Bloomberg News

Immigrants With Right Skills Ride U.S. Hiring Wave: Economy

February 19, 2013

U.S. President Barack Obama

U.S. President Barack Obama said in his State of the Union address that "Our economy is stronger when we harness the talents and ingenuity of striving, hopeful immigrants." Photographer: Andrew Harrer/Bloomberg

The labor market is healing faster for immigrants than for U.S.-born workers as the growing economy favors those at the low and high ends of the pay scale.

Joblessness among those born outside the U.S. averaged 8.1 percent in 2012, down from 9.7 percent three years earlier, according to Labor Department data released to Bloomberg. In the same period, the rate among those born in the country fell to 8.1 percent from 9.2 percent.

Working immigrants, who are more likely than native-born Americans to either lack a high school diploma or to hold an advanced degree, have gained from a decades-long divergence in the labor market that has swelled demand for jobs paying above- and below-average wages. Amid this dynamic, the battle over comprehensive changes in immigration law is coming to the forefront in Congress.

Foreign-born workers “increase efficiency in the economy, and by increasing efficiency, they eliminate bottlenecks,” said Pia Orrenius, a senior economist at the Federal Reserve Bank of Dallas who has studied immigration. Their availability “lowers overall unemployment, and increases economic growth.”

From 2009 through 2012, the number of immigrants employed in the U.S. rose 6.5 percent to 23 million, compared with a 1 percent gain to 119.5 million for those born in the U.S., Labor Department data show.

Shares Climb

A strengthening economy, along with better than forecast corporate earnings and improving global growth, sent U.S. stocks higher. The Standard & Poor’s 500 Index climbed 0.4 percent to 1,525.84 at 10:22 a.m. in New York. The gauge has been up for seven consecutive weeks, leaving it near its highest level since October 2007.

In a sign Europe’s largest economy is rebounding, a report showed German investor confidence jumped more than economists forecast in February to the highest in almost three years.

The data from the U.S. Labor Department also showed immigrants experienced job growth in 13 of 14 occupational categories tracked, according to data compiled by Bloomberg. U.S-born workers saw growth in nine.

Underlying those figures, immigrants’ gains during the past three years were concentrated in low- and high-paying categories that range from health care to management. Only in manufacturing did those born in the U.S. see bigger gains than their foreign counterparts.

Losing Out

The increases mirror a pattern that has developed in the labor market independent of birth status: middle-income workers are losing out as low-wage jobs, such as landscaping and food preparation, and high-wage positions, such as dentistry and engineering, show outsized increases. Middle-wage jobs include work in office administration and factory production.

Economists including Daron Acemoglu and David Autor, both at the Massachusetts Institute of Technology in Cambridge, have attributed this job polarization to the loss of positions that require repetitive tasks and can be replaced by technology.

The skillsets immigrants bring to the country help them fit into the available work opportunities. About 24 percent of employed foreigners over the age of 25 did not have a high school diploma in 2012, compared with 4.6 percent of American- born workers, according to the Labor Department. At the other extreme, 14.1 percent of working immigrants held an advanced degree, higher than the 13.5 percent of U.S.-born employees.

“Immigrants basically go to industries that are growing and help them grow faster,” Alex Nowrasteh, an immigration policy analyst at the Cato Institute in Washington, said in an interview. They “grease the wheels of the labor market and the economy by moving specifically to areas where there is demand for a particular set of skills at a particular place and time.”

Detrimental Effects

There are, of course, experts who argue otherwise. Michael Teitelbaum, vice chairman of the U.S. Commission on Immigration Reform from 1991 to 1997 and now a fellow at Harvard University Law School in Cambridge, Massachusetts, said in Feb. 5 testimony before Congress that an influx of less-skilled workers is detrimental.

His commission, charged by Congress with investigating how immigration affects the labor market, found that guest workers in areas such as agriculture are vulnerable to exploitation and their presence depresses wages and offers employers little incentive to improve working conditions. At the same time, his commission found that allowing the high skilled into the country contributes to global competitiveness.

Immigration Debate

Lawmakers in Washington are debating whether to tap this resource as the foreign born, particularly Hispanics, make up a bigger share of the electorate. Four Democratic and four Republican senators released last month a framework for the most comprehensive changes to immigration law in almost three decades.

Their proposal, yet to be drafted into legislation, calls for a path to citizenship for the nation’s 11 million undocumented immigrants, tougher border security and stronger prohibitions against racial profiling. It also seeks ways to more efficiently attract and retain immigrants who hold advanced degrees, especially in science, technology, engineering and math.

President Barack Obama has called for a bill to be prepared in the next few months.

“Our economy is stronger when we harness the talents and ingenuity of striving, hopeful immigrants,” Obama said during his State of the Union address on Feb. 12. “Right now, leaders from the business, labor, law enforcement, faith communities, they all agree that the time has come to pass comprehensive immigration reform.”

High-Skilled Immigrant

Carola van Eck is among the beneficiaries of rising demand for high-skilled workers. She came to the U.S. in 2008 to work on her doctorate through a University of Amsterdam/University of Pittsburgh joint venture. Though the 28-year-old said that she intended to return home to the Netherlands, the draw of a job as a resident in Orthopedic Surgery at the University of Pittsburgh Medical Center prompted her to stay.

“I really like the work ethic in the U.S.,” van Eck said. “In my country you’re always told to not be better than the boss. Here, you get rewarded for your accomplishments, which motivates you to work harder.”

Miner Dedios typifies those on the other end of the income scale, where immigrants are finding their footing as the world’s largest economy improves.

Dedios, 64, moved to the U.S. in 2010 from the Philippines, intending to work as a firefighter, a middle-wage career. Unable to land a job in rescue work, he now sorts donations for Goodwill Industries International Inc. in Seattle.

Filling ‘Gaps’

“Sometimes, native-born people are not interested in certain jobs at the current wage levels,” said Audrey Singer, a senior fellow at the Brookings Institution in Washington who tracks international migration and policy. Immigrants “fill in some of the gaps.”

The foreign-born’s job prospects may continue to brighten. Immigrants make up a larger share of the most rapidly growing occupations, Singer found in research released last year. Among the 15 fields projected by the Labor Department to grow the most from 2010 to 2020, seven had a share of immigrants that was higher than immigrants’ total share of the labor force. These included iron workers, translators and home-health aides.

Lawmakers should keep such developments in mind when setting policy, Singer said.

“What we haven’t really achieved in our system after decades of thinking about this is how to adjust the admissions policy to better suit our economic needs in something closer to real time,” she said. “That is going to be part of the discussion in the next couple of months. Do we make changes based on some market demand, and how do we measure that? Do we set out knowing what we want and then adjust our policies?”

To contact the reporter on this story: Alex Kowalski in Washington at akowalski13@bloomberg.net;

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net


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