WASHINGTON — Immigrants surpassed native-born workers in several key labor market outcomes from the mid-1990s through 2007, recording higher employment and lower jobless rates — but the trend was reversed with the onset of the current recession, according to a report released today by the Migration Policy Institute (MPI).
The report, Tied to the Business Cycle: How Immigrants Fare in Good and Bad Economic Times, analyzes employment and unemployment patterns over the past 15 years and two recessions, showing that immigrant economic outcomes began deteriorating before the current recession officially began in December 2007.
The authors, Federal Reserve Bank of Dallas Senior Economist Pia Orrenius and Agnes Scott College Economics Professor Madeline Zavodny, trace immigrants' declining fortunes largely to the housing bust which began in spring 2006. As residential construction employment slumped, the immigrant unemployment rate began rising toward the end of 2006, and immigrants since have recorded higher unemployment rates and bigger declines in employment than native-born workers. The analysis tracks MPI's own research, dating back to January, into how the recession has affected immigrants here and around the globe.
"Despite the longer-term trend of rising employment and falling unemployment rates for foreign-born workers, the current recession offers new evidence that economic outcomes for immigrants in the short run are more strongly tied to the business cycle than for natives," Ms. Orrenius said.
The report offers a number of possible explanations for why labor market outcomes for immigrants, who represent more than 15 percent of the workforce, are more cyclical. Among them: Immigrants are overrepresented in less-educated groups that have experienced the greatest job losses; and are more likely to work in cyclical occupations and sectors that suffer the largest job losses during downturns, such as construction and manufacturing.
Other key findings:
"These findings offer further evidence that policymakers should consider creating a more flexible immigration system that would allow employment-based immigration flows to track the economy more closely, rising in times of expansion and falling during recessions," said MPI President Demetrios Papademetriou.
MPI has recommended creation of a permanent, independent executive-branch agency that would make regular recommendations to the president and Congress for adjusting employment-based immigration levels. The Standing Commission on Labor Markets, Economic Competitiveness and Immigration — staffed by a professional corps of career economists, demographers and social scientists — would provide evidence-based and impartial analysis of labor market immigration circumstances and needs.
The report also notes that the poverty rate is higher among immigrants than natives. In 2008, the most recent year for which poverty data are available, 19.9 percent of people in immigrant-headed households lived in poverty, compared to 12.1 percent of those in native-headed households. Given the drop in employment rates, poverty likely became even more prevalent for both immigrant and native families in 2009.
"The report suggests a policy question for legislators: Whether to assist low-income immigrant families during the downturn," said MPI Senior Vice President Michael Fix. "Many legal immigrant families are ineligible for government assistance such as food stamps and cash welfare because of their relatively recent arrival in the United States."
This research is done under the auspices of MPI's Labor Markets Initiative, which is conducting a comprehensive, policy-focused review of the role of immigration in the labor market. The Initiative's next report, examining the role of illegal immigration in the labor market, will be released at an MPI event at 9:30 a.m. EST on December 2nd, 2009. For event details, visit www.migrationpolicy.org.
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The Migration Policy Institute is an independent, non-partisan, non-profit think tank in Washington, DC dedicated to analysis of the movement of people worldwide. MPI provides analysis, development and evaluation of migration and refugee policies at the local, national and international levels.