March 25, 2004
Immigration Now Impacting
College-Educated Employment And Incomes
Why is this recovery different from all others? Answer:
not only is it
jobless, but college-educated workers are bearing a
disproportionate share of the brunt.
Amazingly,
there are currently more unemployed workers with college
degrees than there are unemployed
high school dropouts. The available data series
suggests this has never happened before. [See the
Economic Policy Institute’s recent monograph
“Unemployment level of college grads surpasses that of
high school dropouts”]
It’s trendy,
and apparently
politically permissible, to blame this carnage among
the college-educated on
outsourcing. But immigration is a far more important
cause. Foreigners represent a rapidly growing share of
the
total college-educated workforce—and a still larger
share of the
unemployed. [See
table.]
From 2000 to
2002, a period roughly equivalent to the recent
recession:
An
often-cited study by economic consultants
Forrester Research says that 3.3 million
white-collar jobs will be lost to offshore outsourcing
in the next 12 years. That comes to an average 275,000
jobs lost per year.
But, by comparison, the number of college-educated
immigrants in the U.S. labor force jumped by 546,000 in
2002 alone. This influx must inevitably displace
Americans in the short run, whatever its long-run
benefits. And it is accelerating.
In 2002 (the latest year of available data) 14.2 percent
of all college-educated workers in the U.S. were
immigrants. Some 39.9 percent of high school drop-outs
in the workforce were immigrants, but only 10.1 percent
of workers with a high school degree or some college.
One researcher calls this a case of the Disappearing
Middle – immigrants today tend to fall into either very
low or very high skill levels.
From 2000 to 2002, the number of immigrants in the
workforce with a
bachelor’s degree or better grew 19.4 percent. The
number of immigrant
high school dropouts grew 15 percent. The number of
intermediate immigrant workers with a high school degree
or some college grew only 11.4 percent. This once again
demonstrated the bipolar distribution of the current
immigrant flow.
Many
educated foreigners come here on student visas. Some 13
percent eventually obtain a “green
card,” the permanent–residence visa. Others stay
here illegally. The
H-1b program is another source of educated foreign
workers, mainly in the high-tech IT industry. Until
recently 195,000 H-1bs were admitted annually,
contributing to a glut in an industry that has more than
half a million un- or under-employed
programmers. The H-1b cap was last raised in
2000—just as the
high-tech bubble burst. U.S. employers are still
hiring H-1bs and firing
native techies.
But
unemployment figures alone do not capture the full pain
inflicted by immigrant workers. They also impact income.
Displaced natives may find work in other fields, but at
far lower pay levels. A recent
pathbreaking paper by George Borjas,
“The Labor Demand Curve Is Downward Sloping:
Re-Examining The Impact of Immigration On the Labor
Market.” confirmed what elementary economic
theory had long maintained: all other things being
equal, when you increase the supply of something, its
price will fall.
In
particular, Borjas found that immigration reduced the
wages of native-born college graduates by an average
of 4.9 percent. The impact was greatest on college
graduates with 11-15 years experience—i.e. most likely
to have young families—where it amounted to 5.9 percent
Borjas
findings’ are based on immigration inflows through the
year 2000. Today the foreign born share of the educated
workforce is about 20 percent higher…….and rising
without limit—at least if the
Bush Administration gets its way.
[Number fans click here
for tables.]
Edwin S. Rubenstein (email
him) is President of
ESR Research
Economic Consultants in Indianapolis.
