Immigration and the Job Recovery


There is an interesting dynamic occurring as we come out of the recession.

And the lesson should be used to illustrate how we shape our economic policies going forward.

The story is the story of two recoveries:

1.  The recovery for native-born workers.

2.  The recovery for foreign-born workers.

A recent Pew Hispanic Center report shows that in the year following the end of the Great Recession, foreign-born workers have fared better in the work place:

In the year following the official end of the Great Recession in June 2009, foreign-born workers gained 656,000 jobs while native-born workers lost 1.2 million, according to a new analysis of U.S. Census Bureau and Department of Labor data by the Pew Hispanic Center.

As a result, the unemployment rate for immigrant workers fell 0.6 percentage points during this period (from 9.3% to 8.7%) while for native-born workers it rose 0.5 percentage points (from 9.2% to 9.7%).

An interesting note is that this employment picture is true independent of nationality:

Hispanics experienced more significant setbacks in the recession than other groups. For native-born Hispanics, the recovery continued to generate losses that were greater than average. However, immigrant Hispanics, who account for half of the foreign-born workforce, made notable gains in employment from 2009 to 2010.

That is, if you are a native-born Hispanic you continued to suffer.  But if you are a foreign-born Hispanic, you are doing well.

Why would this be?

I think we are seeing this phenomena because the labor market is more free between employers and non-US citizens.  There s more freedom to negotiate compensation.

The citizen is forced to go into a job interview knowing that the government regulations placed upon a job may already raise the “cost of employment” above the productivity that worker can deliver.  And when THAT happens, he desn’t get the job.

Proof?

The weekly earnings of workers during the recession and the initial stage of the recovery were generally stagnant.  However, foreign-born workers experienced a sharp decline in earnings during the recovery even as they managed to boost their employment.

Though they were able to get more jobs, they had to sacrifice compensation to do so.  Something that is not available to the US citizen due to government regulations.

Fascinating.

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