August 17, 2004

National Data, By Edwin S. Rubenstein

Immigration Impact On American Dropouts, College Grads Increasing

In an earlier column [Immigration Now Impacting College-Educated Employment And Incomes, March 25, 2004] I reported that immigrants are over-represented at both the top and bottom of the educational spectrum, with relatively little in between. Odd result: the impact of immigrant wage competition falls disproportionately on American high school dropouts and college grads respectively.

Northeastern University’s recent study of immigrants in the U.S. labor force, which as I reported last week shows that immigrants are crowding Americans out of the job market, also presents fresh evidence for this immigrant impact on American wages.

Looking at just those immigrant workers that came to the U.S. since 2000, the Northeastern labor economists found:

Andrew Sum et al., " Foreign Immigration and the Labor Force of the U.S., July 2004"

This probably overstates the educational achievements of immigrants. Many are counted as high school graduates if they completed school in their country of origin—regardless of the local standards. And even college-educated immigrants may be at a disadvantage due to a lack of English proficiency. The Northeastern University study notes that, of the top twenty countries of origin, only two—Canada and England —recognize English as the official language. [Table 1.]

Language proficiency will likely be an increasing problem because Hispanics increasingly dominate the new (i.e., post-2000) group of immigrant workers. According to the Northeastern University study:

Mexico alone accounted for 1,040,000, or 37 percent, of all immigrant workers arriving since 2000. India was a distant second, with 140,000. [Table 1.]

Nearly three-quarters of all immigrant high school dropouts are Hispanics; only 8 percent are Asians. Among college-educated immigrants, the ratios are reversed: 45 percent are Asian, 16 percent are Hispanic. [See National Data of April 7, 2004.] In other words, Hispanic dropouts and Asian college grads increasingly dominate the foreign-born workforce.

What are the implications for native workers?

The rule of thumb is that a 10 percent increase in the labor supply diminishes the wages of  native-born workers by 3.5 percent. [See George Borjas, “The Labor Demand Curve Is Downward Sloping" May 2003]

Since 15 percent of the U.S. workforce is currently foreign-born, the average native-born worker today earns about 5.25 percent less due to the immigrant presence.

But this average is a statistical artifact that masks the divergence in immigrant impact on the American-born workforce:

The U.S. has one of the most unequal income distributions in the developed world. We are also massively importing foreign-born workers. These trends are not coincidental.

All this and racial polarization too.

[Number fans click here for tables.]