The employment situation took a decided turn for the worse in 2007. The number of jobs added to the economy in 2007 was less than half the number added in 2006. With the labor force continuing to grow, nearly 1 million workers joined the ranks of the unemployed from the first quarter of 2007 to the first quarter of 2008.

The economic downturn harmed both Latino and non-Latino workers, although Latino workers are bearing relatively more of the pain. With job growth at a standstill, employment rates fell for both groups from the first quarter of 2007 to the first quarter of 2008. The decrease, however, was greater for Latino workers. At the same time, the unemployment rate increased more for Hispanics than for non-Hispanics.

The latest trends in the labor market represent a dramatic reversal for Latinos. For several years, the construction industry contributed substantially to job growth for Hispanic workers, especially for those who were immigrants (Kochhar, 2006 and Kochhar, 2007). The ongoing slump in construction erased those gains, virtually in their entirety, within the past year. Mexican immigrants are among the most severely affected and newly arrived immigrants face daunting prospects in the labor market.

Employment Growth Slows and Unemployment Rises

Job growth in the U.S. came to a near halt in 2007. From the first quarter of 2007 to the first quarter of 2008 employment in the U.S. increased by 685,000, or just 0.5% (Table 4). That compared with the addition of 2.4 million jobs in 2006, an increase of 1.7%. The percent of the working-age population that is employed, or the employment rate, fell from 62.6% in the first quarter of 2007 to 62.2% in the first quarter of 2008.

The slowdown in jobs growth affected both Latino and non-Latino workers. Non-Hispanics gained 356,000 new jobs in 2007, an increase of only 0.3%. Both figures were well below the previous year when non-Hispanic employment increased by 1.7 million, or 1.4%.

Employment growth for Latinos was cut in half in 2007. They gained 329,000 jobs between the first quarters of 2007 and 2008, an increase of 1.7%. That compared with 734,000 new jobs in the preceding one-year period, an increase of 3.9%. Consequently, the Latino employment rate fell to 63.3% in the first quarter of 2008, from 64.5% in the first quarter of 2007.

In 2007, more workers entered the labor force than were able to find jobs. As a result, large numbers of Latinos and non-Latinos are currently unemployed. Non-Hispanics added 536,000 workers to the unemployment rolls in 2007, an increase of 8.9%. Thus, their unemployment rate increased from 4.6% to 5.0%. That was a sharp turnaround from 2006, when unemployment fell by 278,000 for non-Latino workers and the unemployment rate dropped to 4.6% in the first quarter of 2007 from 4.9% in the first quarter of 2006.

Latino unemployment increased by 302,000 workers from the first quarter of 2007 to the first quarter of 2008. That represented a growth of 23.7% in the number of unemployed Latinos. Consequently, the Latino unemployment rate jumped—from 6.1% in the first quarter of 2007 to 7.3% in the first quarter of 2008.

Unemployment Rises Sharply for Foreign-Born Hispanics

The rising tide of Latino unemployment fell mostly upon the shoulders of immigrant workers. In 2007, there were 255,000 more unemployed foreign-born Hispanics, compared with just 47,000 newly unemployed native-born Latinos (Table 5). In contrast, immigrants secured few of the new jobs going to Hispanics, only 70,000 compared with 258,000 for the native born.

The unemployment rate for Latino immigrants leapfrogged the rate for native-born Latinos in 2007. From the first quarter of 2007 to the first quarter of 2008, the rate for foreign-born Latinos increased from 5.5% to 7.5%. That compared with an increase from 6.7% to 6.9% in the unemployment rate of native-born Latinos. This is the first time since 2003 that the percentage of unemployed foreign-born Latinos exceeded that of native-born Latinos.¹¹

The diverging fortunes of immigrant and native-born Latino workers are the result of the slump in construction. At the beginning of the period, in the first quarter of 2007, 21.0% of immigrant Latinos were employed in the construction industry. That compared with only 7.9% for native-born Latinos. Thus, as the construction downturn persisted through 2007, it had a more severe impact on the employment of foreign-born Hispanics.

Mexican Immigrants and New Arrivals Fare Poorly

Most of the rise in unemployment among foreign-born Latinos fell upon immigrants from Mexico. In part that is not surprising because Mexican immigrants account for nearly two-thirds of the foreign-born Latino workforce and they continued to stream into the labor force during the downturn (Table 3). But the burden that fell upon Mexican immigrants is striking in several regards.

For Mexican immigrants, unemployment increased by 233,000 from the first quarter of 2007 to the first quarter of 2008 (Table 6). That meant unemployment among Mexican immigrants, which was 391,000 in the first quarter of 2007, increased by 59.6% in 2007. These workers also accounted for 91.2% of the increase in unemployment for all foreign-born Latinos and 77.2% of the increase in unemployment for all Latinos. That is because Mexican-born workers were the principal source of growth in the foreign-born Latino labor force in 2007.

The misfortune of Mexican immigrants is also revealed in their unemployment rate. That increased from 5.5% in the first quarter of 2007 to 8.4% in the first quarter of 2008, a jump of 2.8 percentage points. Reflecting this, the employment rate for Mexican-born workers also dropped sharply—from 65.9% in the first quarter of 2007 to 63.8% in the first quarter of 2008.

Immigrants who arrived in 2000 or later face a much harder task finding and keeping jobs than they did over the past few years. In previous reports, the Pew Hispanic Center has documented the key role of the construction industry in absorbing newly arrived Latino immigrants (Kochhar, 2006 and Kochhar, 2007). The unemployment rate for immigrants who arrived in 2000 or later years now stands close to the double-digit mark, increasing from 7.1% in the first quarter of 2007 to 9.3% in the first quarter of 2008 (Table 7).

But the economic slowdown did not spare Latino immigrants who arrived in earlier periods. For example, the unemployment rate of immigrants who arrived between 1990 and 1999 rose from 5.4% in the first quarter of 2007 to 8.2% in the first quarter of 2008; for those who arrived between 1980 and 1990, it went up from 3.7% to 6.1%.