by Philip L. Martin
Advantages and Disadvantes of Using the Labor Market as an Integration Instrument
Integrating immigrants via the labor market has several advantages. First, it gives migrants what they most migrated for: jobs at higher wages. Second, it enlists employers as advocates for migrants and migration and reduces anti-immigrant feelings arising from welfare usage. The U.S. says that it welcomes those seeking a hand up, not a hand out. Lastly, it allows children to see the importance of work, and may inspire them to get skills to do better than their parents.
However, there are also many disadvantages in using the US labor market as the major integration instrument. Although immigrants have jobs, they are often at low wages. The federal minimum wage has been $5.15 an hour since 1997 or $10,300 even for a full-time worker. As a result, many immigrant families are working poor, which means they lack health insurance and other benefits, and may retard mobility for their US children.
In addition, there are limited opportunities for learning English in many entry-level jobs filled by immigrants. In agriculture and construction, supervisors adapt to the labor force and speak Spanish, which allows for the development of a multi-tiered society with limited interactions. Large numbers of immigrants may send wrong signals to employers and industries, as they engage in short-term hiring and layoffs rather than making long-term investment strategies to be globally competitive.
For example, immigrants are frequently hired to sort apples. The bottom line, is that the US has an immigrant wages problem, while Europe has an immigrant jobs problem. The U.S. gets newcomers into the labor market, but often at low wages. On the other hand, Europe has low migrant labor force participation and high unemployment, but less of a problem with working poor migrants because of higher minimum wages and benefits.
Immigrants in the US Labor Market
In 2005, the U.S. has a labor force of 148 million, including 8 million unemployed. The unemployment rate is 5.2 percent. Some 65.8 percent of Americans 16 and older are in the labor force, down from a peak 67.3 percent in 2000. There are about 225 million US residents 16 and older, so each 0.1 percent change in labor force participation involves 225,000 people, and the 1.5 percent drop means the labor force is 3.5 million smaller today than in 2000.
There were about 34 million foreign-born US residents in 2004, and their number is rising by a million a year. Immigrants are almost 12 percent of the 295 million US residents, and account directly for a third of US population growth (more if their US-born children are considered). The top 6 countries of origin account for half of the immigrants--Mexico, 10 million, China, 2 million, Philippines and India, 1.3 million each, and Cuba and El Salvador, 1 million each. For all except Cuba, over half of the country's immigrants in the US today arrived since 1990.
About half of US-born and foreign-born residents are in the labor force, which means that 21 million of the 148 million US workers,14 percent, are foreign-born. The foreign born share is higher than the population share because most immigrants are in prime working ages (ages 25-54). The additional 500,000 foreign-born a year who settle in the US account for 25-35 percent of US labor force growth. US labor force growth averaged 2 million a year 1995-00 and 1.5 million a year 2000-04).
Below you will find the key characteristics of foreign-born workers in the US in 2003. Foreign-born workers are 60 percent male and 40 percent female. Foreign-born workers are 80 percent minority, while US-born workers are 80 percent non-minority. Foreign-born workers have a different education profile – 30 percent have less than a High School diploma and 30 percent have a college degree or more.
Of the US-born labor force, 7 percent have less than a High School diploma and 33 percent have a college degree or more. The unemployment rate in 2003 was 6.6 percent for foreign-born workers and 5.9 percent for US-born workers. Median weekly earnings (full-time) in 2003 were $642 for US-born workers and $489 for foreign-born workers, which is a ratio of 1.3, or foreign-born workers earn 76 percent as much as US-born workers.
Perhaps a third of the 21 million foreign-born workers are unauthorized – and perhaps 3/4 of the unauthorized are Mexican. Another 500,000 to 1 million foreign-born workers are legal nonimmigrant temporary foreign workers – some stay only 4-8 months (as with most H-2A, H-2B; J-1, O's and P's), others stay for several years (H-1B, L-1), while others stay indefinitely (Nafta TN, E-1 and E-2).
How well are the immigrants doing in the US labor market? On average, immigrants begin their American journeys earning 25-30 percent less than US workers. However, Barry Chiswick in the late 1970s found that, within 15 years, the extra drive and ambition that encouraged migration also meant that the average immigrant male earned more than the average US-born male. George Borjas used newer data to show that Chiswick's income catch-up-and-cross over theory applied mostly to the wave of immigrants who arrived from Asia after the 1965 reforms. The consensus today is that immigrants narrow the income gap from 30 percent upon arrival to 15 percent (compared to US workers similar in age and education) within 10 to 15 years after arrival, but do not close it.
Most studies examine sub-groups of immigrants, often dividing them by their level of education. Years of schooling is the best single predictor of income, and immigrants are concentrated at the extremes of the education ladder. About a third have a college degree or more, and 40 percent have not graduated from high school. For the US born, 28 percent have a college degree, and 15 percent have not graduated from high school. When arrayed by education, the US-born have a diamond shape with a broad middle representing high school graduates, while the immigrants have more of an hourglass shape because so many are well and poorly educated.
College-educated foreigners tend to do well in the US, often having above-average incomes and most integrate easily. Many were educated in the US and/or employed with H-1B visas before receiving immigrant visas. Immigrants without a high-school diploma fare far worse, but so do Americans with little education. There are about 7 million immigrant and 10 million US-born workers without a high-school diploma, although the immigrants tend to be young and the US-born old. In addition, Borjas estimates that the average earnings of US-born dropouts are 7-8 percent lower because of the presence of the immigrants. In other words, the wage depression impacts of
immigration are fairly modest (the overall wage depression is estimated at 3-4 percent) and concentrated among the worst-off US-born workers.
Labor Market Institutions and Migrants
Employers are the major "players" attracting immigrant workers. Their recruitment and employment decisions encourage migrants to come. Most of the major business organizations, such as the US Chamber of Commerce, support increased immigration and oppose regulatory and enforcement "burdens" on employers aimed at reducing unauthorized migration. There are also specialized organizations pushing for particular types of migrant workers, e.g. ITAA for H-1Bs. The agricultural and other organizations are pushing for more H-2 work visas for unskilled workers.
The US national federation of unions, the AFL-CIO, was a key supporter of efforts to reduce illegal migration with sanctions and legalization in the 1986 IRCA. Unions believed that unauthorized workers reduced wages. In addition, the AFL-CIO was a key opponent of NAFTA, which went into effect in 1994, in part to speed up growth in Mexico and reduce illegal migration. Unions feared US jobs would move to Mexico.
However, the sanctions failed to stop employers from hiring unauthorized workers, largely because migrants found it very easy to buy forged documents. Moreover, US employers, who are not required to authenticate worker documents, were thus immune to sanctions enforcement when migrants presented false documents. NAFTA speeded up changes underway in Mexico, especially migration out of agriculture. With too few jobs created by Nafta for new entrants and those displaced, and employers preferring young women in their first jobs, many of the rural Mexicans moved to the US.
In 2000 the AFL-CIO changed its position and urged that sanctions be dropped, unauthorized foreigners be legalized and guest worker admissions reduced. The AFL-CIO also advocated that minimum wage and similar labor market enforcement efforts be stepped up. Unions believed that the government would never enforce sanctions effectively, and that employers would use the threat of enforcement to intimidate workers. Major national unions have had some success organizing janitors, home health care workers and some workers employed in major hotels and restaurants, but costs for health insurance have held down wage gains. Unions organizing recently arrived rural Mexicans in agriculture and landscaping, etc have NOT been successful.
Both employers and unions play minor roles in providing English, banking and other services that promote integration. Some employers make their training rooms available to NGOs, such as churches and local schools, to provide classes to workers who participate before and after work. However, most adult education and training is handled by community colleges.
We can see several examples of immigrant integration in the work place. New growth areas for migrants are in the midwest and southeast, and many move rural Mexicans into year-round jobs in meat and poultry processing in relatively small and isolated communities. Year-round jobs often lead to family unification and desires to buy homes, which some companies encourage by inviting banks into the work place to help employees to open accounts and establish credit. The win-win nature of the relationship is that migrants can buy the houses they want, and homeowners are more likely to be stable employees.
However, it should be noted that some employers allegedly encourage turnover to reduce benefit costs, since employees normally have to work 2 to 4 months before becoming eligible for health insurance. Hotel chains sometimes sponsor English-language and other classes to prepare employees for advancement and naturalization, enabling them to promote good employees to be supervisors etc, and facilitating US citizenship that permits family unification without waiting in queues. Perhaps the major form of migrant integration is employers sponsoring non-immigrant employees for immigrant visas. Employer sponsorship means that the Department of Labor must be convinced that US workers are unavailable, usually a multi-year process that, critics say, encourages migrants to be exceptionally loyal employees.
Excerpts from the Speech by Prof. Philip Martin, University of California, Davis, USA at the Heinrich-Böll-Stiftung in co-operation with the US Embassy in Germany, Berlin, April 21, 2005 edited by Christine Mehta.
Philip L. Martin is Professor of Agricultural Economics at the University of California. He is a member of the Commission on Agricultural Workers established by the Immigration Reform and Control Act of 1986 and author of numerous studies on immigration.