying jobs or start a legitimate business. These parents generally move to middle-class neighborhoods and have more financial resources to invest in education.

Take Karina Martinez. Both her mother and father migrated to the U.S. as unauthorized migrants and toiled in low-wage jobs until Karina’s older sister was born on U.S. soil. At that time, in the early 70’s, unauthorized immigrants could petition for legal status if they had a child born in the U.S.

Karina’s parents were granted legal residency and her father was able to move out of low-wage agricultural work and into a job at a manufacturing plant that not only paid a living wage, it also allowed employees profit-sharing opportunities. Her father’s salary and large yearly bonuses provided the means to purchase several rental properties, building the family’s wealth and adding income to their household.

Their financial stability also allowed the Martinez family to settle in a largely white middle-class neighborhood and to afford private tuition at elementary and junior high schools. After a decade at the factory, Mr. Martinez cashed out his profit sharing account. He invested half in a retirement fund and he used the other half to start a contracting company, which has become very successful.

Unlike those who grow up poor, Karina always knew that her parents would be able to pay for college, she doesn’t have to worry about taking care of them financially, and they even have assets in the form of property and investments that they can draw on in times of economic crises and/or pass on to Karina and her sisters.  Karina’s case is very important in light of current debates about comprehensive immigration reform. Legal status promotes economic security among the parental generation, the advantages of which stream down to children.

M-A: The recent Pew Research Center study discussed how many of the minorities who lost a big chunk of their household wealth recently did so as the housing market collapsed. Do immigrants primarily build wealth via real estate, and how? In what other ways do they do it? Do social and family networks play a role?

Vallejo: Yes, the Pew study demonstrates the increasing wealth gap between whites and Latinos and blacks. The Pew study finds that between 2005-2009 the median wealth of Latinos fell 66 percent, and the median wealth of white households is now 18 times that of Latinos.

This is a major social issue because minorities, particularly the increase of American-born Latinos, are driving population growth. Minorities are the future of this country and wealth levels are critical because assets provide protection during short-term economic crises, like the loss of a job, a medical emergency, a recession. Assets also provide long-term economic security through retirement income. And, wealth also creates intergenerational stability when it is passed down to children and grandchildren.

Home ownership is the single most important asset for Americans in terms of building wealth, regardless of race/ethnicity, but it is more important for immigrants, especially Latinos, whose assets are less diversified than whites and Asians. For example, the Pew study shows that nearly two-thirds of Latino net-worth comes from home equity compared to 44% of whites. Other ways that immigrants amass wealth is through stocks, mutual funds, retirement accounts, and businesses. But, again, Latinos and blacks are much less diversified in terms of their assets than whites and Asians.

M-A: But there are mitigating factors. How does immigration status factor into how immigrants are able to amass wealth?

Vallejo: Some national origin groups, particularly high-skilled migrants, arrive on U.S. soil with more resources and they have authorization to work in the U.S., putting them in a position to build their wealth portfolio more quickly than other groups. High-skilled migrants might have the resources to buy homes upon arrival and they are also more likely to work in professional jobs that provide opportunities to invest in retirement accounts.

Other groups, like Mexicans for example, are more likely to be unauthorized, they are more likely to be employed in low-wage jobs that do not offer health insurance or that provide opportunities to save for retirement.

Regardless of national origin, it takes time for immigrants to build assets, and if you are an immigrant group that starts off much further behind because of your legal status or because you have low levels of human capital, it takes more time to amass wealth.

M-A: How about their children? Even if the children are U.S.-born, how does their parents' immigration status affect their ability to move into the middle class? You’ve written about the drain on resources that relatives can present. What kind of a challenge does this pose, and how do families cope with it?

Vallejo: My research demonstrates that relatives living in the U.S. can drain the resources of the newly middle class. As I mentioned, some middle-class Mexican Americans grow up poor and they have parents who continue to live in low-income ethnic communities and who toil in low-wage, back breaking jobs that do not provide medical insurance or retirement benefits. So adult children make it to the middle class, but parents, and other relatives living in the U.S., remain poor.

These strong ties to poorer relatives living in the U.S. can drain economic resources and hinder the second generation’s ability to save for retirement, to buy a home, or to amass other types of assets. Socially mobile Mexican Americans often become the financial “safety net” in times of economic crises, like the loss of a job, a medical emergency, or when a home is going into foreclosure. So, let’s say that you are newly middle class and if you have to direct a portion of your resources elsewhere, you can end up without a financial safety net yourself.

M-A: Are there haves and have-nots, some immigrant groups that arrive on similar economic footing but fare better than others because they are better able to access legal status or other help? And does the lack of status keep some families on the lower rungs indefinitely?

Vallejo: Yes. For example, some Vietnamese immigrants who arrived in the U.S. as refugees from the Vietnam War have low levels of education and human capital, like Mexicans. However, their outcomes are different because they arrive with legal status and receive resettlement assistance because they are refugees.

Lacking legal status is certainly something that potentially threatens to keep some families on the margins of society. But, as I show in my research, it is possible for the children of unauthorized immigrants to enter the middle-class. However, they must overcome significant social and structural barriers to get there. The barriers stem from their parents’ more marginalized economic position and include things like growing up in disadvantaged communities with subpar schools, little access to financial resources for college and access to few professionals and mentors that can guide them along the way. A pathway to legal status for unauthorized migrants in the U.S. will lead to greater economic mobility for the immigrant generation and the children of immigrants.

M-A: Another recent report indicates that many affluent minority families continue to live in poorer neighborhoods than their white counterparts. You write that newly middle class Mexican Americans have “strong inter-class networks” that keep them tied to immigrants relatives. How do you think this factors into where they live, if it does at all?

Vallejo: In my research, the types of neighborhoods where middle-class Mexican Americans live vary. Some socially mobile Mexican Americans (those raised in poor households), especially those who must fully support their parents financially, often continue to live in ethnic communities where they were raised in order to be close to kin. Others move out of poorer neighborhoods, though they generally return frequently to visit kin. A small percentage of my respondents live close to low-income communities but in recently gentrified, up-and-coming areas.

Mexican Americans who grow up in middle-class households generally settle in established middle-class neighborhoods. This being said, where minorities live, especially Latinos and African Americans, is not always a matter of choice, even for the middle class. Latinos and African Americans have historically suffered from segregated housing markets, restrictive covenants, and discriminatory lending practices, like redlining and blockbusting, which have concentrated minorities in poor neighborhoods.

M-A: Lastly, do you think the economic downturn will present a long-term obstacle to immigrants’ social mobility? What can those families who have lost homes and wealth in the recent crisis do to pick themselves back up economically?

Vallejo: I’m not sure how to answer the question about what families who have lost homes and wealth need to do to pick themselves up financially, because this is a much broader issue that needs to be addressed at the national level.

It is not only important for immigrants to work towards wealth accumulation as individuals. It is critically important that we lift societal barriers so that immigrants and their children can succeed. We need to institute policies that help immigrants and their children, who are the future of this country, secure their economic status so that we can work towards closing gaps in income, education, occupation, and wealth.

For example, we need comprehensive immigration reform that includes a pathway to citizenship for those currently unauthorized in the country. This will help to secure the economic status of immigrants and their American-born children. Passing the national DREAM Act, which will provide a pathway to citizenship for unauthorized youth who obtain a college degree or enter the military, will result in immediate economic returns in the form of well-educated citizens who can contribute to the economic growth of this nation. We presently have unauthorized youth with college degrees working in the underground economy because they do not have legal status and this is a tremendous waste of human capital.

It is also important to promote policies that secure the economic status of the immigrant generation so that they do not drain the resources of their socially mobile kin.

Unfortunately, these types of policies are unlikely to receive widespread support in the current political and economic climate, posing dire consequences for the future economic growth of this country as the minority population continues to grow.

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