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Differences in Differences: Economic Insecurity Among Minority Households

Families from ethnic and racial minorities tend to be less well-off, which brings jobs that are elss stable and fringe benefits (health insurance, pensions) that are less generous One might therefore expect African-Americans and Latinos to both report greater economic instability, insecurity and unmet needs induced by economic shocks. The SERPI reveals some of this to be true, but the story is not that simple.

African-Americans and Latinos do report more frequent employment shocks (32% and 23%, respectively between spring 2008 and fall 2009) than do whites (16%). However, whereas African-Americans also experience elevated instability in both medical and family domains, Latinos' experience mirrors that of whites. Consequently, blacks experience the least economic stability, whites the most -- with Latinos in between, but closer to the experience of whites.

Paradoxically, however, it is Latinos who report the greatest worry and anxiety about economic risks. For example, in the family domain, Latinos are a third again more likely to report being very worried than are blacks and twice as likely to report being very or extremely anxious, even though their experience with shocks (12% over 18 months) is considerably lower than for African-Americans (19%).

Yet the puzzle grows even more puzzling: it's Latinos who have far greater savings and capacity to borrow. By contrast, in black households only 14% can borrow $5,000 or more from extended family or friends (more than a third of whites and Latinos can) and 41% are so deep in debt they cannot envision becoming solvent (18% and 27% for white s and Latinos). In short, it is blacks who appear more at risk of economic instability, but Latinos who report feeling more insecure (despite their more resilient buffers). And yet both minority groups report equally elevated levels of unmet basic needs when they experience economic shocks - an increase twice as large as for whites.