I. Overview

Hispanic workers enjoyed significant gains in employment in 2004. But the concentration of Latinos in relatively low-skill occupations contributed to reduced earnings for them for the second year in a row. No other major group of workers has suffered a two-year decline in wages. Recently arrived Hispanic immigrants were a leading source of new workers to the economy but also among the principal recipients of wage cuts in 2004. And while the economic recovery in 2004 added many new jobs for Latinos and non-Latinos alike, it did little to reduce the differences between them in their occupational distributions. Job growth for Hispanics and whites, the two largest groups of workers in the economy, occurred mostly in different occupational clusters and they appeared to be on separate paths in the labor market.¹

A Pew Hispanic Center analysis of the latest data from the Bureau of Labor Statistics and the Census Bureau finds that Hispanics maintained their role as a primary force of change in the labor market in 2004.² The demand for immigrant labor remains high and the economy created jobs for nearly one million more foreign-born Latinos. One result has been a rapid decline in the Hispanic unemployment rate in the past 18 months. A key source of new jobs for all workers in 2004 was the construction industry.³ The broader recovery in 2004 also saw the addition of significant numbers of workers in eating, drinking and lodging services, educational services, hospitals and other health services, and professional services.

The vast majority of new jobs for Hispanic workers were in relatively low-skill occupations calling for little other than a high school education. In contrast, non-Hispanic workers secured large increases in employment in higher-skill occupations requiring at least some college education. This polarization contributed to a growing gap in earnings between Hispanic and non-Hispanic workers. The fall in wages for Latinos was greatest among immigrants who arrived in the United States 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. Despite strong demand for immigrant workers, their growing supply and concentration in certain occupations suggests that the newest arrivals are competing with each other in the labor market to their own detriment.

Major findings of this report include:

•  Hispanic employment increased by 1 million workers, or by 6 percent, from the fourth quarter of 2003 to the fourth quarter of 2004. The number of unemployed Latinos fell by 48,000 workers.
• Latino gains were driven by immigrants who entered the country between 2000 and 2004. The employment of this group increased by 914,000 in 2004, and accounted for more than one-third of the total increase in employment in the economy last year.
• Non-Hispanic employment increased by 1.5 million, or by 1.2 percent, from the fourth quarter of 2003 to the fourth quarter of 2004. The ranks of unemployed non- Hispanics decreased by 461,000 in 2004.
• The unemployment rate for Hispanics has fallen by more than two percentage points since mid-2003 and is now closer to the unemployment rate for non-Hispanics than at any point since 2000.
• Eighty-one percent of new jobs for foreign-born Latinos and 76 percent of new jobs for native-born Latinos were in occupations requiring minimal formal education. In contrast, 64 percent of new jobs for native-born white workers were in occupations requiring a college degree or more.
• Hispanic immigrants and native-born workers tend to satisfy demands for different types of work. Foreign-born Latinos account for high shares of employment in several occupations, indicating especially high demand for them in certain lines of work. But occupations with very high concentrations of Latino immigrants, such as, plasterers and stucco masons and garment pressers, are not important sources of employment for native-born workers.
• Real weekly earnings for Hispanics declined by 2.2 percent in 2003 and by another 2.6 percent in 2004. Latinos are the only major group of workers whose wages have fallen for two consecutive years.
• Meanwhile, wages of non-Hispanic white and black workers increased in 2003 but declined by 1.8 percent and 1 percent respectively in 2004. Asian workers are the only group to have increased their earnings each of the past two years.
• Recently arrived Latino immigrants saw their wages fall by 2.6 percent in 2004. This was matched by recently arrived non-Hispanic immigrants whose earnings fell by the same amount in 2004.