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Immigrants and the California economy

The Immigration Policy Center issued a report last week which reported on the extent (large) of the immigrant workforce in California, and the net effect (positive) of this immigrant workforce on wages of all workers. About one third of the workforce is immigrant. Since these workers complement, rather than compete, with American – born workers, their net effect is to push general wages up by 4%.

The summary of the report:

Latinos and Asians account for more than one-quarter of California’s businesses and buying power.

The 2008 purchasing power of California’s Latinos ($249 billion) and Asians ($162.8 billion) is the highest of any state in the nation. Together, Latinos and Asians account for roughly 30% of the state’s total consumer purchasing power. Since 1990, the purchasing power of Latinos in California has increased by 258%, and the purchasing power of Asians by 272%, according to the Selig Center for Economic Growth at the University of Georgia.

California’s 427,678 Latino-owned businesses had sales and receipts of $57.2 billion and employed 445,820 people in 2002. The state’s 371,530 Asian-owned businesses had sales and receipts of $125.8 billion and employed 745,874 people. Together, businesses owned by Latinos and Asians comprised more than one-quarter of all businesses in the state, according to the U.S. Census Bureau’s 2002 Survey of Business Owners.

Immigrant workers, entrepreneurs, and taxpayers are integral to California’s economy.
“Immigrants comprise more than one-third of the California labor force. They figure
prominently in key economic sectors such as agriculture, manufacturing and services. Immigrants provide leadership and labor for the expansion of California’s growing economic sectors—from telecommunications and information technology to health services and housing construction,” according to the California Immigrant Policy Center.


Immigrants in California pay roughly $30 billion in federal taxes, $5.2 billion in state income taxes, and $4.6 billion in sales taxes each year. In California, “the average immigrant-headed household contributes a net $2,679 annually to Social Security, which is $539 more than the average US-born household.”

Immigrants in Los Angeles County account for nearly 36% of the county’s total consumer purchasing power and over 40% of its total economic product, according to a study by Manuel Pastor and Rhonda Ortiz at the University of Southern California.

Most native-born Californians have experienced wage gains from immigration.

“During 1990–2004, immigration induced a 4 percent real wage increase for the average native worker,” according to a 2007 study by economist Giovanni Peri of the University of California, Davis.

The reason for wage increases is that “immigrant workers often serve as complements to native workers rather than as their direct competitors for jobs, thereby increasing total economic output. Native workers benefit because they are able to specialize in more productive work.”

California’s immigrants move up the socioeconomic ladder over time—learning English, buying homes, and escaping poverty.

A study by demographer Dowell Myers of the University of Southern California found that:

• The share of California’s foreign-born Latinos who reported being proficient in English as of 2000 rose from 33.4% of those who had been in the United States for less than 10 years to 73.5% among those who had been here for 30 years or longer.
• The share of foreign-born Latinos in California who owned their own homes as of 2005
rose from 16.4% of those who had been in the United States for less than 10 years to 64.6% among those who had lived here for 30 years or more.
• The share of California’s foreign-born Latinos who lived below the poverty line as of
2005 dropped from 28.7% of those who had been in the United States for less than 10 years to 11.8% among those who had been here for 30 years or more.

The share of immigrants in Los Angeles County who owned their own homes as of 2005-06 rose from 14.8% of those who had come to the United States within the previous 10 years to 63.4% of those who had lived here for more than 30 years—compared to a homeownership rate of 54.2% among the native-born, according to a study by Manuel Pastor and Rhonda Ortiz at the University of Southern California.

Nearly half of Californians are Latino or Asian—and they vote.

The Latino share of California’s population grew from 25.8% in 1990, to 32.4% in 2000, to 36.2% in 2007. The Asian share of the population grew from 9.2% in 1990, to 10.9% in 2000, to 12.3% in 2007, according to the U.S. Census Bureau.

Latinos comprised 18% of California voters in the 2008 elections, and Asians 6%. Barack Obama defeated John McCain among Latino voters in California by 74% to 23%, and among Asian voters by 64% to 35%, according to CNN exit polls.

One-quarter of California’s registered voters are immigrants or the children of immigrants. The foreign-born share of California’s population rose from 21.7% in 1990, to 26.2% in 2000, to 27.4% in 2007, according to the U.S. Census Bureau.

43.6% of immigrants in California were naturalized U.S. citizens in 2007 (up from 31.2% in 1990)— meaning that they are eligible to vote.

24.4% of all registered voters in California are “New Americans”—naturalized citizens or the U.S.-born children of immigrants who were raised during the current era of large-scale immigration from Latin America and Asia which began in 1965—according to an analysis of 2006 Census Bureau data by Rob Paral & Associates.

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