2004 June 17 Thursday
Non-Citizens And Illegals Getting Over A Quarter Of New Jobs

The Pew Hispanic Center has released a new report documenting how illegal aliens are taking a disproportionate fraction of new jobs while wages decline at the low end. (PDF format) (full report avaiable here also PDF format)

WASHINGTON, D.C.--(June 16, 2004)--While an increase in Latino employment is driving the revitalization of the U.S. labor market, the hiring surge has not translated into higher wages. The weekly earnings for Hispanics and most other workers remain stagnant.

The “jobless recovery” may have turned around, but gains for Latinos have not been widespread. Immigrant Latinos, especially the most recent arrivals, have captured the most jobs. Non-citizens, Hispanics and others, who will not be able to vote in the November election are accounting for more than a quarter (28.5 percent) of the total increase in employment. But the improved employment picture has not delivered higher wages to workers overall and to Latinos in particular. The median weekly wage for Hispanics has declined in all but one of the past eight quarters. As a result, median wages for Latinos have also lost ground in comparison with the national median wage.

These are among the key findings of a new Pew Hispanic Center report, “Latino Labor Report, First Quarter 2004: Wage Growth Lags Gains in Employment.” The developments come at a time when jobs and wages are central issues in the presidential campaign. The report, which also deals with the political impact of the employment picture, includes an analysis of job gains by citizens and non-citizens, and a breakdown in the so-called battleground states.

In the 12 months ending March 31, the economy added a net total of 1.3 million new jobs. Non-citizens captured 378,496 or 28.5 percent of those jobs. Employment growth for non-citizens was twice as fast as their population growth nationwide. The proportion of new jobs captured by non-citizens was also much larger than their share of overall employment (8.6 percent). Thus the political impact of job gains may be dampened by the fact that non-citizens, who do not vote, are benefiting disproportionately from the turn around in the labor market.

The picture is somewhat different in the 18 so-called battleground states that have been the targets of intense advertising campaigns by both major political parties and that are generally considered up for grabs by the news media. These states have taken most of the job gains, scoring nearly 75 percent of the increase. In these states, non-citizens accounted for 20.1 percent of the employment increase, which is small than their share nationwide. Moreover, the non-citizen working-age population is growing faster in these states, 26.1 percent a year, than nationwide, and the job gains did not keep up with population growth.

What is going on here is really simple: employers prefer to hire people who will work for less. Newly arrived illegals will work for less than legal Hispanics and native born Americans. The illegals accept lower salary jobs and the wages go down for everyone they compete against. Harvard labor economist George Borjas has made a career out of trying to make all economists acknowledge the obvious: the demand curve for labor has a negative slope. As the quantity of a type of labor increases its price declines. See his paper "The Labor Demand Curve is Downward Sloping: Reexamining the Impact of Immigration on the Labor Market," (PDF Format) for a scholarly treatment of the subject.

Getting back to the Pew report: Note that the absolute number of employed Hispanics has increased in the last year by more than the number of employed non-Hispanics. So most new jobs now go to Hispanics.

The number of employed Hispanics increased by 704,779 workers from the first quarter of 2003 to the first quarter of 2004. The number of unemployed Latinos fell by 18,590 works in contrast to an increase of 111,281 in the preceding year. Across the same time frame from 2003 to 2004, the number of employed non-Hispanics increased by 622,565 and the ranks of unemployed non-Hispanics decreased by 249,996.

Gains in Hispanic employment are driven by recently arrived immigrants with those entered the country since 2000 showing an increase of 748,305 jobs from the first quarter of 2003 to the first quarter of 2004. Meanwhile, immigrants who arrived previously as well as native-born Latinos showed net decreases in employment.

Real weekly earnings for Latino workers in the first quarter of 2004 were lower than their level in the first quarter of 2003. Wages were also stagnant or declining for Hispanic males and construction workers, but on the increase for Hispanic females and immigrant Latino workers.

Median Latino wages have declined.

The median, or midpoint, weekly earnings for Latinos dropped from $402 in the first quarter of 2003 to $395 during the same period this year, after adjusting for inflation. They lost ground when compared with African American and white workers.

A person earning about $20,000 a year is not paying much in taxes. If that person has even a single child then the cost of that child's education per year is way more than the person pays in taxes. Add in subsidized medical care and other subsidies it is easy to see that the employers of the low salaried workers are getting labor subsidized by taxpayers.

That decline in wages translates into more demand for government services and less taxes paid to the government. The middle and upper classes have to pay more in taxes and get less in government services to pay for this trend in labor costs and the growth in the number of illegal Hispanics living in the United States.

George W. Bush is a big supporter of massive amounts of immigration and would like to give amnesty to illegals. So Bush is effectively a supporter of illegal immigration. The irony of this situation is that illegal immigrants, by driving down the wages of natives and out-competing them for jobs, may make the mood of the electorate sufficiently pessimistic about economic conditions to cost Bush reelection.

Declines in labor force participation rates - even during the recovery phase - have caused the real unemployment rate to be underestimated.

Haseeb Ahmed, an economist with Economy.com, studied labor-force trends from November 2001, when the recession ended, through February 2004. During that period, overall labor-force participation fell, compared with an increase in other recoveries dating back to 1970.

The drop in the labor force participation rate -- the share of the adult population working or looking for a job -- was about 0.8 percentage points for whites, compared with an average 0.7-point gain 27 months into other recoveries; 1.3 points for blacks, compared with a 0.5-point gain; and 1.8 points for Hispanics, compared with a 0.7-point gain.

Hispanic labor-force participation rates have been rising in recent months, one reason the unemployment rate is actually higher than in December. The African-American participation rate is about the same.

Note that the black labor force participation rate is not recovering. That is bad news for America.

The National Economic Development and Law Center and Dr. Carol Zabin, Dr. Arindrajit Dube, and Ken Jacobs of the Center for Labor Research and Education, UC Berkeley which documents how taxpayers essentially subsidize low wage jobs through various benefits that flow from higher income taxpayers to those who have low wages. The report is entitled The Hidden Public Costs of Low-Wage Jobs in California

  • Public assistance was concentrated among workers in several sectors. For instance, workers in the retail industry collectively received about $2 billion of public assistance, over twice the amount received by workers in any other sector.
  • Most of the public assistance that went to working families went to families with workers earning very low wages: $5.7 billion went to families whose workers had average wages of under $8 per hour. Another $1.9 billion went to those with wages between $8 and $10 per hour.
  • Most of the public assistance to working families went to families with full-time workers, dispelling the notion that part-time work largely accounts for the low earnings of poor working families. Seventy-six percent ($7.63 billion) went to single earner families with over 35 hours of work per week or dual earner families with over 70 hours of work per week. Moreover, 82 percent ($8.26 billion dol-lars) of public assistance benefits went to families with at least one full-time job (over 35 hours per week).
  • The simulation we conducted on wages predicts that a drop in public assistance payments from $10.1 billion to $7.4 billion (a $2.7 billion difference) would occur if the current group of public assistance recipients earned at least $8 per hour. Simply raising wages for these workers earning minimum wage and slightly above would help the working families and could potentially save billions of dollars in program expenditures.
  • The simulation we conducted on employer-provided health insurance predicts that, at current wage levels, public assistance payments would drop from $10.1 billion to $7.9 billion (a $2.2 billion difference) if the working families currently receiving assistance had access to affordable health insurance through their employers. When combined with employer-provided health insurance, pay-ments would fall to $5.4 billion with a wage floor of $8 per hour, $4.4 billion with a wage floor of $10 per hour, $3.7 billion with a wage floor of $12 per hour, and $3.2 billion with a wage floor of $14 per hour.

This report greatly underestimates the costs of low wage jobs because it leaves out subsidies such as education where the lower wage people get benefits for their families that they do not pay for through the taxes that they pay. The real problem with the "Open Borders" argument for unlimited immigration is that when it comes to low wage jobs price does not equal total costs.

So what are our "leaders" in Washington DC doing about this state of affairs? They are trying to make it worse. Powerful US Senators are determined to get the AgJobs immigration amnesty bill passed and they have lined up 62 Senate sponsors.

Senators Edward Kennedy (D-MA) and Larry Craig (R-ID) have vowed to enact an amnesty program for millions of illegal aliens, even if it means holding every other piece of Senate legislation hostage to accomplish it. The two senior legislators have promised to attach their Agricultural Jobs, Opportunity, Benefits and Security Act (AgJobs) to every Senate bill for the remainder of the year. Their first target is the Defense Authorization bill now being debated in the Senate.

Ted Kennedy is a member of the US political party that used to be in favor of higher wages for the lower classes. Now he and most other elected Democrats in Washington actively work to lower wages in the United States. This is madness.

Share |      By Randall Parker at 2004 June 17 01:06 PM  Immigration Economics


Comments
Brock said at June 17, 2004 3:08 PM:

So you advance two main theories:

One, that we're getting more labor for each dollar spent. Ok, efficiency is good. Fresh vegitables are cheaper. So far, so good.

It's really not too surprising that most new (low skilled) jobs are going to Hispanics. They are the majority of sub-population we call Immigrants. I bet if you looked at Immigrants as whole, they would be taking the 'largest share.'

Also, your mention that the Hispanic Median Income has gone down isn't too interesting either. More Hispanics have been hired, but the new hires are near the bottom. This moves the Median. It doesn't mean that the Hispanics who already have jobs are getting paid less. My co-workers from the Dominican Rep. haven't taken a pay cut because some FOB just took a job as a day laborer. It just means we now pay less for the labor of other Hispanics (pardon, Immigrants).

Two, that the welfare state redistributes wealth from the rich to the poor. Um, Ok, not too controversial. In fact, it's the whole point of the welfare state. Anyone who earns less than a certain amount of money receives more than they pay for. Where that level should be, and how we arrange incentives are simply policy questions.

By the way - Ted Kennedy has never been about "high wages for the poor", even if that's what he said. What he's been about if "High wages for people who vote for me." These new Hispanic (and other Immigrants) can't vote, so he really doesn't care how much money they make. What the Hispanics (and other Immigrants) do do, however, is create greater efficiency of the use of labor. This creates cheaper labor for employers, meaning that any citizen who can speak & write English is now available for a higher paying job - which are being created too, you know.

Look, any way you slice this, efficient use of labor is good for the economy. More employees, more products, more jobs, etc. etc. It's a virtuous circle.

Also, the public education of the poor has been a pretty good investment so far. Running an office, its useful to employ people who know how to read, write and use computers - even if their parents couldn't afford to pay for their education. Do you know how many business would close if we were working with an uneducated workforce? We've come a long way since the 19th century you know.

Randall Parker said at June 17, 2004 3:19 PM:

Brock,

You have inverted the conventional measure of efficiency. The conventional measure is amount of value created per hour worked. A worker who is getting paid a low wage is obviously not created much value per hour worked. If he was then he'd most likely be getting paid more.

If we looked at Chinese, Korean, or Japanese immigrants we'd find that very few of them are doing low-skilled work. First generation immigrants vary greatly in how well they do.

During the 1960s the size of the labor force expanded every year and yet salaries went up every year. No, expanding labor force size does not have to drive down median income level. But it does if the workers have low productivity.

Welfare state: The more poor people there are the bigger the welfare state will be. How much money gets distributd is a function in large part of how many poor people vote to get money redistributed to them.

Again, efficient use of labor for the US economy is not simply the use of more labor. It is getting more productivity for each worker in the economy. Immigration is lowering worker productivity. Immigration of low cognitive ability people lowers productivity for an indefinite period of time until genetic engineering will allow for cognitive enhancement.

Public education of Hispanics has yielded a low return on investment because Hispanics graduate from high school at low rates and Hispanics have low levels of advanced academic achievement as compared to whites, East Asians and South Asians.

gc_emeritus said at June 17, 2004 5:39 PM:

Brock:

Two, that the welfare state redistributes wealth from the rich to the poor. Um, Ok, not too controversial. In fact, it's the whole point of the welfare state. Anyone who earns less than a certain amount of money receives more than they pay for. Where that level should be, and how we arrange incentives are simply policy questions.

The point is that the more unskilled immigrants we admit, the less the percentage of the population that can be bled to pay for other people. That bodes VERY ill for our republic as the guys who can't compete start to compare in number to the guys who *can* economically/academically compete. As Randall has shown many times, unskilled immigrants are net tax recipients even unto the third generation . If they have less than a high school education *in the 21st century*, statistically speaking they are going to be a drain on the US taxpayer. Conversely, if they have *more* than a high school education (i.e. they are skilled immigrants) they will be a boost to the coffers of the US.

John S Bolton said at June 18, 2004 2:24 AM:

I wonder if you haven't gotten misled by the wage statistics; couldn't they be for full-time, regular employees only? $400 a week is a lot higher than the 15k/year given in the census data for median personal income of foreign-born 80's and 90's cohorts (over 16 years of age). Or does the discrepancy come from greater seasonality and labor-force departure and re-entry occurring very frequently in these groups? If so, that might explain the higher percentage of new jobs taken by immigrants; they churn a lot more. They get hired and laid-off much faster, perhaps.

Luke Lea said at June 18, 2004 6:57 PM:

Excellent piece of reporting. I'm getting my Immigration Moratorium bumper sticker now! Where do you go on the internet to order made to order bumper stickers?

Brock said at June 21, 2004 7:04 AM:

Randall - Efficiency is a two-way equilibrium. You can get the same level of work for less money, or you can get more work for the same (or more) amount of money. Either way, efficiency goes up. When you employ illiterate Mexicans at picking watermelons, and you then employ English speakers in jobs that use their English skills, productivity increases. You've heard about the new 1.2 Million jobs created, right? They aren't all Mexican immigrants getting it.

Randall & gc_emeritus - You're assuming that the welfare state will remain at current levelts; that it's some kind of fixed beast which cannot be changed. That's simply not true.

The Welfare State has a lot of inertia, but that doesn't make it immovable. Everyone from FDR through Nixon spent their time building it up. Only with Reagan have we begun to unwind it; but the unwinding continues. Clinton got through his wildly successful welfare reform. Bush (term-1) got through some education reform (although his Farm & Highway bills were a joke; I'm talking about a trend). In the next term Bush wants to privatize Social Security. That's HUGE.

If every single frickin' Mexican just up & left Mexico, Americans would still outnumber then 3 to 1 - and that's assuming they had the right to vote; which they wouldn't. Our destiny is in our own hands. Trust the electorate to see that some folks are leaches on the system, and to fix it.

Bob Badour said at June 21, 2004 7:43 PM:

Brock,

Mexicans have a knack for growing populations. They took Mexico City proper from 10 million to 18 million in five years with relatively current estimates reaching 28 million for the metropolitan area.

Five (count em) five years to almost double the population in a city that now has the population of Canada.

Your presupposition that the ratio of 3:1 would remain for longer than a millisecond just leaves me unimpressed with your argument.

doug said at December 27, 2004 8:12 PM:

WAIT TILL THEY TAKE YOUR JOB.

Daniel Bowling said at April 27, 2005 6:53 AM:

I think that it is a bunch of crap that all of the jobs of us tax paying citizens are being taken by these illegal immigrants. I also think that it isn't right that many of Americas hard working families are going bankrupt or close to it for there medical problems. All of these families are losing tons of money for their health care while these illegal immigrants are sitting here and getting it all for free then the state gov't isn't even giving the hospitals enough money to pay back what they are doing for the immigrants. All of the money being spent on these "illegal aliens" could be spent on more life saving technology and cures for dieseases that many Americans might have.

Tom Davidson said at March 30, 2006 7:29 AM:

As a person with African heritage I was offended by the remarks of Mexican President Fox when he stated that the illegals and migrant workers were doing jobs that American blacks won't even do. It seems he came within a breath of using the "n" word. What he failed to mention is that American blacks will no longer work for slave wages. Been there, done that. A Priceton economics professor, a friend of John Nash, recently did a study and determined that if all the money that was spent to support illegals in this country were converted to hiring every american citizen who wanted a job picking grapes, pears, oranges etc. they could be paid $20 an hour @ fourty hours a week. Watch who'd be standing in line by the thousands to do the work that Fox said Americans wouldn't do.


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