Latinos call for reform
By Ursula Williams
web posted September 5, 2005
Latinos come to America because they see America as the land of opportunity, where their dreams can be achieved. Unfortunately, for many Latino families, it takes multiple generations to achieve the standard of living they expected when they bravely gave up everything in their native countries for a chance in America. The difficulty they face in achieving the American Dream is not due to a lack of effort by Latinos or by discrimination in the workplace; it is a result of a change in the way wealth is created and maintained in the United States.
Wealth now comes primarily through investment and not wages.
Despite Latinos' being among the most industrious and hard-working of Americans, the wealth gap in America is widening between races. In 2001 the median household net worth of white families was $120,900, while for all other families it was $17,100. Between 1998 and 2001, the gap between families and minorities widened by 21 per cent.
The result is that in the six years prior to 2001, white households saw their net worth increased by 37 per cent while minority households actually saw a decrease of 7 per cent! A 44 per cent widening in net-worth while the wage gap widened by only six per cent is truly troubling.
Due to the nature of much of the work done by Latinos, we are less likely or able to participate in employer-sponsored retirement plans like 401(k)s. This means that Latinos are less likely to own financial assets, which are now the main instrument of wealth creation in the United States. The direct result of this lack of access to instruments of wealth creation? A widening wealth gap.
How can we allow Latinos and other minorities to increase their wealth as rapidly as the average American? The answer lies in an unlikely place: Social Security reform. Latinos' inability to invest privately increases the urgency of the need to reform social security.
Rather than acting as a safety net, Social Security is limiting low-income Americans' upward mobility. For instance, many hard-working Latinos simply cannot make enough money to invest privately after 12.4 per cent of their wages is stripped from their checks via payroll taxes every 2 weeks. Under the current system, most Latinos simply don't have a chance.
The only way for Latinos to retire at the level of comfort that they deserve is to allow for personal accounts. The average return on Social Security is less than two per cent. A conservative mix of bonds and stocks will earn on average a 6 per cent return, allowing Latinos to retire with over three times as much money as they currently do.
Personal Retirement Accounts would also overcome another reason for the growing wealth gap in America: a lack of inheritance. Although it is the primary retirement vehicle for working-class Americans, Social Security is not transferable to descendants. This makes wealth accumulation virtually impossible for Latinos. Through PRAs, however, Latinos would be able to pass on a nest egg to their children, increasing wealth through intergenerational transfers of assets.
Through Social Security reform, Latinos will be able to leave a legacy to their children, giving them a better life and hope for the future. Thousands of Latinos will learn the value of saving and investing. Many Latinos already know the importance of owning our own businesses. Now let us own our retirements as well.
I, as a young Latina, firmly believe in America's desire to provide equal access to wealth creation for all its citizens. I hope that through Social Security reform Latinos will be given the same investment opportunities as the rest of the country. 
Ursula Williams is a recent graduate of Biola University and is the Deputy Director at Students for Saving Social Security, a non-partisan student group on over 200 campuses across the country advocating for reform through ownership.
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