Randall Parker, parapundit.com, Jun. 17
The Pew Hispanic Center has released a new report documenting how illegal aliens are taking a disproportionate fraction of new wages while wages decline at the low end. (PDF format) (full report avaiable here also PDF format)
WASHINGTON, D.C. — (June 16, 2004) — While an increase in Latino employment is driving the revitalization of the U.S. labor market, the hiring surge has not translated into higher wages. The weekly earnings for Hispanics and most other workers remain stagnant.
The “jobless recovery” may have turned around, but gains for Latinos have not been widespread. Immigrant Latinos, especially the most recent arrivals, have captured the most jobs. Non-citizens, Hispanics and others, who will not be able to vote in the November election are accounting for more than a quarter (28.5 percent) of the total increase in employment. But the improved employment picture has not delivered higher wages to workers overall and to Latinos in particular. The median weekly wage for Hispanics has declined in all but one of the past eight quarters. As a result, median wages for Latinos have also lost ground in comparison with the national median wage.
These are among the key findings of a new Pew Hispanic Center report, “Latino Labor Report, First Quarter 2004: Wage Growth Lags Gains in Employment.” The developments come at a time when jobs and wages are central issues in the presidential campaign. The report, which also deals with the political impact of the employment picture, includes an analysis of job gains by citizens and non-citizens, and a breakdown in the so-called battleground states.
In the 12 months ending March 31, the economy added a net total of 1.3 million new jobs. Non-citizens captured 378,496 or 28.5 percent of those jobs. Employment growth for non-citizens was twice as fast as their population growth nationwide. The proportion of new jobs captured by non-citizens was also much larger than their share of overall employment (8.6 percent). Thus the political impact of job gains may be dampened by the fact that non-citizens, who do not vote, are benefiting disproportionately from the turn around in the labor market.
The picture is somewhat different in the 18 so-called battleground states that have been the targets of intense advertising campaigns by both major political parties and that are generally considered up for grabs by the news media. These states have taken most of the job gains, scoring nearly 75 percent of the increase. In these states, non-citizens accounted for 20.1 percent of the employment increase, which is small than their share nationwide. Moreover, the non-citizen working-age population is growing faster in these states, 26.1 percent a year, than nationwide, and the job gains did not keep up with population growth.
What is going on here is really simple: employers prefer to hire people who will work for less. Newly arrived illegals will work for less than legal Hispanics and native born Americans. The illegals accept lower salary jobs and the wages go down for everyone they compete against. Harvard labor economist George Borjas has made a career out of trying to make all economists acknowledge the obvious: the demand curve for labor has a negative slope. As the quantity of a type of labor increases its price declines. See his paper “The Labor Demand Curve is Downward Sloping: Reexamining the Impact of Immigration on the Labor Market,” (PDF Format) for a scholarly treatment of the subject.
Getting back to the Pew report: Note that the absolute number of employed Hispanics has increased in the last year by more than the number of employed non-Hispanics. So most new jobs now go to Hispanics.
The number of employed Hispanics increased by 704,779 workers from the first quarter of 2003 to the first quarter of 2004. The number of unemployed Latinos fell by 18,590 works in contrast to an increase of 111,281 in the preceding year. Across the same time frame from 2003 to 2004, the number of employed non-Hispanics increased by 622,565 and the ranks of unemployed non-Hispanics decreased by 249,996.
Gains in Hispanic employment are driven by recently arrived immigrants with those entered the country since 2000 showing an increase of 748,305 jobs from the first quarter of 2003 to the first quarter of 2004. Meanwhile, immigrants who arrived previously as well as native-born Latinos showed net decreases in employment.
Real weekly earnings for Latino workers in the first quarter of 2004 were lower than their level in the first quarter of 2003. Wages were also stagnant or declining for Hispanic males and construction workers, but on the increase for Hispanic females and immigrant Latino workers.
The median, or midpoint, weekly earnings for Latinos dropped from $402 in the first quarter of 2003 to $395 during the same period this year, after adjusting for inflation. They lost ground when compared with African American and white workers.
A person earning about $20,000 a year is not paying much in taxes. If that person has even a single child then the cost of that child’s education per year is way more than the person pays in taxes. Add in subsidized medical care and other subsidies it is easy to see that the employers of the low salaried workers are getting labor subsidized by taxpayers.
That decline in wages translates into more demand for government services and less taxes paid to the government. The middle and upper classes have to pay more in taxes and get less in government services to pay for this trend in labor costs and the growth in the number of illegal Hispanics living in the United States.
George W. Bush is a big supporter of massive amounts of immigration and would like to give amnesty to illegals. So Bush is effectively a supporter of illegal immigration. The irony of this situation is that illegal immigrants, by driving down the wages of natives and out-competing them for jobs, may make the mood of the electorate sufficiently pessimistic about economic conditions to cost Bush reelection.
Haseeb Ahmed, an economist with Economy.com, studied labor-force trends from November 2001, when the recession ended, through February 2004. During that period, overall labor-force participation fell, compared with an increase in other recoveries dating back to 1970.
The drop in the labor force participation rate — the share of the adult population working or looking for a job — was about 0.8 percentage points for whites, compared with an average 0.7-point gain 27 months into other recoveries; 1.3 points for blacks, compared with a 0.5-point gain; and 1.8 points for Hispanics, compared with a 0.7-point gain.
Hispanic labor-force participation rates have been rising in recent months, one reason the unemployment rate is actually higher than in December. The African-American participation rate is about the same.
Note that the black labor force participation rate is not recovering. That is bad news for America.
The National Economic Development and Law Center and Dr. Carol Zabin, Dr. Arindrajit Dube, and Ken Jacobs of the Center for Labor Research and Education, UC Berkeley which documents how taxpayers essentially subsidize low wage jobs through various benefits that flow from higher income taxpayers to those who have low wages. The report is entitled The Hidden Public Costs of Low-Wage Jobs in California
Public assistance was concentrated among workers in several sectors. For instance, workers in the retail industry collectively received about $2 billion of public assistance, over twice the amount received by workers in any other sector.
Most of the public assistance that went to working families went to families with workers earning very low wages: $5.7 billion went to families whose workers had average wages of under $8 per hour. Another $1.9 billion went to those with wages between $8 and $10 per hour.
Most of the public assistance to working families went to families with full-time workers, dispelling the notion that part-time work largely accounts for the low earnings of poor working families. Seventy-six percent ($7.63 billion) went to single earner families with over 35 hours of work per week or dual earner families with over 70 hours of work per week. Moreover, 82 percent ($8.26 billion dol-lars) of public assistance benefits went to families with at least one full-time job (over 35 hours per week).
The simulation we conducted on wages predicts that a drop in public assistance payments from $10.1 billion to $7.4 billion (a $2.7 billion difference) would occur if the current group of public assistance recipients earned at least $8 per hour. Simply raising wages for these workers earning minimum wage and slightly above would help the working families and could potentially save billions of dollars in program expenditures.
The simulation we conducted on employer-provided health insurance predicts that, at current wage levels, public assistance payments would drop from $10.1 billion to $7.9 billion (a $2.2 billion difference) if the working families currently receiving assistance had access to affordable health insurance through their employers. When combined with employer-provided health insurance, pay-ments would fall to $5.4 billion with a wage floor of $8 per hour, $4.4 billion with a wage floor of $10 per hour, $3.7 billion with a wage floor of $12 per hour, and $3.2 billion with a wage floor of $14 per hour.
This report greatly underestimates the costs of low wage jobs because it leaves out subsidies such as education where the lower wage people get benefits for their families that they do not pay for through the taxes that they pay. The real problem with the “Open Borders” argument for unlimited immigration is that when it comes to low wage jobs price does not equal total costs.
So what are our “leaders” in Washington DC doing about this state of affairs? They are trying to make it worse. Powerful US Senators are determined to get the AgJobs immigration amnesty bill passed and they have lined up 62 Senate sponsors.
Senators Edward Kennedy (D-MA) and Larry Craig (R-ID) have vowed to enact an amnesty program for millions of illegal aliens, even if it means holding every other piece of Senate legislation hostage to accomplish it. The two senior legislators have promised to attach their Agricultural Jobs, Opportunity, Benefits and Security Act (AgJobs) to every Senate bill for the remainder of the year. Their first target is the Defense Authorization bill now being debated in the Senate.
Ted Kennedy is a member of the US political party that used to be in favor of higher wages for the lower classes. Now he and most other elected Democrats in Washington actively work to lower wages in the United States. This is madness.