June 4, 2008

Latino Labor Report, 2008: Construction Reverses Job Growth for Latinos

II. Introduction

The U.S. economy has witnessed its share of ups and downs this decade. Following the 2001 recession, an extended economic slowdown and rising unemployment rates occurred through the middle of 2003. The recession and subsequent period of anemic growth affected Hispanic and non-Hispanic workers alike, as both groups suffered comparable declines in major labor market indicators.3

An economic recovery started in mid-2003 with the booming housing industry playing a key part. Hispanic workers, who account for about one-fourth of construction industry employment, were among the greatest beneficiaries. Their unemployment rate plunged during the economic recovery and reached an historic low by the end of 2006. Moreover, the gap in the unemployment rate between Hispanics and non-Hispanics also reached an historic low—only 0.5 percentage points.4

The economy reversed course again in 2007. Higher interest rates, dramatic drops in home prices, rapid growth in foreclosures and sharp declines in new home building were among the leading causes of the decline in economic growth rates. These developments have affected Hispanic workers more than non-Hispanic workers. From an historic low in late 2006, the unemployment rate for Latinos rose sharply in 2007 and again stands well above the rate for non-Latinos.

Foreign-born Hispanics, especially Mexican immigrants and recent arrivals, have been hurt the most by the slump in the construction industry. These workers had benefited greatly from the housing boom (Kochhar, 2007) but are now seeing most of those gains evaporate. In addition to the lost jobs, weekly earnings for most Hispanic workers, especially construction workers, slipped backward in 2007.

This report focuses on changes in employment and wages by ethnicity and nativity, principally between the first quarter of 2007 and the first quarter of 2008. The report first examines trends in major labor market indicators since 2000. It then turns to changes in the working-age population and labor force—two key demographic indicators—in 2007. Changes in employment, unemployment and outcomes for Hispanic men and women in 2007 are the focus of subsequent sections. A final section presents evidence on wage trends in recent years.

The report does not distinguish Latino workers by immigration status. For more information on unauthorized workers in the U.S. labor market, see Passel (2006). The report also does not examine job displacement or the relationship between immigration and wages of native-born workers.

  1. See Kochhar (2003) for an analysis of the Hispanic experience in the 2001 recession and subsequent economic slowdown.
  2. Employment data on Hispanics first became available in 1973