June 16, 2004

Latino Labor Report, First Quarter 2004

Wage Growth Lags Gains in Employment

Entering the first quarter of 2004, Latino employment gains started to outpace the growth in the Hispanic population and labor force for the first time since January 2000. The turnaround in labor market indicators for Latinos can be traced to the middle of 2003, and those gains have now been sustained for nearly a year. Demand for Latino workers, especially recently arrived immigrants, is driving the revitalization of the U.S. labor market, but the hiring surge has not translated into wage growth. Weekly earnings for Hispanics and most other workers remain stagnant and the median weekly wage for Hispanics is shown to have declined in all but one of the past eight quarters. As a result, median wages for Latinos have not only slipped backwards in recent years on an absolute basis but also in comparison to the national median wage.

Non-Hispanic workers also fared well in job growth in the past year, replicating the successes experienced by Latinos. However, while clearly beneficial, the hiring boost has not been sufficiently large to return key labor market indicators, such as the unemployment rate, to the levels they enjoyed prior to the 2001 recession. The unemployment rate for U.S.-born Hispanics, particularly for the fast-growing second generation, remains high and shows no indication of dropping. There is still slack in the labor market, as a large number of Latino workers are apparently choosing to wait on the fringes for more positive developments before returning to actively seek work. Indeed, enough such workers reentered the labor market in the first quarter of 2004 to cause the Latino unemployment rate to increase despite the large gains in employment.

At a time when the jobs picture is considered a potentially critical element in the 2004 presidential campaign, non-citizens– Hispanics and other immigrant groups — who will have no vote in the November election are accounting for more than a quarter (28.5 percent) of the total increase in employment. A comparison of the first quarter of 2003 to the first quarter of 2004 shows that the economy added a net total of 1.3 million new jobs. Non-citizens captured 378,496 or 28.5 percent of those jobs. That rate of employment gains was double the rate at which the share of non-citizens in the working-age population increased (14.3 percent). In other words, employment for non-citizens grew twice as quickly 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 lessened by the fact that non-citizens are benefiting disproportionately from the turnaround in the labor market.