Employment statistics reported by the Pew Hispanic Center (Kochhar et al., 2010) indicate that American businesses are using the recession and the recovery to replace non-immigrant workers with immigrants.
Early in the recession, immigrants accounted for 18.8% of job losses, slightly more than their 15.5% representation in the labor force. However, as the economy has started to recover, employment of immigrants has increased, even as employment of non-immigrants has continued to decrease. From the 2nd quarter of 2008 (2/2008) to the 2nd quarter of 2009 (2/2009), non-immigrant workers lost 4.5 million jobs and immigrants lost 1.1 million. During the economic recovery, from 2/2009 to 2/2010 non-immigrants lost another 1.2 million jobs, while immigrants actually gained 0.7 million jobs, erasing 62% of their job losses from the previous year.
Recent history suggests that what the Pew Hispanic Center has documented for this recession and recovery, to date, will probably continue, with the ultimate displacement from work of non-immigrants likely becoming much greater. Camarota (2004) reported data from the Census Bureau for the period 2000 to 2004, which included the last, much milder recession and recovery. The number of adult immigrants holding jobs increased, from 2000 to 2004, by 2.3 million, and Camarota (2004) estimates that half of those were illegal immigrants. However, in the same period the number of non-immigrant Americans holding jobs fell by 0.5 million, the number of unemployed non-immigrant Americans increased by 2.3 million, and an additional 4 million non-immigrants left the labor force, i.e. they were no longer employed or seeking employment.
One concern frequently expressed of late is that the unemployment rate will remain high because economic growth for the foreseeable future will be less than needed to match population growth. The population growth referred to is working age population. What effect does immigration have on that?
From 2/2009 to 2/2010 the non-immigrant workforce (working-age population) increased by 1.6 million, while the immigrant workforce increased by 0.7 million (by immigration), a disturbingly large number given our continuing high unemployment rate. There was a small decline of 0.1 million in the immigrant workforce from 2/2008 to 2/2009. That resulted from the departure of a substantial number of immigrants who were already here, many illegally. However, that outflow, which beneficially tightened the labor market, was almost completely erased by our auto-pilot immigration policy that has continued through the recession. In fiscal 2008 we awarded permanent residence to 1.1 million foreign nationals, ¾ of them working age adults (Department of Homeland Security, 2008). The number was also 1.1 million in 2009 (Monger, 2010). During those years the Pew Hispanic Center (Passel and Cohn, 2010) estimates an influx of 300,000 new illegal immigrants/yr. That is lower than the 550,000/yr from 2005 to 2007, when the economy was growing, and there is no reason to think that it will not return to the previous level as the economy recovers. Immigration is a significant factor in keeping unemployment high, as well as displacing non-immigrants from jobs.
The data reported here don’t provide the detail to analyze the microeconomics of how American businesses replace non-immigrant workers with immigrants, but the recent past provides some clues. Starting in the 1970s, the meat packing industry started to replace well-paid, often union workforces, with immigrant workers, first legal immigrants and more recently illegal immigrants, at much lower wages (Beck, 1996). In 1980, meatpacking plants paid average wages of $22.31/hr (inflation-adjusted 2007 dollars). In 2007, average wages in the industry had fallen to $11.81, approximately half of what they had once been (Chicago Tribune 12/5/08). Companies paying poverty level wages compete very successfully with other companies, and eventually all the workers in an industry may be reduced to poverty, as happened in the meat packing industry. I suspect the same process is going on with the companies that employ people in the building trades, custodial services, and other occupations. One may posit that the displacement of non-immigrants with immigrants observed in the Pew report simply results from structural changes in the economy, however data cited by Kochhar et al. suggest otherwise. The industry that lost the most non-immigrant Hispanic workers from 2/2009 to 2/2010 was construction. During that time the industry shed 133,000 non-immigrant Hispanics, while adding 98,000 immigrant Hispanics. The same displacement of non-immigrant Hispanics was noted in other industries during the recovery. Displacement can easily occur even without competitive pressure. Any company that has started to grow again may find that it can hire immigrants for much less than it pays current employees. Eventually it probably yields to the temptation to cut wages for everybody. Perhaps the handwriting is already on the wall. From 2/2009 to 2/2010 wages of non-immigrant workers fell by 0.7%, while wages of immigrants fell by 4.5%.
There are diverse moral and ethical perspectives on the current situation. I will offer mine and invite others to state their own. My personal view is that, given the profound effects of current high immigration rates on our people, immigration policy should be changed so that it benefits the citizens and permanent legal residents of the United States (i.e. Americans). That is really the same priority that we expect of all government policies. We should reject the immigration demands of American business interests that dream of increasing profits by maintaining a permanent underclass of new immigrants who will work for poverty-level wages, allowing businesses to impose such wages on all blue collar workers, just as they have done to farm workers for decades. I think the facts argue for substantially curtailing legal immigration, and for improving border, visa, and workplace enforcement to prevent future illegal immigration. Based on concerns expressed in other diaries, I would make those changes permanent to reduce population pressure and economic hardship for the poorest Americans. However, I think our current economic situation makes a particularly compelling case for accepting those changes in the near term.
REFERENCES
Kochhar, R,., Espinoza, C.S. and Hinze-Pifer, R. 2010. After the Great Recession: Foreign Born Gain Jobs; Native Born Lose Jobs. Pew Hispanic Center. http://pewhispanic.org/...
Camarota, S.A., 2004. A Jobless Recover? Immigrant Gains and Native Losses. Center for Immigration Studies http://www.cis.org/...
Department of Homeland Security. Yearbook of Immigration Statistics, 2008. http://www.dhs.gov/...
Monger, R. U.S. Legal Permanent Residents: 2009. Department of Homeland Security. http://www.dhs.gov/...
Passel, J. and Cohn, D’V., 2010. U.S. Unauthorized Immigration Flows Are Down Sharply Since Mid-Decade. Pew Hispanic Center. http://pewhispanic.org/...
Beck, R., 1996. The Case Against Immigration: The moral, economic, social, and environmental reasons for reducing U.S. immigration back to traditional levels, chap. 6. W.W. Norton and Co., New York. http://www.numbersusa.com/...
Chicago Tribune, 12/5/08 Henry C. Jackson. Raids could force meatpackers to raise worker pay http://archives.chicagotribune.com/...