May 2, 2005

Latino Labor Report, 2004

IX. Conclusions

Employment growth, which first showed signs of recovery in 2003, maintained its momentum in 2004 as the economy added 2.5 million new jobs. Hispanic workers secured 1 million of the new jobs while the remainder went to non-Hispanic workers. Almost all of the increase in Hispanic employment was accounted for by newly arrived immigrants. The demand for immigrant workers remains strong and foreign-born Latinos, by accounting for over one-third of the total increase in employment, continue to extend their presence in the labor market. The economic recovery in 2004 was relatively widespread and several industries contributed significantly to employment increases. The most notable industries are construction, professional and other business services, eating, drinking and lodging services, and hospitals and other health services. These industries hired significant numbers of both foreign-born and native-born workers in 2004.

While the foreign-born and native-born and Latino and non-Latino workers tended to gain or lose jobs in the same industries, these workers appeared to be on different paths in the labor market in some key respects. Hispanics, in general, and Latino immigrants, in particular, are concentrated in jobs with minimal training and education requirements. More than 80 percent of foreign-born Latinos and nearly two-thirds of native-born Hispanics work in such occupations. The employment trends in 2004 fueled this concentration as almost all jobs gained by foreign-born Latinos were also centered on those occupations. In contrast, nearly one-half of new jobs for native-born workers, and almost two-thirds of new jobs for native-born white workers, were in occupations at the highest rungs of training and education requirements. Thus, job growth for Hispanics and whites, the two largest groups of workers in the economy, appeared to fulfill different needs in the labor market in 2004.

Recent economic growth, however, has not led to wage growth. For Hispanic workers, 2004 marked the second consecutive year of decline in wages and their earnings continue to fall relative to the earnings of other workers. The fall in wages for Latinos was led by immigrants who arrived in the U.S. in the past five years. Thus, the new immigrants who are enjoying significant growth in employment are doing so at the expense of lower wages. This trend is, no doubt, exacerbated by their concentration in occupations calling for minimal skills and education. The fact that employers have been able to add to their payrolls without bidding up wages also indicates that some slack lingers in the labor market. In conclusion, recent economic growth has been characterized by three features: high demand for immigrant workers, low wage growth, and segmentation in the labor market. Whether this is the temporary nature of the economic recovery or a long-term trend remains to be seen.

The Effect of January 2004 Revisions in the Current Population Survey

In January 2004, the U.S. Census Bureau made a downward adjustment to the population controls in the Current Population Survey. This adjustment was based on revised estimates of net international migration from 2000 to 2003. According to a note released by the BLS (“Adjustments to Household Survey Population Estimates in January 2004”), the cumulative effect of this adjustment was to reduce the estimate of the Hispanic working-age population by 583,000, the Hispanic labor force by 446,000 and the number of employed Hispanics by 421,000. The BLS has also published a methodology that can be used to estimate the effects of the January 2004 revisions on previously published data series for the intervening months in the 2000 to 2003 time period (see “Creating Comparability in CPS Employment Series,” by Marisa L. Di Natale). That methodology was applied to make revisions to estimates of the Hispanic population, labor force and employment in 2003 and earlier years. The latest revisions to the CPS population controls are based on revised estimates of net international migration. In principle, that means some of the revision could be attributed to emigration by second and third generation Hispanics. However, that effect is assumed to be negligible in the current analysis and the full extent of the CPS revision was assumed to apply to first-generation Hispanics arriving in the U.S. since 2000, all of whom are assumed to be noncitizens. Previously computed distributions of the Hispanic first generation by education, age, industry, occupation, etc. were then utilized to distribute the total change in the Hispanic population along these dimensions.

The January 2004 revisions also affected estimates of the non-Hispanic population. However, those revisions were very small in proportion to the working-age population of non- Hispanics and were ignored for the purposes of this paper.