May 2, 2005

Latino Labor Report, 2004

III. Changes in Employment in 2004

Hispanics maintained their role as a primary force of change in the labor market as the economic recovery gathered momentum in 2004. Both Hispanics and non-Hispanics scored gains in 2004 as total employment increased by 2.5 million workers. In absolute terms, the increase in the number employed for non-Latinos was more than for Latinos, and the reduction in the number unemployed was also greater for non-Latinos in 2004. That is as expected since non- Hispanics outnumber Hispanics in the labor force by a margin of nearly seven-to-one. Surprisingly, it was the first time since 2000 that the absolute gain in employment for non- Hispanics has exceeded the absolute gain for Hispanics. Nonetheless, the pace of growth in Latino employment continues to be much faster and the fall in the unemployment rate was also greater among Hispanic workers.

The latest tabulations by the Pew Hispanic Center show large increases in the numbers of employed workers during 2004. As shown in Table 1, the improved conditions in the labor market in 2004 translated into jobs for an additional 1 million Hispanic workers between the fourth quarters of 2003 and 2004.7 This was an increase of 6 percent in the space of one year. The increase in Latino employment over the course of this period slightly exceeded the growth in the Latino labor force. Thus, in the year ending in the fourth quarter of 2004, the number of unemployed Hispanic workers decreased by 48,000 and the unemployment rate for Hispanics declined from 7.1 percent to 6.5 percent.

The employment gains for Hispanics were twice as high as the prior year’s increase of 518,000 (as measured from the fourth quarter of 2002 to the fourth quarter of 2003). But the decrease in the number unemployed was about the same—in the neighborhood of 50,000 workers—in both years. The Latino unemployment rate also fell by about 0.5 percentage points in both 2003 and 2004. Thus, in the past two years the Hispanic unemployment rate has fallen by over one percentage point—from 7.6 percent in the fourth quarter of 2002 to 6.5 percent in the fourth quarter of 2004. With consistent progress in unemployment and larger gains in the number employed one can conclude that the year ending in the fourth quarter of 2004 was a more successful year for Latino workers than the preceding year.

The turnaround in employment for non-Hispanic workers was also impressive. For these workers, employment increased by 1.5 million workers from the fourth quarter of 2003 to the fourth quarter of 2004. That is an increase of 1.2 percent over the previous year, compared to the 6 percent increase for Hispanics. The absolute change in employment in 2004 was nearly five times as high as the increase of 315,000 for the same period in 2002-2003. Unemployment among non-Hispanic workers also fell by 461,000 in the year ending in the fourth quarter of 2004, in sharp contrast to an increase of 217,000 in the previous year. After rising slightly in 2003, the unemployment rate for non-Hispanic workers fell in 2004, from 5.4 percent in the fourth quarter of 2003 to 5 percent in the fourth quarter of 2004.

Overall, the evidence shows that Hispanics continued to be the driving force for change in the labor market in 2004. Non-Hispanics, who outnumber Hispanics by a margin of seven-toone in the labor force, did secure a higher absolute gain in employment in 2004. That is notable only because in each year between 2000 and 2003 Latino gains in employment were greater than for non-Hispanics despite the fact that Hispanics make up only 13 percent of the labor force. But, in percentage terms, the growth in employment for Latinos was five times more than the growth in employment for non-Latinos in 2004. The unemployment rate is also falling faster for Latino workers. In the last two years the Hispanic unemployment rate has dropped by over one percentage point and has significantly reduced the gap with respect to the non-Hispanic unemployment rate.

  1. The choice of a quarter as the unit of time permits the gathering of a larger sample size as it brings together three months of data from the Current Population Survey. That is useful for the analysis of Hispanic workers by detailed characteristics. In comparison to monthly data, the choice of a quarter also dampens, even if it does not eliminate, the seasonal fluctuations that are an inevitable part of the behavior of most labor market variables.