Another look at immigrant workers and declining labor force participation

The bumper sticker to this posting is that among several factors causing relatively fewer Americans to be employed or look for work, one of them is higher numbers of illegal workers. And one of the factors buried in the statistics of incremental decline in labor force rates is a positive one: not working in order to invest in education. Many young Americans continue to arrive at adulthood poorly educated, and they are vulnerable regardless of the presence of illegal workers. It is short-sighted to isolate the illegal workforce out of a more complex and more difficult set of conditions.


Economists such as Borjas and immigration experts such as Camarota (both with several postings by me) say that poorly educated immigrant labor has been driving Americans out of the workforce, and lowering the wages of many stay in workforce and are employed. They try to correlate foreign worker trends and lower American workforce rates. The correlations are often there – as in Nevada (see below). However, there are factors other then immigrant labor at play. It is not clear how strong are causal links.
The competition for jobs would be mainly between poorly educated Hispanics and Americans with limited education.
Is America producing poorly educated youth? Definitely, Yes. According to Jay Greene, who has studied education dropt out rates, about one million youths each year leave high school for good before graduating, and even more graduate without the credentials to enter and succeed in college. “Only 51% of all black students and 52% of all Hispanic students graduate [from high school], and only 20% of all black students and 16% of all Hispanic students leave high school college-ready.”
And force participation rates of youth and of blacks have been declining. As I posted before, in Nevada, with one of the highest penetration rates of illegal workers,
In 2000, 55.1% of Nevadans between 16 and 19 were either employed or looking for work. By 2004, that number slipped to 45.8%. Among people age 20 to 24, the participation rate dropped from 81.3% to 77%. The number of blacks participating in the state’s work force fell from 71.1% to 64.9%.
Cause and effect link made between immigrant labor and labor force rate declines? Yes and No. The fly in the ointment is presence of several factors that appear also to be driving down labor force rates particularly among young persons: (1) more are going to school; (2) when enrolled at school, more appear to be not taking jobs; and (3) more can Afford per parental financial success to live without working.
A forthcoming Brookings Institution study* of labor force participation trends reports that labor force participation rates of 16-19 year olds has been going down for decades. In the 2000-2005 period, rates both genders and all age groups between 16 and 54 declined. Some of that was due to the recession. Most age groups have largely bounced back. However, the rate for 16 to 19 year olds has not bounced back. Males in that age range had a 52.8% participation rates in 2000, and a 43.2% rate in 2005. The authors assign that drop in part to prolonged impact of the recession on this group, more educational involvement, and to something they cannot explain.
*Stephanie Aaronson, Bruce Fallick, Andrew Figura, Jonathan Pingle, and William Wascher (2006), “The Recent Decline in Labor Force Participation and its Implications for Potential Labor Supply,” Brookings Papers on Economic Activity

Comments are closed.