How much do immigrants earn?

Commentary about business and finance.
May 8 2006 5:21 PM

The Immigrant Economy

The obscure government report that reveals everything you need to know about foreign workers.

Lou Dobbs, Rep. Tom Tancredo, R-Colo., and their fellow immigration critics argue that poor, unskilled workers illegally throng our shores (and riverbanks) to enjoy abundant benefits showered upon them by hard-working taxpayers and steal jobs from poor Americans. But as the Wall Street Journal editorial page and others sympathetic to immigrants note, the U.S. economy couldn't function without the vast armies of foreign-born workers willing to work in tough industries for low wages.

Given the passion surrounding the topic, it's surprising how few people in the media have latched onto an interesting study released last month by the Bureau of Labor Statistics: "Foreign-Born Workers: Labor Force Characteristics in 2005." While Gene Epstein flagged the report in Barron's over the weekend, there has been no mention of it in the New York Times or Wall Street Journal and certainly not on Lou Dobbs Tonight. The report lays out, in antiseptic federal prose and chunky charts, the state of the government's knowledge about the role immigrants play in the U.S. labor market. Not all its conclusions are obvious.

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The data is derived from the BLS's Current Population Survey, a monthly survey of 60,000 households that also produces the unemployment rate. The BLS doesn't distinguish between legal and illegal immigrants. For its purposes, the foreign-born include "legally-admitted immigrants, refugees, temporary residents such as students and temporary workers, and undocumented immigrants." Of course, such a survey might naturally be suspected of undercounting illegal, undocumented, non-English speaking immigrants. "Technically that's true, but we do adjustments," says Abraham Mosisa, an economist with the Bureau of Labor Statistics.

The report confirms and quantifies much of what we already know. Foreign-born people constitute 15 percent of the U.S. labor force. In the Pacific West, about 28 percent of the labor force is foreign-born. And all those people with strange accents are here to work. Foreign-born people are more likely than the population at large to be in the labor force (67.7 percent vs. 65.8 percent) and less likely to be unemployed (4.6 percent vs. 5.2 percent). "Since 2000," the report notes, "the foreign born have accounted for 46 percent of the net gain in the total labor force."

As might be expected, the study shows that foreign-born workers are disproportionately represented in lower-paying jobs and professions. Only about a quarter work in management or professional jobs, compared with 36 percent of native-born Americans. Immigrants are more concentrated in service and agricultural industries, and 28 percent of the foreign-born workers over 25 haven't completed high school, compared with 7 percent of native-born. And they earn less: The median weekly wages of foreign-born workers are $511—75 percent of the $677 for native-born workers.

Again, no surprise. What's up for debate is the impact immigrants have on wages of the poorly educated, low-skilled American workers with whom they are thought to compete. The question has been the subject of dueling National Bureau of Economic Research papers. This one, by George Borjas and Lawrence Katz of Harvard, argues that the influx of huge numbers of Mexican workers between 1980 and 2000 "has played a modest role in the widening of the U.S. wage structure by adversely affecting the wages of less-educated native workers and improving the earnings of college graduates." Berkeley economist David Card presents a more sanguine take, arguing that "evidence that immigrants have harmed the opportunities of less educated natives is scant."

Some surprising findings emerge, too. If, like Caitlin Flanagan, you measure American family values and virtue by the tendency of women to stay home and care for children rather than work, then immigrants are definitely a net positive. Of those with children under 18, only 58.5 percent of foreign-born women participate in the labor force, compared with 73.2 percent for native-born mothers. Of those with kids under the age of 3, only 44.2 percent of foreign-born women work, compared with 62 percent of native-born women.

Not all immigrants are uneducated, low-skilled workers—not by a long shot. The BLS notes that "about equal proportions of both the foreign and native-born had a bachelor's degree and higher, 31 and 33, respectively." And the workers who arrived here with college degrees—or obtained degrees after they arrived—have narrowed the earnings gap with native-borns rather quickly. As Table 5 shows, the weekly median earnings for foreign-born workers who have a bachelor's degree (there are 4.553 million of them) are about 94 percent of those from similarly educated native-born workers.

The takeaway from the BLS study is that the U.S. economy relies on the talent and sweat of foreign-born workers, skilled and unskilled, legal or illegal. And that includes the BLS Study. Abraham Mosisa, who has a master's in economics, was born in Ethiopia and is a U.S. citizen. "I am the one who put all these numbers together."

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