Latino, Non-Latino Income Gap Widens : Economy: Study links concentration of ethnic group members in low- and moderate-wage levels to growing disparity of nation’s rich and poor.

Echoing a widening income split between the nation’s rich and poor citizens, a similar economic fissure is separating the nation’s Latino and non-Latino groups, according to data released Monday by a leading poverty research group.

The Center on Budget and Policy Priorities reported that 28% of the nation’s Latino households have incomes that place them among the poorest fifth in the country, while only 11% had incomes among the richest fifth.

“Because of the concentration of Hispanics in low- and moderate-income brackets, the growing income gap between the wealthy and other Americans has contributed to a widening gap between the incomes of Hispanics and non-Hispanics,” the report said.

The findings, based on an analysis of data and estimates collected by the Congressional Budget Office and the U.S. Census Bureau, followed a report issued last month in which the center found sharply rising income differences among all U.S. households. That report found “the combined incomes of the richest 2.5 million Americans now nearly equal the combined incomes of the 100 million Americans with the lowest incomes.”

Income disparities for all Americans have dramatic consequences for Latinos, who are among the fastest growing population groups in the nation, center officials said Monday.

“We were looking at the distribution of differing income levels and had a sense there was some sort of connection between rich, poor and middle class based on demographic groups,” said Scott Barancik, the report’s author.

The center’s researchers, for example, observed that in 1979 the typical Latino household income equaled 71% of the income of the typical non-Latino household. However, by 1988, the most recent period for which figures are available, the typical Latino family income had fallen to 66% of the household income of the typical non-Latino family. The household incomes reflect adjustments to account for inflation.

The loss of income for the typical Latino household can be traced, in part, to changes in federal tax policies during the 1980s, Barancik said.

“Tax burdens on poor and moderate (income) persons increased over the course of the decade and declined for the top 1% of the nation,” he said. “To the extent that Hispanics were disproportionately among the poor and moderate-income levels, they were affected more by the changes in tax policies.”

In addition, inflation-adjusted wages earned by full-time Latino workers declined 9% during the 1980s, compared to a 2% decline for all workers.

Barancik speculated that Latino immigration had some impact on the widening income gap, but the study did not address causal factors.

Meanwhile, the report said, census figures show that government assistance programs helped a declining number of all families rise from poverty during the period studied. Even so, the proportion of Latino families in poverty remained higher than among non-Latino families.

Barancik said that the report’s findings should be used to help shape the national debate over budget cuts.

“We think it’s important that as next month’s budget summit will continue, people will be talking about cutting tens of millions of dollars off the federal budget,” he said. “I think it is important to consider the income distributional issues created by their proposed cuts and tax policies.”

With that thought in mind, the report criticized the Administration’s proposals to cut taxes on income from capital gains. “Because so few Hispanics are in the very top income brackets or have large amounts of capital gains income, the average Hispanic family will gain very little or nothing from this proposal,” Barancik wrote. “Yet Hispanics could be forced to help pay for the proposal--and could suffer income losses as a result.”