04/07/2004
In a recent column, I reported recent new evidence that immigration is now impacting the incomes of college graduates.
I also noted a "Disappearing Middle" in the education of immigrants. Increasingly, they are either high school dropouts or college grads. In 2002, for example, the proportion of all immigrant workers who were high school graduates was down to just two in five (40.8% — see table 1 below).
The race of immigrant educational haves and have-nots is strikingly different. While Hispanics and Asians account for, respectively, 45 percent and 25.5 percent of all foreign born workers:
Put differently, about half (47 percent) of all Hispanic immigrants in the labor force are dropouts. Just over a tenth (11.2 percent) are college grads.
For Asians the numbers are reversed: over half (54 percent) are college grads. Less than a tenth (9.3 percent) are dropouts.
If anything, the number of Hispanic immigrant dropouts is understated. Many are counted as high school graduates if they completed school in their country of origin — regardless of standard.
The good (much-trumpeted) news: Hispanic immigrants are more likely to find work or to be actively looking for work than dropouts of other ethnicities.
The labor force participation rate of immigrant Hispanic dropouts in 2002 was 66.7 percent. That’s nearly twice the labor force participation rate of white immigrant dropouts (35.4 percent) and substantially above that of Asian immigrant dropouts (46.2%).
The bad news: this exemplary work ethic diminishes the chance that Hispanic immigrants will ever get a High School degree or its equivalent. Moreover, the dropout ethos is being passed on to first- and second- generation Hispanics, whose dropout rates are sharply higher than that of their counterparts in other races. [See U.S. Department of Education, National Center For Education Statistics, "Status And Trends in the Education of Hispanics," April 2003, Supplemental Table 3.3b]
The bottom line for American workers:
Immigration is impacting the incomes of college graduates. But immigrant dropouts are still far more of a drag on the market.
Figures for 2002 show that immigrants account for about 40 percent of all dropouts, but just 14.5 percent of all college graduates. [See Table 2 below.]
Using the rule of (college-educated Hispanic immigrant George Borjas') thumb, each 10 percent increase in immigrant workers reduces native wages by about 3.5 percent. [See "The Labor Demand Curve Is Downward Sloping: Re-Examining The Impact of Immigration on the Labor Market"]
So the current immigrant influx translates to a 14 percent wage reduction for native-born American dropouts and a 4.9 percent wage reduction for native-born American college grads.
The widening income gap within the U.S. may not be caused by the rich getting richer. They are simply not getting poor as rapidly as dropouts.
But it is increasingly clear that immigration is costing all Americans something.
[Number fans click here for tables.]
Edwin S. Rubenstein is President of ESR Research Economic Consultants in Indianapolis.
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