Immigrants are good for business. In fact, the rapid clip of U.S. economic growth might not be possible without them. Even as academics debate whether immigrants take jobs away from domestic workers, and as homegrown militias organize to patrol the nation's southern border, hundreds of thousands of immigrants -- more than half of them undocumented -- make their way to jobs in the United States every year. According to the Census Bureau, more than 80 percent of the foreign-born population, estimated at close to 34.2 million in 2004, is of prime working age versus only 60 percent of the native born. This figure includes more than 10 million undocumented migrants -- an all-time high, according to a Pew Hispanic Center report from this year. Immigrants now comprise a larger share of labor-force growth than native workers.
On the heels of a jobless recovery and incontrovertible evidence that post–September 11 policies designed to seal U.S. borders have failed, however, proposals for comprehensive immigration reform have, once again, taken center stage. The swelling undocumented population poses a monumental dilemma, both for politicians anxious to guarantee the business community an ample supply of workers and for bureaucrats still in denial about the lengths would-be immigrants will go to get around physical barriers in pursuit of jobs in the United States.
We should not be too quick to seal our borders completely. Foreign-born workers have maintained the viability of declining industries facing acute global competition, such as nondurable manufacturing, and have filled the briskly growing number of non-exportable jobs in industries like construction and personal services. These trends, combined with high levels of wage inequality between skilled and unskilled workers, bear important lessons for the viability of an expanded guest-worker program and should be part of the debate as we look toward comprehensive immigration reform.
Immigration and Labor Demand
As Congress debates another round of immigration reform, it's important to note just how much the functions of immigrant labor in the United States have changed. Three features of recent immigration trends are noteworthy: the growth of undocumented immigration, a rising share of unskilled and Hispanic workers among new arrivals, and an unprecedented geographic dispersal of the foreign-born.
Much of the current controversy about immigration reform focuses on border control and employment issues, yet family and humanitarian concerns remain the pillars of the preference system, accounting for the vast majority of legal admissions. Between 1980 and 2000, legal admissions averaged 650,000 to 670,000 annually, and exceeded 1 million in several years as a result of the 1986 amnesty program. Employment-based immigrants, who accounted for a mere 9 percent to 16 percent of all legal immigrants admitted since 1996, fell below the cap every year except for 2001, 2002, and 2004. By design, the majority of immigrants admitted under work preferences are skilled workers or professionals.
By contrast, the unauthorized component of the U.S. foreign-born population grew rapidly during the 1990s. Undocumented migration has fallen since 2000 to around 700,000 annually, down from an annual peak of nearly 750,000 between 1995 and 1999. What's more, based on estimates from the 2004 Current Population Survey, more than 85 percent of the undocumented workers here arrived since 1990, with more than 80 percent from Latin America, mostly Mexico. That unauthorized entrants have surpassed legal admissions since about 1995 not only is historically unprecedented but also suggests considerable unmet demand for unskilled workers.
This squares with the educational characteristics of the foreign-born population. Although immigrants are as likely as natives to hold college degrees, the foreign-born are also disproportionately more poorly educated. More than 20 percent completed less than nine years of formal schooling, compared with just over 4 percent of the native-born population. Recent arrivals from Latin America, mostly Mexico and Central America, dominate the pool of the low-skilled migrants, whose only labor-market possibilities are poorly paid manual-labor jobs.
Finally, new settlement patterns are changing the geographic landscape of the foreign-born population. Lured by abundant unskilled jobs and affordable housing, foreign-born workers, and recent arrivals in particular, are opting for places like Raleigh, North Carolina; Reno, Nevada; and Memphis, Tennessee. Today, recent immigrants, including the undocumented, are less inclined to enter one of the six traditional gateway states (California, New York, Texas, Florida, Illinois, and New Jersey) than in the past. About 39 percent of undocumented migrants reside in states where, until recently, the foreign-born population had a minimal presence.
The South registered the fastest growth in the foreign-born population, 88 percent compared with 38 percent in the Northeast, 50 percent in the West, and 65 percent in the nation's heartland. But regional averages conceal considerable diversity among states. For instance, Nebraska's foreign-born population grew 165 percent during the 1990s -- 2.5 times the national average -- while Nevada's foreign-born residents surged more than 200 percent. Georgia, North Carolina, and Arkansas registered hefty increases in their foreign-born populations, 233 percent, 274 percent, and 196 percent, respectively.
The bifurcated skill distribution of contemporary immigrants and the sizable shares of unskilled immigrants among recent arrivals pose both an economic and a social dilemma. The puzzle is that despite the wage declines sustained by unskilled workers during the 1980s and the first half of the '90s, the volume of immigration, and low-skilled migrants in particular, continued to rise. I believe this is because unskilled immigrants have become preferred workers in industries that are vulnerable to international competition as well as for unskilled service jobs not amenable to outsourcing. Another dilemma is whether and how much undocumented workers compete with one another and with native workers, and whether they do this through outright displacement or by pulling down wages of workers they don't replace.
The social dilemma is that the immigrant geographic dispersal poses formidable social integration challenges for communities unaccustomed to commingling with foreign-born residents. A successful guest-worker proposal must address both labor displacement and the wage-competition effects of undocumented immigration, as well as include strategies to promote social integration if earned amnesty is part of the proposed solution.
Workers Wanted: No Skills Needed
Huddled along curbsides in large cities, at gas stations, in suburban parking lots, and on visible street corners in small towns, they wait anxiously for drive-by employers in hopes of being “chosen” for a day of manual labor. Fairly common scenes in California since the late '80s, open-air markets for day laborers proliferated during the roaring '90s and even during the recent period of sluggish job growth. The vast majority are recent migrants who lack marketable skills or legal status. Once the province of men, these markets now also draw women seeking jobs in garment factories or domestic work in private households. Tales of unpaid workdays, subminimum wages, and uncompensated overtime proliferate in investigative reports about day laborers in janitorial, landscaping, construction, and other industries with skill requirements so low that workers are easily substituted and English is not required.
Nationally and in the large urban labor markets like Los Angeles and Miami where immigrants have traditionally settled, labor-force growth averaged 32 percent to 33 percent between 1980 and 2000. In the new immigrant urban destinations as well as the small metropolitan and nonmetropolitan markets, labor-force growth averaged 35 percent to 40 percent, respectively, with most of the expansion occurring during the booming '90s. In the main, new immigrants stayed away from large urban labor markets where labor-force growth stagnated or declined, such as Philadelphia, Detroit, and St. Louis.
Perhaps as a domestic alternative to outsourcing, as Congressional Quarterly Weekly has reported, changes in the industrial composition of employment favored the absorption of unskilled immigrant workers. Even as the share of the U.S. workforce engaged in agriculture dwindled -- from 4 percent in 1980 to less than 2 percent in 2000 -- concentration of immigrants (especially Hispanics) in farming jobs has intensified. In the new destinations, the share of foreign-born workers engaged in agriculture nearly quadrupled since 1980, rising from 4 percent to 17 percent of the industry total. The same is true in other declining industries, such as durable and nondurable manufacturing, where increased reliance on foreign-born workers provides alternatives to outsourcing, possibly accompanied by downsizing, as a means of remaining globally competitive.
In the traditional immigrant hubs, for example, as the nondurable manufacturing labor force shrank from 8 percent to 4 percent of all workers between 1980 and 2000, the industry's workforce became immigrant-dominated. Slightly more than one in four nondurable manufacturing workers were foreign born in 1980, compared with nearly half by 2000. There is a similar trend in the new immigrant destinations, where the exodus of native workers from the shrinking nondurable manufacturing sector was offset by the entry of immigrants, who currently comprise about 18 percent of all workers, compared with less than 7 percent in 1980. Whether or not immigrants are displacing domestic workers, smaller wage bills are a common result.
Immigrants are also participating in growth industries, notably construction and various personal-service industries like restaurants, cleaning concerns, and landscaping, which require few skills. Nationally, construction industries absorbed 7 percent of the total labor force in 2000, relatively unchanged since 1980. Yet parts of the industry have become “immigrant job niches” throughout the nation. In the traditional immigrant urban hubs, the foreign-born share of construction workers more than doubled, from 15 percent to 37 percent in just two decades. So, too, in the new destinations, where immigrants' employment share of the construction workforce more than tripled since 1980, from 4.8 to 16.2 percent.
Whether immigrants take jobs away from domestic workers because they are preferred by employers hungry for cheap labor or whether they fill niches vacated by native workers in new places remains an open debate, but changes in weekly wages yield insight into this thorny question. In the traditional immigrant hubs, for example, median weekly wages of white and black construction workers were relatively stagnant, rising only 1 percent to 2 percent between 1980 and 2000. Over the same period, though, median weekly wages of U.S.–born Hispanic workers fell 13 percent, slightly less than the 21-percent wage decline registered by foreign-born Hispanics. Non-Hispanic immigrants saw their wages fall 11 percent, or about half as much. Similarly, in the new immigrant destinations, where median wages of foreign-born Hispanic construction workers fell 23 percent after 1980, black and white construction workers enjoyed modest wage growth.
A more dramatic scenario of wage polarization between native and foreign-born workers obtains in the burgeoning personal- and repair-service industries, which accounted for nearly 14.5 percent of all workers in 2000, up from 11.6 percent in 1980. Median weekly wages of white and black service workers rose about 24 percent in the traditional immigrant destinations, and 29 percent to 34 percent, respectively, for white and black workers in the new immigrant destinations. However, the positive wage growth of U.S.–born Hispanics working in personal and repair services was considerably more modest, at 4 percent and 8 percent, respectively, for residents in the traditional and new immigrant destinations. Yet this compares quite favorably with the experience of Hispanic immigrants working in the personal- and repair-service industries, whose median weekly wages plummeted 9 percent and 11 percent in the new and traditional destinations, respectively, since 1980. At the same time, median weekly wages of non-Hispanic immigrants engaged in similar concerns rose 12 percent and 9 percent, respectively, in both new and traditional destinations.
That between 40 percent and 50 percent of foreign-born Hispanics lack a high-school education largely explains their deteriorating wage position, but not why they appear to be preferred workers in declining industries. Only 7.5 percent of their native-born compatriots, 13 percent of blacks, and about 5 percent of white workers were as educationally disadvantaged. Unlike manufacturing concerns, neither construction nor personal and repair services are amenable to outsourcing, hence wage erosion cannot be blamed on imperatives to remain competitive in global markets. In fact, median weekly wages of foreign-born Hispanics -- the largest segment of recent legal and illegal immigration -- declined in 10 out of 13 broad industry categories during the past two decades. Partly this is because they compete with themselves and/or with unskilled Hispanic citizens as they flood specific labor-market niches; partly, though, it is because they are increasingly vulnerable to exploitation as their swelling numbers render them redundant workers.
Social and Policy Implications
Unskilled immigration is likely to continue -- through legal or clandestine means -- owing to brisk growth in industries requiring limited skills, the exodus of native workers from declining industries, and the powerful role of social networks in recruiting fellow compatriots eager for a share of the American wage pie. Some head to labor-scarce regions where few immigrants had settled before; others fill jobs that native workers rebuff in the traditional destinations. Guest-worker proposals designed to combat undocumented migration should take note of the labor-force transformation toward industries that employ large numbers of unskilled workers and the accompanying wage deterioration among native and foreign-born workers in these industries.
Recent labor-force trends have two very strong lessons for immigration-policy reform. One is that the current emphasis on highly skilled workers of employment-based legal migration ignores the substantial demand for unskilled labor, particularly in industries for which outsourcing is not a viable option to reduce labor costs. To address this labor shortage, temporary-worker proposals should include substantial numbers of visas for unskilled workers. Second, dramatic wage deterioration as industries become saturated with foreign-born workers raises questions about the extent to which foreign workers displace native workers, and whether legal status is responsible for the growing wage disparities between native and foreign-born workers in immigrant-dominated industries that require few skills.
Beyond matching “willing workers” to available jobs -- something the labor market already does, albeit imperfectly -- viable guest-worker proposals must ensure that temporary legal status becomes a full-fledged labor standard, protecting workers' wages, benefits, and safety. Transferring authority for the oversight of a guest-worker program to the Labor Department, along with enhanced clout to enforce labor standards, will surely go a long way toward avoiding a repeat performance of failed employer sanctions. (Whether temporary status itself will contribute to wage disparities by preventing guest workers from accumulating job-specific experience requires further investigation.)
Finally, a dose of realism about the short- and medium-term social implications of guest-worker programs will help prevent social cleavages of the sort currently manifested in many new locales where immigrants have settled. Although many suburbanites welcome the new immigrants as hardworking people, in other places they have experienced a backlash, often triggered by the specter of day laborers congregating on street corners anxious for a chance to work. Unskilled foreign-born workers -- whether temporary guests or permanent residents -- do not disappear after working hours. They need education, English-language instruction, and health care. Any guest-worker program devoid of social guarantees and legal protections for workers and their families is no better than the current arrangement that allows vulnerable immigrant labor to be exploited.
Marta Tienda, the Maurice P. During '22 Professor of Demographic Studies, teaches sociology and public affairs at Princeton University.
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