Moviendose on up

Every now and then, it behooves us to stop listening to the shouting heads on television and look at some numbers. A new study by the Pew Hispanic Center shows that Latino immigrants are moving up the economic ladder, out of low-wage jobs and into middle-wage employment.

The survey uses the hourly wage distribution in the US to examine relative income, dividing the distribution into five groups: low, low-middle, middle, high-middle, and high (bonus points for creativity!). Demographic group data comparisons from 1995 and 2005 provide the basis for inference about economic mobility. Both documented and undocumented workers are included.

Foreign-born workers, who make up 15% of the US labor force, are more likely to be low earners than high earners. However, the good news is that there is evidence of progress. Latino immigrants comprised 42 percent of low wage (< $8.50) earners in 1995, but only 36 percent in 2005. There has been huge absolute growth in the number of Latinos at the lower end of the wage distribution, but it was less than what foreign-born Latino population growth (i.e. immigration) would predict. In other words, new immigrants are doing better now than they were in 1995, making Latino immigrants as a demographic relatively better off. The study notes that recent Latino immigrants are older, more highly educated, and less likely to be employed in agriculture than preceding cohorts, which may account for this trend. Also noteworthy are higher incidences of entrepreneurship, which results in rapid movement through the wage scale. Interestingly, the most upwardly-mobile subgroup was Mexicans and Central Americans, with South Americans and Caribbean Islanders remaining fairly stable over the 10-year period.

In summary, Latinos are improving their position in the US wage distribution principally in two ways: by remaining in the US and working (the longer the time spent in the US labor market, the greater the likelihood of being in the higher-earning brackets), and by entering at higher points in the distribution upon arrival. The study credits the construction boom with this second point. Construction pays much more than agriculture, and when that industry boomed, it created a huge demand for workers in the middle-earning range, which was amply met by immigration. This could be problematic as rising interest rates and slacking construction decrease labor demand in the sector over the next several years.

Asian immigrants were also examined, and they too are doing well. The number of Asian immigrants in the high-wage bracket almost tripled, reaching 1.2 million in 2005.

The demographics of the native-born workers should surprise few. Native-born Latinos (like their immigrant counterparts) are more likely to be low wage-earners, as are native-born blacks. Native-born Asians (like their immigrant counterparts) are more likely to be high wage-earners, as are native-born whites. Significantly, the study reports "little to no change in the position of native-born groups in the wage distribution". So much for the zero-sum game.

It's worth mentioning here that, despite much research into the relationship between immigration and wages of native-born workers, there is not yet a consensus. Some studies conclude that immigration harms native-born workers' wages, others find no effect, yet more find a positive effect. It's a really tricky issue and we may not have the data to adequately examine it yet. One thing that is pretty solid, though, is that wages for high-school drop-outs have been pretty stagnant whilst other education groups' wages have risen. So listen to Mr. T, kids: don't be a fool--stay in school.