March 22, 2006: Dropping Out: Immigrant Entry and Native Exit From The Labour Market, 2000-2005
Immigrant Entry and Native Exit
From the Labor Market, 2000-2005
By Steven A. Camarota
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Advocates of legalizing illegal aliens and increasing legal immigration argue that there are no Americans to fill low-wage jobs that require relatively little education. However, data collected by the Census Bureau show that, even prior to Hurricane Katrina, there were almost four million unemployed adult natives (age 18 to 64) with just a high school degree or less, and another 19 million not in the labor force. Perhaps most troubling, the share of these less-educated adult natives in the labor force has declined steadily since 2000.
Looking first at all workers shows that between March 2000 and March 2005 only 9 percent of the net increase in jobs for adults (18 to 64) went to natives. This is striking because natives accounted for 61 percent of the net increase in the overall size of the 18 to 64 year old population.
As for the less-educated, between March of 2000 and 2005 the number of adult immigrants (legal and illegal) with only a high school degree or less in the labor force increased by 1.6 million.
At the same time, unemployment among less-educated adult natives increased by nearly one million, and the number of natives who left the labor force altogether increased by 1.5 million. Persons not in the labor force are neither working nor looking for work.
In total, there are 11.6 million less-educated adult immigrants in the labor force, nearly half of whom are estimated to be illegal aliens.
Of perhaps greatest concern, the percentage of adult natives without a high school degree who are in the labor force fell from 59 to 56 percent between March 2000 and 2005, and for adult natives with only a high school degree participation in the labor force fell from 78 to 75 percent.
Had labor force participation remained the same, there would have been an additional 450,000 adult native dropouts and 1.4 million adult natives with only a high school degree in the labor force.
Data collected since Hurricane Katrina, in January 2006, show no improvement in labor force participation for less-educated natives. It shows a modest improvement in unemployment only for adult native dropouts, but not for natives with only a high school degree.
The decline in less-educated adult natives (18 to 64) in the labor market does not seem to be the result of more parents staying home with young children, increased college enrollment, or early retirement.
There is some direct evidence that immigration has harmed less-educated natives; states with the largest increase in immigrants also saw larger declines in natives working; and in occupational categories that received the most new immigrants, native unemployment averages 10 percent.
While most natives are more educated, and dont face competition from less-educated immigrants, detailed analysis of 473 separate occupations shows that 17 million less-educated adult natives work in occupations with a high concentrations of immigrants.
Some of the occupations most impacted by immigration include maids, construction laborers, dishwashers, janitors, painters, cabbies, grounds keepers, and meat/poultry workers. The overwhelming majority of workers in these occupations are native-born.
The workers themselves are not the only thing to consider; nearly half of American children (under 18) are dependent on a less-educated worker, and 71 percent of children of the native-born working poor depend on a worker with a high school degree or less.
Native-born teenagers (15 to 17) also saw their labor force participation fall from 30 percent in 2000 to 24 percent in 2005.
Wage data show little evidence of a labor shortage. Wage growth for less-educated natives has generally lagged behind wage increases for more educated workers.
A national unemployment rate of 5 percent is irrelevant to the current debate over illegal immigration because illegals are overwhelmingly employed in only a few occupations, done mostly by workers with only a high school degree or less. In these high-illegal occupations, native unemployment averages 10 percent twice the national average. Moreover, the unemployment rate does not consider the growing percentage of less-educated workers who are not even looking for work and have left the labor market altogether. It would be an oversimplification to assume that each job taken by an immigrant is a job lost by a native. What is clear is that the last five years have seen a record level of immigration. At the same time, the unemployment rate of less-educated natives has remained high and the share that have left the labor force altogether has grown significantly. Wage growth has also generally been weak. Thus it is very hard to see any evidence of a labor shortage that could justify allowing illegal aliens to stay or to admit more as guestworkers. Rather, the available evidence suggests that immigration may be adversely impacting less-educated natives. The statistical findings of this study are consistent with other research that has looked at the pattern of immigrant job gains and native loses in recent years.1
Data Source and Methods
Data Source. The information for this backgrounder comes from the March Current Population Survey (CPS) collected by the Census Bureau. All figures in this study reflect the 2000-based population weights, which were put out by the Census Bureau after the 2000 Census revealed that the nations population was larger than previously thought. By using the new weights, we are able to make comparisons between the years 2000 and 2005. The March data used for most of this study, which is also called the Annual Social and Economic Supplement, includes an extra-large sample of minorities and is considered one of the best sources of information on the foreign-born.2 The foreign-born are defined as persons living in the United States who were not U.S. citizens at birth.3 For the purposes of this report, foreign-born and immigrant are used synonymously. Because all children born in the United States to foreign-born parents are by definition natives, the sole reason for the dramatic increase in the foreign-born population is new immigration. The immigrant population in the 2005 CPS includes roughly 9.7 million illegal aliens and 1 to 1.5 million persons on long-term temporary visas, mainly foreign students and various types of temporary workers. The CPS does not include persons in “group quarters,” such as prisons and nursing homes.
It is possible that the situation has changed since March 2005. For this reason we also report some statistics from the January 2006 CPS, which is the most recent data source available. Given its larger sample size, the March CPS is considered a better source of data on the foreign-born. Nonetheless, the January file still includes 11,000 adult (18 to 64) immigrants and 74,000 adult natives and should therefore provide a reasonable picture of conditions at the start of 2006.
For our comparisons of detailed occupations we also use a combined sample of the 2003 and 2004 American Community Survey. Each ACS data file is six times larger than a March CPS. By combining the two most recent years of the ACS we should be able to gain insight into the distribution of immigrants and natives across the 473 occupations used by the Census Bureau for which there is data.
Focus on Adult Workers. In this study we mainly examine employment patterns among adult workers age 18 to 64. Although persons under 18 and over 64 often work, it is adults who comprise the vast majority of full-time workers and almost always are the primary income source for a household. Thus the labor-market situation of adult workers is central to both to the economy and American families. At various points in the study we examine labor-force participation among workers under 18. But when considering withdrawal from the labor market, it makes sense to look only at those who are at least 18 and under age 65, thereby eliminating those in high school or those likely to be retired. In this report we focus on the three most common measures of labor-force attachment used by economists: 1) unemployment, which refers to persons who are not holding a job, but say they are looking for work. 2) persons working, which refers to individuals who have a job. (The percentage who are employed as a share of the entire working-age population is a commonly used measure of labor force attachment, which economists sometimes refer to as the EP employment to population rate.) 3) labor-force participation, which refers to persons working or looking for work. This can be expressed as a percentage of those working or looking for work in the total working-age population. Economists sometimes refer to this as the LF labor force participation rate. Though common in more technical papers, we will not be using these abbreviations in this report.
Illegals in the CPS. It is well-established that illegal aliens do respond to government surveys such as the decennial census and the Current Population Survey. While the CPS does not ask the foreign-born if they are legal residents of the United States, the Urban Institute, the former Immigration and Naturalization Service (INS), the Pew Hispanic Center, and the Census Bureau have all used socio-demographic characteristics in the data to estimate the size of the illegal population.4 Our preliminary estimates for the March 2005 CPS indicate that there were between 9.6 and 9.8 million illegal aliens in the survey. It must be remembered that this estimate includes only illegal aliens captured by the March CPS, not those missed by the survey. If we assume that some 10 percent of illegal immigrants were missed by the survey, then that would place the total illegal population at nearly 11 million in March of 2005. By design this estimate is consistent with those prepared by others.5 While consistent with other research findings, it should be obvious that there is no definitive means of determining whether a respondent in the survey is an illegal alien with 100 percent certainty.
Illegals and Labor Force. We find 5.8 million adult illegal immigrants (age 18 to 64) employed in the March 2005 CPS. We also find 370,000 unemployed adult illegals. It must be remembered that these figures are only for adults 18 to 64 who were captured by the CPS and are in the labor force. It does not include those missed by the CPS. It also does not include illegals who are 15 to 17 years of age in the labor force nor the tiny number over age 64. Illegals comprise a larger share of the 18-to-64-year-olds in the labor force than of the entire labor force (when workers under 18 and over 64 are included) because there are comparatively few illegals in their teenage years and even fewer over age 64.
Less-Educated Natives and Illegal Immigration. Although we report figures for all adult workers 18 to 64, we focus our analysis mainly on native workers who have not completed high school, or those who have a high school degree but report no schooling beyond high school. We refer to these workers collectively as less-educated or less-skilled. Collectively there were 65 million native-born Americans 18 to 64 in this group in March 2005, and they comprised 42 percent of all natives 18 to 64. Throughout this study we report statistics for the two groups separately whenever possible. These workers are the most relevant to the current debate over illegal immigration because all researchers agree that illegals are overwhelmingly less-educated.6 Our research indicates that some 83 percent of employed illegals (18 to 64) have no more than a high school diploma. One of the central questions in the current debate over illegal immigration is the extent to which there is a domestic supply of this type of worker that could be utilized if we chose to enforce the law and reduce the number of less-skilled illegal aliens in the country.
Of course, mechanization could, in many cases, also fill the labor needs of employers. In fact, there is evidence that by dramatically increasing the supply of less-skilled workers immigration may be retarding the adoption of labor-saving devices and techniques.7 But in this study we are mainly interested in the supply of less-educated workers. Nonetheless, it is worth keeping in mind that the substitution of capital for labor, as economists like to describe the process, is another way of meeting the needs of employers.
Less-Educated Natives Tend to Be the Poorest Americans. The fact that less-educated workers tend to be the poorest Americans is another reason to focus on them. It is well-established that educational attainment is one of the best predictors of economic success in the modern American economy. The average annual income of an adult native (aged 18 to 64) without a high school degree is only 27 percent that of an adult native with more than a high school degree, and for natives with only a high school diploma it is still just 57 percent that of adult natives with education beyond high school. Adult natives 18 to 64 without a high school degree account for 28 percent of adult natives in poverty. Adult natives with only a high school degree account for 38 percent of adults in poverty. In short, those with a high school degree or less account for two-thirds of the poverty population among adults. And it is not only the workers themselves to consider. In 2005, 48 percent of all children (under 18) in native-headed households were dependent on a worker with only a high school degree or less.8 Of children of the native-born working poor, 71 percent are dependent on the wages of workers with only a high school degree or less.9 Put simply, less-educated workers and their dependents comprise a very large share of the low-income population. Thus how they do in the labor market impacts them, their children, taxpayers, and society as a whole.
Employment of the Less-Educated
Declining Native Employment. Table 1 examines the labor force status of adult natives and immigrant workers in the United States. The top of the table shows that the number of adult natives (age 18 to 64) holding a job has grown by only 303,000 between March 2000 and March 2005, while the number of adult immigrant workers holding a job increased 2.9 million. Put a different way, the total net increase in employment among adult workers was 3.2 million, but only 9 percent of the net increase went to natives. This is striking because natives account for 61 percent of the net growth in the number of people 18 to 64 in the United States, yet they earned only 9 percent of the net increase in jobs between March 2000 and March 2005.10 It is not unreasonable to say that natives account for most of the net increase in the number of potential workers, but immigrants accounted for almost all of the net increase in actual workers.
Declining Employment Among Less-educated Natives. Table 1 also divides the adult population (age 18 to 64) by educational attainment. The table shows that the number of natives without a high school diploma holding a job declined by 1.3 million and the number with only a high school diploma holding a job declined by 1.9 million. At the same time, the number of adult immigrants without a high school degree holding a job increased by more than 800,000, and the number with only a high school degree holding a job increased by more than 700,000. Taken together, the number of less-educated natives working fell by 3.2 million, while the number of less-educated immigrants working increased by 1.5 million.
Numerical Decline in Native Employment. The middle portion of Table 1 shows that part of the explanation for the decline in employment among less-educated natives was due to a significant rise in unemployment for both groups. There were 256,000 more unemployed native dropouts in March 2005 than in March 2000 and 696,000 more unemployed natives with only a high school diploma. Thus, 20 percent of the decline in the number of native dropouts working was due to an increase in unemployment. For natives with only a high school education, the 696,000 rise in unemployment accounted for 37 percent of the decline in the number holding a job. If we look at those not in the labor force, shown in the bottom section of Table 1, we see that the number of native dropouts not in the labor force changed very little, while the number of natives with only a high school degree went up by 1.4 million. Thus, looking only at numbers, the explanation for the rise in the number not working is somewhat different for the two groups.
For natives with only a high school diploma, the 1.9 million decline in the number working was due entirely to a substantial increase in the number unemployed and the number not in the labor force. But for native dropouts, there was a significant decline in the total number of such individuals aged 18 to 64. This is due to rising high school graduation rates for natives and the retirement of older native-born dropouts. Thus some of the decline in the number of adult native dropouts working was simply due to an overall decline in the number of such workers. This is not at all the case for natives with only a high school diploma.
Decline in Employment Rates. The decline in the absolute number of natives who lack a high school diploma in the 18-to-64 age group was also accompanied by a significant deterioration in the percentage of these natives working. All of the percentage changes in the share working, unemployed, or not in the labor force shown in Table 1 for natives are statistically significant. That is, we can say with 90 percent certainty that the figures for 2000 and 2005 in the nations actual population are different from each other based on the results of the survey. For the most part, the changes in the number of immigrants working, unemployed, or not in the labor force also are statistically significant. However the percentage changes for immigrants are not statistically significant. This is not to say that there were not changes in the employment percentage for immigrants in the actual population. It does mean that given survey variability we cannot say if the changes in percentage of immigrants working, unemployed, or not in the labor force represent real changes in the population.
The top of Table 1 shows that the share of native dropouts holding a job declined from 53 to 48.2 percent. This was partly due to a very substantial rise in their unemployment rate from 10.3 to 14.3 percent, and was also due to a rise in the number not in the labor force, from 40.9 to 43.7 percent. (Note: persons in the labor force are either working or looking for work.) If the number of dropouts not in the labor force had remained the same as in 2000 (40.9 percent), then some 454,000 additional dropouts would have been in the labor force. If we take the 454,000 and add it to the 256,000 rise in unemployment among native dropouts, it means that 710,000, or 53 percent, of the 1.3 million decline in the number of native dropout workers was due to a rise in their unemployment rate and a fall off in their labor force participation rate. The rest of the decline was simply the result of there being fewer adults age 18 to 64 who had not completed high school. Whatever the reason, these individuals, who already had the highest unemployment and lowest labor force participation rate of any group, have seen their situation deteriorate even further in the last five years. Moreover, as the bottom of Table 1 shows, there were a total of seven million adult natives without a high school degree not in the labor force. Even if half or two-thirds of this group do not wish to work, there is still a huge pool of native-born unskilled adult labor numbering in the millions.
As for natives with only a high school diploma, the percentage unemployed and the percentage not in the labor force also increased significantly. The top of Table 1 shows that the percentage of high-school-only adult natives holding a job declined from 74.5 to 70.3. This was partly due to a rise in their unemployment rate from 4.8 to 6.9 percent, and was also due to a rise in the number not in the labor force from 21.8 to 24.6 percent. Unlike dropouts, there was no decline in the overall number of natives 18 to 64 years of age with only a high school diploma. In fact, the total number of such natives increased slightly. If the share not in the labor force had remained the same as in 2000 (21.8 percent), then 1.4 million more natives with only a high school degree would have been in the labor force. This also does not include the 696,000 rise in the number of unemployed natives with only a high school education.
Taken together, the decline in the labor force participation rates of native dropouts and those with only a high school degree means that there were almost 1.9 million fewer less-educated natives in the labor force in 2005 than in 2000. Or put a different way, there are nearly 1.9 million less-educated natives “missing” from the labor market. And this figure does not include the 1.2 million rise in unemployment among less-educated native-born workers. This compares to the 1.6 million increase in the number of less-educated immigrants in the labor force. These figures seem to indicate that if unemployment and labor force participation for natives had remained at 2000 levels, there would have been an ample supply of less-educated workers in the United States, without immigration. Moreover, these workers are still here, and if the number of less-educated immigrants in the labor force were reduced by enforcing immigration laws, then less-educated natives who are unemployed or not in the labor force might be available to take such jobs. At the very least, we can say that until very recently, a much larger share of less-educated workers held jobs.
Employment Declined Every Year. Table 1 shows only 2000 and 2005 it does not show the intervening years. Figure 1 reports the percentage of adult native dropouts (18 to 64) holding a job, and the share in the labor force. Again, persons are considered to be in the labor force if they either have a job or are looking for one. Figure 2 shows the same figures for adult natives (age 18 to 64) who have only a high school degree. (Table A in the appendix provides more detailed year-by-year information for all educational categories.) Both figures show declining labor force participation for both groups in every year since 2000 despite the overall improvement in the economy since 2003. The figure for the share working also shows the same trend, with the exception that the share of high-school-only natives holding a job did rise very slightly between 2004 and 2005 due to an improvement in their unemployment rate.11 However, the share in the labor force in 2005 was still only 70.3 percent, much lower than the 74.5 percent in 2000. Moreover, Figure 2 shows that the share of high-school-only adult natives in the labor force continually deteriorated between 2000 and 2005. Figures 1 and 2 are important because they show that the problem of declining native labor force participation and work is not confined to just one year, but has continued despite a significant improvement in the economy. Of course, as already mentioned, it is immigrants who are the primary beneficiaries of job growth since 2000. That itself is the puzzling question: Why are natives, particularly less-educated natives, doing so badly? Or put a different way: why are immigrants getting all the net increase in employment?
Whats Happened Since March 2005. As already discussed, the March CPS is the best data source for examining immigrants and natives, especially for the kind of detailed analysis in this study. However, the other monthly CPSs can also be used to study immigrants and natives. Data from January 2006 are the most recent available and can give a reasonable picture of how things might have changed since March of 2005. The January 2006 CPS shows no meaningful change in the pattern discussed in this report. As Figure 1 shows, the March 2005 CPS reported 56.3 percent of adult natives with less than a high school education in the labor force; the January CPS shows 56.4 percent. For those with only a high school diploma, the March 2005 data showed 75.4 percent in the labor force; in January 2006 it was 75.3 percent. Neither of these differences is statistically significant. While labor force participation has not changed, unemployment does seem to have improved for native-born dropouts. It was 12.9 percent in January 2006, compared to 14.3 percent in March 2005. For natives with only a high school degree, unemployment also improved very slightly in January 2006 to 6.7 percent compared to 6.9 percent in March 2005. As the for share working, the decline in unemployment for native dropouts means that 49.3 percent were working in January 2006 compared to 48.2 percent in March 2005. This is still much lower than the 53 percent who held a job in March 2000. Other than the decline in unemployment, there has been no meaningful change for less-educated natives between March 2005 and January 2006.
It should be noted that the above analysis compares the March 2005 CPS, which includes the Annual Social and Economic Supplement to the January 2006 CPS, which has no supplement. While all CPS data should produce comparable results, the Annual Social and Economic Supplement is designed to capture harder-to-find populations, such as immigrants. For that reason, the Annual Supplement is used to measure such things as poverty or health insurance coverage. To really see if things have changed since March 2005, it probably makes more sense to compare the January 2006 CPS with the March 2005 CPS without the supplement. The March 2005 CPS without the supplement shows 56.5 percent of adult native dropouts in the labor force, virtually identical to the 56.6 percent shown in the January 2006 CPS. The March 2005 CPS without the supplement also shows that 75.8 percent of adult natives with only a high school degree were in the labor force. This is actually better than the 75.3 percent found in January 2006 CPS, suggesting that things might have deteriorated even further for natives with only a high school diploma in recent months, at least with regard to labor force participation.
As for unemployment, among native dropouts it was 14.3 percent in March 2005, with or without the supplement. Thus, although their unemployment remains higher than in 2000 and higher than for any other group, the last few months do seem to have seen some improvement in dropout unemployment rates. There is no such improvement for natives with only a high school diploma. The March CPS without the supplement shows their unemployment at 6.6 percent, compared to 6.7 percent in the January CPS. Taken together, the results from January 2006 as compared to March, with or without the supplement, show little or no change for less-educated natives. Unemployment may have lessened for native dropouts, but the more troubling decline in labor force participation does not seem to have improved. And in fact, there might have been a further deterioration for natives with only a high school diploma.12
Full-time Work Has Also Declined. So far we have considered those holding a job collectively. While the share of less-educated natives holding a job or in the labor force has declined, it is possible that this situation is at least partly ameliorated by a rise in the share of native workers who are employed full-time. (Full-time is defined as usually working 35 hours a week or more.) Table C in the appendix examines this question. The share of native workers employed full-time actually declined slightly between 2000 and 2005. However, these declines are not statistically significantly. While the declines are not statistically significant, they certainly do not indicate that more natives are working full-time. As we have seen, the share of natives in the labor force has declined significantly and this has not been offset by a rise in the share working full-time. This is true for both men and women.
Reasons? Child Rearing, School Attendance and Early Retirement
Labor Market Participation and Child Rearing. The increase in the number of working age (18 to 64) natives not in the labor force could be the result of factors other than the scarcity of employment opportunities. One reason for it might be an increase in the number of adults staying home to care for a young child. In American society women are still more likely to take time off from a career in order to care for children. Thus, looking at changes by gender can also shed light on this question. Analysis of the CPS shows that the drop in labor force participation was about three percentage points for both male and female dropouts and about three percentage points for men and women with only a high school diploma. (Table B in the appendix of this report shows detailed figures for men.) Since the decline was the same for both men and women, it seems unlikely that child rearing explains the falloff in labor force participation among native men 18 to 64. Moreover, the share of less-educated women not in the labor force with and without a young child (under age six) increased by roughly the same amount between 2000 and 2005, indicating that the share of mothers staying home with kids has not grown.
Labor Market Participation and School Attendance. Another possible reason why less-educated natives might leave the labor force is to gain more schooling. In 2000, 85.7 percent of natives (aged 18 to 64) who did not have a high school diploma reported they were not in school, in 2005 the percentage was actually slightly lower, 85.1 percent. Fewer natives in school should have caused a slight increase in labor force participation, the opposite of what actually happened. As for persons with only a high school education, in 2000, 97.4 percent reported that they were not in school, which was almost identical to the 97.1 percent in 2005. It should be noted that there are some 18-year-olds and even some 19-year-olds in high school; also some dropouts are working for a GED and may report being in school. But the share of such persons was basically the same in 2000 and 2005. Whats more, there are almost no less-educated persons, as it is defined here, attending college because the vast majority of college students show up in the data as having at least some education beyond high school, unless they are in their first semester. The bottom line is that rising school attendance does not seem to explain falling labor force participation among less-educated natives.
Labor Market Participation and Early Retirement. One final possible reason for the decline in labor force participation for less-educated natives is that a larger share of persons retired early. But if we look at the labor force participation for persons age 60 to 64 in 2000 and 2005, we find no indication that they account for the overall decline. In 2000, 35.7 percent of native dropouts age 60 to 64 reported that they were in the labor force compared to 32.8 percent in 2005, a 2.9 percentage-point change; this is almost exactly the same as the decline for dropouts overall. As for natives with only a high school diploma age 60 to 64, we find that the percentage in the labor market went from 44.3 percent in 2000 to 46.8 percent in 2005. This means that all of the overall decline in labor force participation among natives with only a high school education was due to a decline for those under age 60, making earlier retirement an unlikely cause of the change. Thus it seems very unlikely that early retirement explains any of the decline in labor force participation among either group of less-educated natives.
Evidence of Immigrant Competition
The above analysis shows that there is a very large pool of less-educated adult natives either unemployed or not in the labor force. Thus it seems hard to argue that America is desperately short of less-educated workers. Moreover, these workers have not fared well in the recent years. Given the dramatic increase in the number of less-educated immigrant workers, it is difficult to imagine that there is no competition for jobs among similarly educated natives. However, trying to actually measure the impact is not easy. For example, it is not possible to compare differences across metropolitan areas because the sample size of the CPS is different for most cities. Moreover, most metropolitan areas are not defined in the survey.13 Looking for differences across states is possible, but states are not discrete labor markets. Moreover, any comparison across cities or states may not be meaningful because we live in a national economy with large-scale movements of people, goods, and capital between different parts of America. In its 1997 study, The New Americans, the National Research Council came to this same conclusion. In an effort to avoid some of these problems, we look at age groups and occupations at the national level. However, such comparisons also have limitations.
Natives and Immigrants by Age. Table 2 reports the share of less-educated natives working in 2000 and 2005 by age. It also shows the immigrant share of workers in each age group in 2000 and 2005. The bottom of the table shows the correlation between the changing immigrant shares of each group and the share of natives holding a job in each age group.14 The correlation is negative 0.58. A negative correlation means that as immigrants increased as a share of an age group, the percentage of natives working in that same age group decreased. Any correlation larger 0.5 or -0.5 is usually seen as meaningful. The square of a correlation, in this case 0.38, can be interpreted to mean that 38 percent of the variation in the changing percentage of less-educated natives holding a job across age groups is explained by the growth of immigrants in the age group.
It is common in economics to focus on workers age 25 to 64 because workers in this age range generally represent the most productive workers. And by age 25 most Americans have completed all of the schooling they are likely to get. Table 2 also reports the correlation when workers under age 25 are excluded. The table shows that when young workers are excluded the correlation rises to 0.71, and the square of the correlation for the 25-to-64 population is 0.50. This would suggest that immigration accounts for about half of the variation in the changing share of natives holding a job across the age groups. Of course, Table 2 does not control for factors other than the changing immigrant share. Moreover, a correlation is not definitive proof that immigration is adversely impacting natives, especially since there are only a limited number of age groups to compare. But the results are certainly consistent with that possibility. Its worth noting that the correlations only looking at male workers produce very similar results to those in Table 2.15 Correlations focusing on the labor force participation of less-educated workers also look very similar to those in Table 2.16
Natives with Less Than a High School Degree. Table 2 combined high school dropouts and those with only a high school degree. Table 3 reports figures only for native high school dropouts age 18 to 64. The correlations of 0.19 is both positive and very weak, indicating that the growth of immigrants in an age group did not vary with the decline in natives holding a job. Again, a correlation does not control for a variety of factors and is not proof that immigrants have no impact on native employment. What it does mean is that changes in employment among native dropouts did not vary with the growth in immigrant workers in an age group between 2000 and 2005. It may simply be that because the jobs dropouts tend to have require the least skills, the labor market for high school dropouts is not segmented by age. That is, dropouts in their 20s do the same kind of work as those in the 30s, 40s, and so on. Thus, changing immigrant shares by age has little impact on native employment by age, but there still may be a significant impact on all dropouts. There is a well-developed literature showing that high-school-dropout immigrants and natives do compete with each other for jobs.17 The figures for men only and labor force participation also show no significant correlation between growth in the immigrant share of an age group and native dropout labor market outcomes.
Natives With a High School Degree. Table 4 reports, by age, the correlation between the growth in immigrant workers with only a high school diploma between 2000 and 2005. It also shows the share of natives with only a high school degree holding a job by age group. The correlation between immigrant growth and native employment decline is -0.76, an indication of a strong relationship between declining employment among natives with only a high school degree and the rise in immigrant workers. The square of 0.76 is 0.58, indicating that 58 percent of the variation between age groups in the decline of native employment is explained by the increase in the immigrant share. This would seem to be a large impact. However, as already discussed, correlations should always be interpreted with caution. As is true with the other analysis reported above, the same general pattern exists when we look at male workers with only a high school education and also when we focus on their labor force participation.18
High-Immigrant Occupations. Another way to examine the impact of immigration on labor market outcomes for natives is to compare occupations. Table 5 reports the concentration of immigrants and natives in the major occupational categories used by the Census Bureau in 2005. All figures are for adults age 18 to 64. The occupational categories are ranked based on native unemployment rates, which are shown in the first column. One of the most important things about Table 5 is that it shows that there are millions of native-born Americans employed in occupations that have high concentrations of immigrants. Its simply incorrect to say that immigrants only do jobs natives dont want. If that were so, then there should be occupations comprised almost entirely of immigrants. Just the first five occupational categories of farming/fishing/forestry, construction, building cleaning/maintenance, and food processing currently employ 22 million adult native-born Americans.
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Because persons not in the labor force generally do not list an occupation, its not possible to use occupational data to measure labor force participation. However, persons who are unemployed do indicate what they did at their last job. Thus, we can look at the relationship between the presence of immigrants in an occupation and native unemployment. Table 5 shows that native unemployment averages 10 percent in the first five occupations listed. The table also shows that in just these five occupations there are 2.3 million unemployed adult natives. Its also worth mentioning that while 96 percent of adults who are not in the labor force report no occupation, some did tell the Census Bureau what job they did when they last worked. In 2005, more than 380,000 adult natives (age 18 to 64) not in the labor force said that when they were in the labor market, they were employed in one of the first five occupations listed at the top of the table. These figures certainly indicate that these occupations are not “off limits” to natives.
Perhaps the unemployed native workers are not where employers want them, or there is some other reason businesses find these unemployed natives unacceptable. But on its face Table 5 indicates that there is quite a lot of unutilized labor of this kind in the United States. We can also correlate native unemployment by occupation with the presence of immigrants. Unfortunately, the Census Bureau changed the way it defined occupations in 2003, making it impossible to examine how native unemployment rates changed over time by occupation. However, it is possible to look at the unemployment rate and the share of the occupation that is comprised of immigrants who indicated in the 2005 survey that they arrived in 2000 or later. These recently arrived immigrants are shown in column three of Table 5. The correlation between native unemployment rates and the share of an occupation that is comprised of recently arrived immigrants is 0.87. The square of this correlation is 0.76. As already indicated, this can be interpreted to mean that the presence of recent immigrants explains 76 percent of the variation in native unemployment rates across occupations. If we compare the share of the occupation that is comprised of all immigrants, not just those who arrived after 2000, the correlation is 0.88. Correlations are not proof that immigration increases native unemployment. But all of these figures are consistent with the possibility that immigration may explain a good deal of the unemployment among natives.
Less-educated Workers by Occupations. A potential problem with the occupational categories in Table 5 is that they are highly aggregated, comprising many different specific jobs. It could be the case that the immigrants are concentrated in only a few specific occupations. So for example, in the construction category maybe all of the construction laborers are immigrants, while all or nearly all of construction foremen are natives. (Higher-level supervisors would be in the management occupational category.) By looking at all construction jobs together in Table 5 we may not get an accurate picture. The Current Population Survey is simply not large enough to divide workers into much more detailed job categories and still get a reasonable estimate of immigrant shares. One way to deal with this question is to look at only less-educated natives and immigrants in each occupation. By less-educated we mean those with only a high school degree or less.19 This should provide a more “apples to apples” comparison.
Table 6 shows adults with only a high school degree or less in each occupational category. The table reads as follows: In the building cleaning and maintenance category unemployment is 11.6 percent among less-educated natives. The second column shows that 39.3 percent of less-educated workers in that occupational category are foreign born. The table shows that there are still 14.4 million less-educated adult natives employed in the first five occupations listed and an addition 1.7 million less-educated unemployed adults natives in these five occupations. If we include personal care and service occupations, then there are an additional 1.6 million less-educated adult natives in a “high-immigrant” occupation, and 143,000 more unemployed. This comes to 37 percent of all less-educated adult natives. The correlation between the immigrant share of less-educated workers and the unemployment rate for less-educated natives is 0.90, and the square of the correlation is 0.81. This certainly supports the high correlations found in Table 5 when all workers are considered.
Detailed Look at Occupations. There is another data source that allows a more detailed look by occupation. The American Community Survey (ACS) is almost six times larger than the Current Population Survey. While 2005 ACS data are not yet released, by combining 2004 and 2003 ACS data we can get good estimates that should be reliable for detailed occupations and is still recent. Table D in the appendix at the end of this Backgrounder shows over 470 occupations for which there are data for 2003 and 2004. By examining occupations in this very detailed way we can see if there are occupations comprised only of immigrants. The far left column of Table D provides a number that corresponds to the occupational categories shown in Table 5. So if you want to know about construction occupations, simply look down the list in Table D for occupational category 2, which is the occupational category shown in Table 5. Probably the most important thing about Table D is that there are just four occupations out of 473 in which the majority of adult workers are immigrants. These occupations employ only 315,000 immigrant and native-born adults, and account for less than two-tenths of 1 percent of all adults 18 to 64 holding a job, and only 1 percent of all immigrants are employed in these immigrant-majority occupations. It is simply not correct to say that immigrants only do jobs that Americans dont want, when Table D shows the majority of workers doing just about every single job in America are native-born. The tiny number of immigrant- majority jobs falls to just 3 when teenagers (ages 15 to 17) and persons over age 64 are included.
To be sure, there are a number of occupations in which immigrants make up a very sizable share. In 35 out of 473 occupations, one-third or more of adult workers (18 to 64) are foreign born. These occupations, some of which are high-skilled, but most of which are low-skilled, account for less than 7 percent of the U.S. work force and 18.2 percent of all immigrant workers. But perhaps most relevant, there were still 5.1 million adult natives employed in these very immigrant-heavy occupations, constituting 60 percent of all adult workers in these occupations. In fact, if workers under 18 and over 64 years of age are included, the number of occupations in which immigrants are more than one-third drops from 35 to 21. Moreover, there were 92 occupations in which 20 percent of workers were immigrants, accounting for 20 percent of all workers and 41 percent of immigrant workers. These occupations also employed 17.7 million natives. So there are not that many high-immigrant occupations and even in such occupations the overwhelming majority of workers are still natives. Moreover, the immigrant share is even smaller when all workers are considered, including those under 18 and over 64.
Less-Educated Workers by Detailed Occupation. The fact that there are millions of natives already doing exactly the same kind of work as immigrants is relevant to the problem of declining work and labor force participation discussed at length throughout this paper because, as we have seen, many natives would seem to face significant job competition from immigrants. This is especially true of less-educated natives, who are more likely to be in occupations where immigrants comprise a large share of workers. Using the detailed list of occupations in Table D, we find that half of natives with less than a high school diploma work in an occupation that is at least 15 percent foreign born, and one-third of natives with only a high school diploma only are employed in an occupation that is at least 15 percent immigrant. In total, this comes to 17 million less-educated natives.20 In contrast, only one-fifth of natives with more than a high school degree work in a occupation that is 20-percent immigrant. Many, in fact most, natives do not face significant job competition from immigrants. But just as clearly, millions of natives do face such competition, especially less-educated natives. The key point to take away from Table D is that a large share of less-educated natives are employed in high-immigrant occupations. This fact means that some natives almost certainly are impacted by immigration.
Of course, the American economy is dynamic, and it would be a mistake to think that every job taken by an immigrant is a job lost by a native. To be sure, many factors impact unemployment and labor force participation. But it would also be a mistake to assume that dramatically increasing the number of workers in these occupations as a result of immigration policy has no impact on the employment prospects of natives. The data presented make clear that the very idea that there are jobs that only immigrants do is simply wrong. To talk about the labor market in this way is not helpful in understanding the potential impact of immigration on American workers because it gives the false impression that the job market is segmented between jobs that are done almost exclusively by immigrants and jobs that are exclusively native. This is clearly not the case, even at the bottom end of the labor market.
Immigration in the Largest States. Table 7 reports employment figures for immigrants and natives in 2000 and 2005 for the 20 largest states, 12 of which saw a statistically significant change in the number of immigrant workers. When we look at all workers, there is some evidence that immigration may have harmed natives. In the 12 states with statistically significant growth in the overall number of immigrant workers, the share of adult natives working declined by 3.4 percentage points on average, compared to an average decline of 2.3 percentage points in the other eight states in the table.21 However, there are clearly exceptions to this general pattern. Illinois and Michigan, which saw a significant decline in manufacturing jobs in recent years, were not among the states with a big increase in the immigrant share of less-educated workers. Moreover, there is no strong correlation between declining overall native employment and growth in immigrant workers. This of course may be the result of limited size of the CPS sample in some states, making it impossible to determine the actual impact of immigration. In addition to the issue of sample size, it is important to realize that states are not discrete labor markets, this is particularly true of large states with many large metropolitan areas. Unfortunately, comparisons across metropolitan areas are not possible using the CPS public use file. But even comparisons between cities might not be meaningful because as we mentioned earlier, we live in a national economy.
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Table 8 reports employment figures for immigrants and natives with only a high school degree or less. In eight of the largest 20 states there was a statistically significant growth in the number of less-educated immigrant workers. In the eight states shown in Table 8 with statistically significant growth in the number of less-educated immigrant workers, the decline in the number of less-educated natives working averaged 5.1 percentage points, compared to 4.0 percentage points for natives in states without statistically significant immigrant growth. The correlation between the growth in the immigrant share of less-educated workers and the decline in adult natives working is 0.50. Excluding Illinois and Michigan, the correlation between declining work among less-educated natives and a growing immigrant share of such workers is 0.61. This supports the possibility that immigrants adversely impacted the share of less-educated natives working. We can say that, in general, states that saw the largest increase in the immigrant share of less-educated workers also tended to see a bigger decline in the share of less-educated natives working. They also tended to see the largest decline in labor force participation.
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Wages Among Less-Educated Natives. While this report focuses on employment, wages are another measure of native performance in the labor market. Table 9 reports real wages adjusted for inflation for year-round full-time adult natives (age 18 to 64) in 2000 and 2005. The CPS asks about wages in the calendar year prior to the survey. Table 9 shows that overall real wages for workers with less than a high school diploma rose just 1 percent. For those with a high school degree they went up 5 percent, and for those with education beyond high school they increased 8 percent. These findings tend to support the idea that wage growth has been slower for less-educated workers. It is common in economics to focus on male workers when trying to determine the impact of some outside factor like immigration because wages for women have generally risen over time as stereotypes and discrimination continue to become less pronounced, thereby creating a long-term trend of improving wages for female workers. There is no such long-term social tend among men. Table 9 shows that wages for adult men have not done well in recent years, especially for less-educated men. Real annual wages for native male high school dropouts actually fell 1 percent, and for men with only a high school diploma real wages increased just 3 percent. In contrast, wages for more educated men rose 10 percent.
It would be incorrect to assume that Table 9 provides conclusive evidence about the impact of immigration. What the table does make clear is that there is little indication that less-educated workers are in short supply. If that were the case, wages should have risen very quickly, or at least faster than for other workers, as employers bid up wages in an effort to retain or attract workers. But the wage data do not support that conclusion, at least not for less-educated workers.
To this point, we have examined immigrants collectively. As already discussed in the Methods section of this report, a significant share of foreign-born workers in the United States are in the country illegally. Table 10 reports our best estimates for adult (18 to 64) workers by legal status. Natives are also shown. Table 10 shows that, in the March 2005 CPS, there are a total of 5.8 million adult illegal immigrants holding jobs. We also estimate that there are 370,000 unemployed adult illegal immigrants. It must be remembered that these estimates are only for illegals in the CPS who are between the ages of 18 and 64 and are in the labor force.
Occupational Distribution of Illegals. Table 10 shows the distribution of adult illegal immigrants (aged 18 to 64) across occupational categories. The occupations are ranked based on adult native unemployment. The first five occupations listed are also the most heavily impacted by illegal aliens; in fact, two-thirds of all illegals work in those occupations. This compares to only 20 percent of native-born Americans. Putting aside those natives who may have withdrawn from the labor market altogether, it would seem that perhaps one-fifth of native-born adults face significant job competition from illegal immigrants. These occupational categories tend to be the lowest paid, so those natives most impacted will tend to be the poorest Americans. As will be recalled from Table 6, 14.4 million less-educated adult natives work in these five occupational categories, accounting for about one-third of all less-educated adult native workers.22 As we have seen, unemployment averages 10.3 percent for all adult natives in these occupations and for less-educated natives it averages 11.5 percent. The correlation between native unemployment and the share of the occupation comprised of illegal aliens is 0.90. Again, a correlation is not proof of causation, but it is certainly consistent with the possibility that illegal immigration has harmed the labor market prospects of natives.
Illegals by State. Table 11 shows the number and share of workers who are illegal immigrants in the 13 states with the largest number of illegal workers. Because of the sample size of the CPS, there are only a limited number of states for which we can make reasonable estimates. It must be remembered that state estimates of illegals are subject to even more uncertainty than national estimates. However, there is general agreement that the illegal populations are quite large in these states. What is important about the table is that the number of less-educated adult natives who are unemployed or not in the labor force is quite large. In total, there are 1.8 million unemployed less-educated adult natives in the 11 states listed in Table 11. There are also 9.4 million less-educated adult natives in these 13 states who are not in the labor force. There is not only a large pool of unused less-educated labor in these states, but the number of less-educated adult natives not in the labor force increased by 723,000 between 2000 and 2005 in these states and the number unemployed increased 375,000. None of these figures include teenagers or persons over age 64. Its also worth remembering that natives from other states can move to states with a strong demand for labor if employers make it worth their while. Perhaps the illegal immigrants have particular skills that employers want or perhaps there is something about less-educated natives in these states and throughout the country that makes them undesirable to employers. Nonetheless, it is clear that those states with large numbers of illegal immigrant workers have a substantial pool of less-educated adult natives who could be used if the number of illegals were reduced through enforcement.
The findings of this report call into the question the idea that America is desperately short of less-educated workers. In 2005, there were 3.8 million unemployed adult natives (18 to 64) with just a high school degree or less and another 19 million not in the labor force. Moreover, between 2000 and 2005 there was a significant deterioration in the labor market prospects of less-educated adult natives. The labor force participation has fallen significantly for both natives without a high school degree and those with only a high school degree. Had it remained the same in 2005 as it had been in 2000, there would have been an additional 450,000 adults without a high school degree in the labor force and 1.4 million more adult natives with a only high school degree in the labor force. This decline in particularly troubling because these workers already have lower labor force participation and higher unemployment than more educated workers. They also tend to be the poorest Americans.
Among teenage natives (age 15 to 17), labor force participation has also declined. At the same time that natives have been leaving the labor market, the number of immigrants with a high school degree or less in the labor force increased by 1.6 million. Wage growth among less-educated adult natives has also lagged well behind more-educated workers.
The argument that America needs illegal aliens and high levels of legal immigration only makes sense if one ignores the plight of less-educated native-born Americans. We find little evidence that immigrants only do jobs natives dont want. Detailed analysis of 473 separate occupations shows that there are virtually no jobs in which a majority of workers are immigrants, let alone illegal aliens. The overwhelming majority of workers in almost every single occupation, even the lowest-paid, are native-born.
We find some direct evidence that immigration has adversely impacted natives. In areas of the country with the largest increase in the number of less-educated immigrant workers, less-educated natives have seen the biggest decline in labor force participation. Native unemployment also tended to be the highest in occupations with the largest influx of new immigrants. While it would be a mistake to assume that every job taken by an immigrant represents a job lost by a native, it would also be a mistake to think that dramatically increasing the number of less-educated immigrant workers has no impact on less-educated natives. This study calls into the question the wisdom of proposals to allow illegal immigrants to remain in the country, or to increase legal immigration still further. The plight of less-educated Americans has generally not been an important consideration for most political leaders in the ongoing debate over immigration. The findings of this report suggest that it should be.
1 See for example Andrew Sum et al. from Northeastern University, at www.nupr.neu.edu/7-04/immigrant_04.pdf .
2 The survey is considered such an accurate source of information on the foreign-born because, unlike the decennial census, each household in the CPS receives an in-person interview from a Census Bureau employee. The 213,000 persons in the Survey, almost 24,000 of whom are foreign born, are weighted to reflect the actual size of the total U.S. population. However, it must be remembered that some percentage of the foreign-born (especially illegal aliens) are missed by government surveys of this kind, thus the actual size of this population is almost certainly larger; of course this was also true in past years as well.
3 This includes naturalized American citizens, legal permanent residents (green card holders), illegal aliens, and people on long-term temporary visas such as students or guest workers, but not those born abroad of American parents or those born in outlying territories of the United States such as Puerto Rico.
4 To determine who are legal and illegal immigrants in the survey this report uses citizenship status, year of arrival in the United States, age, country of birth, educational attainment, sex, receipt of welfare programs, receipt of Social Security, veteran status, and marital status. We use these variables to assign probabilities to each respondent. Those individuals who have a cumulative probability of one or higher are assumed to be illegal aliens. The probabilities are assigned so that both the total number of illegal aliens and the characteristics of the illegal population closely match other research in the field, particularly the estimates developed by the Urban Institute and Pew Hispanic Center. This method is based on some well-established facts about the characteristics of the illegal population. For example, it is well-known that illegals are disproportionately young, male, unmarried, under age 40, and have few years of schooling, etc. Thus, we assign probabilities to these and other factors in order to select the likely illegal population. In some cases we assume that there is no probability that an individual is an illegal alien.
5 The INS report estimating seven million illegals in 2000 with an annual increase of about 500,000 can be found at www.immigration.gov/graphics/aboutus/statistics/Ill_Report_1211.pdf . The Census Bureau estimate of eight million illegals in 2000 report can be found at www.census.gov/dmd/www/ReportRec2.htm (Appendix A of Report 1 contains the estimates).
The Pew Hispanic Center has estimated 11.1 million illegals from the March 2005 CPS. This includes an adjustment for those missed by the survey. The Pew report can be found at www.pewhispanic.org/files/reports/46.pdf . The newest Pew estimates can be found at http://pewhispanic.org/reports/report.php?ReportID=61 . The Urban Institute has also calculated estimates by legal status. Urban estimates that in March of 2002, 8.3 million illegal aliens were counted in the CPS, with an additional one million being missed. Urbans estimates based on the March 2002 CPS can be found at http://www.urban.org/url.cfm?ID=1000587 Additional information was provided by Jeffery Passel, now at the Pew Hispanic Center, by telephone and in person interviews in 2004 through 2006. Dr. Passel is the lead author of both the Urban Institute and Pew studies.
6 A recent study by the Pew Hispanic Center estimated that 75 percent of illegal immigrants ages 25 to 64 have only a high school degree. Unfortunately, the Pew study does not provide educational statistics for illegals 18 to 64. Nonetheless Pews estimates are still similar to our estimates. The Pew report entitled “Unauthorized Migrants: Numbers and Characteristics” can be found at http://pewhispanic.org/files/reports/46.pdf .
7 For an overview of some of the research on mechanization and the potential negative impact of immigration see “Jobs Americans Wont Do: Voodoo Economics from the White House” at www.nationalreview.com/comment/krikorian200401070923.asp .
8 In 2005, there were 53.9 million children in households headed by natives. There were 6.4 million children in households headed by natives in which there was at least one adult (18 to 64) dropout working. There were an additional 19.3 million children in native households with at least one worker who had only a high school degree, excluding households with a dropout worker. These 25.7 million children accounted for almost 48 percent of all children in native households.
9 There were 5.9 million children in poverty who lived in a native-headed household in which at least one adult (18 to 64) person worked. Of these, 1.7 million children lived in a household with an adult dropout worker. In addition, 2.5 million mor