October 29, 2010

After the Great Recession: Foreign Born Gain Jobs; Native Born Lose Jobs

I. Overview

In the year following the official end of the Great Recession in June 2009,1 foreign-born workers gained 656,000 jobs while native-born workers lost 1.2 million, according to a new analysis of U.S. Census Bureau and Department of Labor data by the Pew Hispanic Center, a project of the Pew Research Center.2

As a result, the unemployment rate for immigrant workers fell 0.6 percentage points during this period (from 9.3% to 8.7%), while for native-born workers it rose 0.5 percentage points (from 9.2% to 9.7%).3

The 2009-2010 recovery for immigrants, who make up 15.7% of the labor force, is also reflected in two other key labor market indicators. A greater share of their working-age population (ages 16 and older) is active in the labor market, evidenced by an increase in the labor force participation rate from 68.0% in the second quarter of 2009 to 68.2% in the second quarter of 2010. Likewise, a greater share is employed, with the employment rate up from 61.7% to 62.3%.

These gains occurred at a time when native-born workers sustained ongoing losses. The native born engaged less in the labor market (labor force participation rate fell from 65.3% in the second quarter of 2009 to 64.5% in the second quarter of 2010), and a smaller share was employed (58.3% versus 59.3%).

But the jobs recovery for immigrants is far from complete. The 656,000 jobs immigrants gained in the first year of the recovery are not nearly sufficient to make up for the 1.1 million jobs they lost from the second quarter of 2008 to the second quarter of 2009. Over the two-year period from 2008 to 2010, second quarter to second quarter, foreign-born workers have lost 400,000 jobs and native-born workers have lost 5.7 million jobs.4 The unemployment rate for immigrants is still more than double the rate prior to the recession, when it stood at 4.0% in the second quarter of 2007.

Also, even as immigrants have managed to gain jobs in the recovery, they have experienced a sharp decline in earnings. From 2009 to 2010, the median weekly earnings of foreign-born workers decreased 4.5%, compared with a loss of less than one percent for native-born workers. Latino immigrants experienced the largest drop in wages of all.5 It might be that in the search for jobs in the recovery, immigrants were more accepting of lower wages and reduced hours because many, especially unauthorized immigrants, are not eligible for unemployment benefits.6

The reasons that only foreign-born workers have gained jobs in the recovery are not entirely clear. One factor might be greater flexibility on the part of immigrants. Research suggests that immigrants are more mobile than native-born workers, moving more fluidly across regions, industries and occupations (Orrenius and Zavodny, 2009, Borjas, 2001). But the flip side of flexibility can be instability. Unpublished research by the Pew Hispanic Center finds that immigrants are more likely to exit from and enter into employment on a month-to-month basis.

Another reason that immigrants are displaying greater success at the start of the recovery might simply be that their employment patterns are more volatile over the business cycle. This means that immigrants register sharper losses in the early stages of recessions but rebound quicker in the recovery. That pattern played out in the 2001 recession and recovery,7 and it may be repeating now—there is evidence that immigrants took a harder hit than native-born workers during the Great Recession.8 Whether or not the initial lead in jobs recovery taken by immigrants sustains itself remains to be seen, given the tenuous nature of the overall rebound from the Great Recession.

Demographic changes, both short term and long term, might also be a factor in determining employment trends in the recovery. The ebb and flow of immigration is sensitive to the business cycle, with economic expansions tending to boost inflows. A September 2010 report from the Pew Hispanic Center (Passel and Cohn, 2010) estimated that, coincidental with the economic downturn, the number of unauthorized immigrants in the U.S. labor force fell from 8.4 million in March 2007 to 7.8 million in March 2009.9 It appears that the economic recovery, young as it is, is attracting immigrant workers back into the U.S.

Longer-term demographic trends might also be reasserting themselves during the recovery. The immigrant share of the U.S. labor force has been on the rise for several decades, especially since 1990. Some 15.7% of the labor force today is foreign born, up from 9.7% in 1995.10 Because the foreign-born labor force has been growing faster than the native-born labor force, immigrant employment has tended to rise faster than native-born employment. The pattern during the current recovery is consistent with the long-run demographic trend—from the second quarter of 2009 to the second quarter of 2010, the number of immigrants in the labor force increased by 566,000, while the native-born labor force decreased by 633,000.

This report analyzes labor market outcomes in recent years not just by nativity, but also for racial and ethnic groups, including Hispanics, whites, blacks and Asians.11 The primary focus is on the period from the second quarter of 2008 to the second quarter of 2009, when most of the job losses during the Great Recession occurred, and the period from the second quarter of 2009 to the second quarter of 2010, the first year of recovery from the recession. Previous reports by the Center have analyzed outcomes for Latinos and immigrants at the beginning of the Great Recession and the period leading up to the recession (Kochhar, June 2008, December 2008, 2009).

Labor markets trends from the second quarter of 2009 to the second quarter of 2010 are partly affected by the hiring of Census 2010 temporary workers. Employment of those workers peaked in May 2010 and decreased sharply thereafter. Because the U.S. government hires only U.S. citizens, the hiring of Census workers would have tilted to the native born—only 43% of immigrants in the labor force in the second quarter of 2010 were U.S. citizens. Absent Census 2010 hiring, the difference between the jobs gained by immigrants and the jobs lost by the native born would most likely have been greater.

The data for this report are derived from the Current Population Survey (CPS), a monthly survey of about 55,000 households conducted jointly by the Bureau of Labor Statistics (BLS) and the Census Bureau. Data from three monthly surveys were combined to create larger sample sizes and to conduct the analysis on a quarterly basis. The universe for the analysis is the civilian, non-institutional population ages 16 and older.

Estimates in this report are adjusted for annual, technical revisions to the CPS and will not match estimates published by the BLS (see Appendix A for details). Employment estimates in this report, from the survey of households, will also not match the payroll estimates of employment published by the BLS from its surveys of employers. Payroll data cannot be used in this report because, except for gender, they do not record the demographic characteristics of workers.

Because immigration status is not recorded in the source data, this report is not able to identify immigrants in the labor force by whether or not they are unauthorized. However, other reports from the Pew Hispanic Center have reported on the labor force status of unauthorized immigrants. As of March 2009, there were 7.8 million unauthorized immigrants in the labor force, accounting for about one-third of the foreign-born labor force (Passel and Cohn, 2010). Also, the report does not address the question of whether native-born workers would fare differently in the job market absent the growth in the foreign-born labor force. This issue is the subject of research by many economists, including Ottaviano and Peri (2008), Card (2005) and Borjas (2003).

Working-Age Population, or the Workforce: The population of persons ages 16 and older.

Labor Force: Persons ages 16 and older who are employed or actively looking for work.

Employment Rate: Percentage of the working-age population that is employed.

Labor Force Participation Rate: Percentage of the working-age population that is employed or actively looking for work.

Unemployment Rate: Percentage of the labor force that is without work and is actively looking for work.

Labor market outcomes are tracked using a variety of indicators. Economic trends are reflected in levels of employment and unemployment, and in the rates of employment and unemployment. The extent to which persons ages 16 and older participate in the labor force, either working or seeking work, is also influenced by economic conditions—people are drawn into the labor market during expansions, and they withdraw during recessions. Changes in these indicators are the key to understanding the impact of the business cycle on different racial and ethnic groups.

Other main findings of this report include:

Foreign born and native born

Hispanics

Whites

Blacks

Asians

Industries

Wages

The next section of this report describes employment and unemployment trends during the last year of the Great Recession, from the second quarter of 2008 to the second quarter of 2009, and the first year of the economic recovery, from the second quarter of 2009 to the second quarter of 2010. Trends in employment are discussed in the aggregate, by nativity, by racial and ethnic group, and by industry. The subsequent section analyzes recent trends in the working-age population and labor force, principal demographic forces that determine labor supply. The concluding section reports on changes in the earnings of workers in the recession and the recovery. Methodological details and supplementary data tables are presented in the appendices.

  1. In a statement issued Sept. 20, 2010, the National Bureau of Economic Research (NBER), the nation’s arbiter of business cycle dates, declared the recession ended in June 2009.
  2. These estimates reflect changes from the second quarter of 2009 to the second quarter of 2010. Unless otherwise mentioned, estimates in this report are nonseasonally adjusted. Thus, all comparisons across time are made with reference to the same calendar quarter. Also, the estimates in this report are derived from a survey of households, namely, the Current Population Survey, and will differ from payroll estimates reported by the Bureau of Labor Statistics from a survey of employers.
  3. The terms “foreign born” and “immigrant” are used interchangeably in this report.
  4. A recent report from the Migration Policy Institute (Papademetriou, Sumption, Terrazas, Burkert, Loyal and Ferrero-Turrión, 2010) examines the experiences of migrant workers in several countries, including the U.S., during the Great Recession.
  5. The terms “Latino” and “Hispanic” are used interchangeably in this report.
  6. Economic research demonstrates that unemployment insurance can affect the intensity of job search, although the magnitude of the effect is a subject of debate (for a recent example, see Krueger and Mueller, 2008).
  7. See Orrenius and Zavodny (2009). Immigrant employment is more volatile because of their relative youth, lack of education and concentration in industries and occupations that are cyclically sensitive
  8. The labor market experience of immigrants and minorities in the early stages of the Great Recession was the focus of an earlier report by the Center (Kochhar, 2009).
  9. Unauthorized workers accounted for 5.1% of the labor force in March 2009, compared with 5.5% in March 2007.
  10. The estimate of the current share is for the second quarter of 2010. The share for 1995 is an annual estimate. The nativity of workers was recorded on a regular basis in the Current Population Survey, the source data, starting in 1995.
  11. All references to whites, blacks and Asians are to their non-Hispanic components.