Archive for the ‘Economics’ Category

The underclass scenario in immigration

Friday, October 26th, 2018

Reihan Salam writes about the risks of a persistent, multi-generational underclass of American residents. This class compromises immigrants and their subsequent generations who do not get the education and social skills needed to rise up economically in the American economy.

Very large numbers of Latin Americans are here, legally or unauthorized, with little formal education and limited English.

Despite what we like to think about our “knowledge” economy, some 25 million jobs — 15 percent — do not require either much formal education or English language proficiency. At the lowest level of education, five million workers today have no more than an eighth-grade education. Four million of them are foreign-born. They comprise a special underclass marked by far greater economic and social isolation and vulnerability to exploitation than native-born workers, even if these foreigners feel better off than they were in their home countries.

Within our native-born labor force, barely 1 percent have an education level of eighth-grade or lower. Among Mexican and Central American workers, that share is 34 percent, or about 3.3 million workers. For the rest of the foreign-born labor force, it’s 4 percent, or about 600,000 people.

In all likelihood, at least half — and possibly more — of these 4 million foreign-born workers are living here illegally. Many of them likely came to the United States over the Mexico-U.S. border during the 1990s and early 2000s.

These 4 million workers crowd into farming and low-level construction jobs, cooking, housekeeping, groundskeeping and building cleaning, among other occupations. The jobs can be socially isolating. It is easy to avoid, for years, learning more than rudimentary English.

Waiting tables, retail sales and personal-care jobs are often off limits for many of these foreign workers because of their limited English, as well as a lack of social skill sets that native-born Americans take for granted.

See Reihan Salam, Melting Pot of Civil War.

For education figures go here.

 

 

Rising number immigrants who are college grads and/or speak English

Wednesday, October 24th, 2018

Today, immigrants account for 17% of all college educated adults in the U.S. compared with 10% in 1990. The rise in college education and English proficiency began about ten years ago – when Asian immigration overtook Latin American immigration.

When you take into account all foreigners in the U.S., 48% of foreigners 25 years or older came to the United States between 2011 and 2015 with college graduates compared to 31% of US born adults and 2015. Half of the college educated immigrants are from Asia. There are more recent college educated foreigners who arrived from Latin American than from Europe.

This high rate exists because of temporary visa holders, who (in the 2011-105 period) were 84% college educated compared with 33% among those awarded green cards in this period. The college education rate of recent naturalizations was 31%.

The percentage of recent immigrants with college degrees is 10% to 20% higher in most states than the college educated percentage of native born persons. The college education rate of recently arriving foreigners 25 years or older ranges from the low 80s in Vermont and District of Columbia to 25% in Arkansas (and lower in MT and SD).

Still, most immigrants arrive with limited English proficiency – 57%, through that percentage has declined from 66%. As of 2015, 34% of immigrants were bilingual, meaning they spoke English well and another language at home. Another 16% spoke only English at home.

The following is the percentage of all immigrants 18 or older who spoke only English at home or who were bilingual (spoke English “very well”), by date of arrival:

1986 – 1990: 35%

1996- 2000: 34%

2006 – 2010: 36%

2011- 2015: 43%

From here.

 

Hispanic purchasing and voting power

Saturday, October 13th, 2018

In some states, Hispanics account for a large percentage of spending power and tax revenues overall. In both Texas and California, Hispanic households had more than $125 billion in after-tax income in 2015, accounting for more than one of every five dollars available to spend in each state that year. In Nevada, a state with a rapidly growing Hispanic population, their earnings after taxes accounted for more than one-sixth of the spending power in the state. In Arizona and Florida, Hispanics contributed almost one out of every six dollars in total tax revenues in 2015.

Hispanic Americans who only recently gained eligibility to vote could be a big factor in the 2020 election. Between 2015 and 2020, a projected 5.7 million Hispanics will gain eligibility to vote for the first time, most by turning 18 and aging into the electorate. In six states carried by Republicans in 2016, including Arizona, Pennsylvania, and Wisconsin, the estimated population of newly eligible Hispanic voters will exceed Donald Trump’s 2016 margin of victory. In Michigan, a state Trump carried by 10,704 votes, almost 46,300 Hispanic Americans will gain eligibility by 2020.

From here.

 

Labor law violations and low wage immigrant workers

Friday, October 12th, 2018

A groundbreaking study of low-wage occupations in three metropolitan cities found that almost 26% of workers failed to receive the legally required minimum wage…and of those eligible for overtime, a whopping 75% did not receive the pay they were entitled to. Many of the industries most prone to violations such as wage theft and unpaid overtime are also industries that are most heavily populated by immigrant workers. Indeed, as of eight years ago, over half of all workers born in Mexico and Central America were employed in seven notoriously low-wage, high-violation industries: construction, restaurants, retail, landscaping, agriculture, food manufacturing, and building services…

A 2013 study found that 41% of Latino immigrants working in the agriculture, construction, hospitality, and poultry processing industries in Nashville, Charlotte, New Orleans, southern Georgia and several towns and cities in northern Alabama had experienced wage theft.

Expanding the scope of immigration reform to include labor standards enforcement is fundamental to ensuring that the rights of immigrants are upheld and all workers, immigrants or otherwise, stand on equal footing not just with each other, but with their employers as well.

From Janice Fine and Gregory Lyon, Segmentation and the Role of Labor Standards Enforcement in Immigration Reform, Journal on Migration and Human Security, 2017

Rich countries need to improve immigration policies

Saturday, October 6th, 2018

The Economist says, “Migrants can make the world more prosperous, but voters need convincing…. The influx should be orderly and legal as well as humanely handled. Migrants should be encouraged to work. They should be helped to fit in. And they should be seen to pay their way.

America’s flexible labour market makes it easy for migrants to find entry-level jobs, and its meagre welfare state means they have to. The unemployment rate for immigrants is 4% compared with 16% in Sweden, where benefits are fatter and unions have negotiated industry-wide pay scales that price unskilled migrants out of jobs (see chart 2). The National Academies of Sciences found that even immigrants who drop out of high school are net contributors to the public purse if they arrive in America before the age of 25

Cultural assimilation is startlingly quick in America. Fully 60% of foreign-born Latinos speak mostly Spanish, but by the next generation this has fallen to 6%, according to the Pew Hispanic Center. Some 15% of newlywed foreign-born Hispanics in 2015 were hitched to non-Hispanics; among US-born Hispanics it was a whopping 39%. For Asians the figures were 24% and 46%.

And elsewhere…..

Nearly every rich country has an ageing population and a shortage of workers to care for them. Yet surprisingly little effort has been made to train foreign workers to meet this demand. The German government, anticipating a huge shortfall of geriatric nurses, is training young Vietnamese in Hanoi in both nursing and the German language. But such examples are rare.

Raffy Fermin moved from the Philippines to the United Arab Emirates to fix cars. Locals love flashy vehicles, but would not be seen dead under one. So Porsche, a German firm, sponsors a school in Manila that teaches young Filipinos how to service its machines. When they qualify, Porsche offers them jobs in the Gulf.

The Economist August 25 2018

We don’t plan for native-born workforces

Tuesday, September 18th, 2018

The 19th Century saw foreign workers brought into the U.S. through private sector workforce recruitment, such as Chinese workers on railroads, to fill jobs otherwise filled by native-born Americans. American food processing companies in the 1990s recruited undocumented workers at staff their factories. But there has been little of the reverse, that is, a concerted hiring of native-born American workers to staff positions that otherwise would be filled by immigrants.

An example of a possible “Hire An American” policy to recruit native-born American doctors for rural medical care.

Today, one quarter of all practicing doctors are foreign-trained (the great majority being foreign born). In rural areas, and in low income areas, the percentages are higher. What would it take to design and implement a strategy to make them more native-born?

There is no federal agency nor any major research/policy institute which routinely examines native born / immigrant workforce dynamics. There is no tried and tested method of designing such a strategy. And no one in Washington is talking about building this capacity.

And, for purposes of staffing rural physician slots with more native-born doctors, building such a strategy is very difficult. Let’s look at the forces that would complicate a plan, for instance, to financially incentivize graduates of American medical schools to locate for extended periods in rural areas”

1. Labor shortages and surpluses come in waves and both influence and are influenced by immigration.

2. There is a lot of internal sorting / shifting within occupations. For instance, native born doctors tend to concentrate in higher compensated specialties and live in relatively more amenable locations.

3. There can be a lot of sorting / shifting between occupations — for instance, using nurse practitioners a lot more for primary care than physicians. In my dozen years in Vermont, I am far more likely to see a nurse in primary care than to see a physician.

Business Roundtable grades U.S. poorly on immigration policy

Friday, September 14th, 2018

The Business Council wrote a letter to Homeland Security Secretary Kirstjen Nielsen on August 22, signed by 39 CEOS. Citing a backlog of green card applications, the Business Council wrote that in the past year, U.S. Citizenship and Immigration Services (USCIS) “has issued several policy memoranda over the past year” that inject uncertainty into skilled employment by foreigners. “Few will move their family and settle in a new country if, at any time and without notice, the government can force their immediate departure–often without explanation.” The Council also opposes the impending decision to bar the spouses of H1-B visa holders from working.

The Business Council’s ranking of immigrant policies

Overall ranking: The Council on a scale of 1 to 5 ranks the U.S. at 2.3, Germany at 4.5, the U.K. at 3.9, and Canada at 3.3. “Based on a comprehensive examination of 10 advanced economies to identify and evaluate the best immigration policies to promote economic growth, the United States ranked 9th out of 10 competitor countries, ahead of only Japan, a country historically closed to outsiders. This analysis found that America’s near-bottom ranking among major advanced economies is due to U.S. laws and regulations that impose unrealistic numerical limits and excessive bureaucratic rules on hiring workers that the country’s economy needs.”

For use of highly skilled workers, the Council’s scores are the U.S. at 2.0, Germany at 5.0, the U.K. at 4.0, and Canada at 3.5.

Here is what the Council says about skilled labor immigration:

U.S.(2.0): More than half of applicants for H-1B visas each year are denied the opportunity to work due to the low H-1B quota.

Germany (5.0): Applications for high-skilled people are rarely turned down, there is no annual quota and Germany’s membership in the European Union (EU) provides access to 500 million people who can work without any immigration processing. The process is clear enough that some employers do not need attorneys to apply. The EU Blue Card provides an easy option for hiring non-EU skilled professionals, including no labor market test.

Canada (3.5): There is no annual quota for hiring high-skilled foreign nationals. Employers must pay a market wage; recent requirements for employers to test the labor market have made the process much more difficult for employers.

Sweden and immigration: a lot has to do with jobs

Wednesday, September 12th, 2018

The foreign-born worker unemployment rate in Sweden is five times that of native born workers. in the U.S. the foreign-born rate is below that of native born workers.

in 2000, 8.9 million people lived in Sweden. 50,000 immigrants entered the country, and 38,000 emigrated. In 2019, 10 million people lived in Sweden. 163,000 persons, equivalent to 1.6% of the population immigrated and 46,000 emigration. That annual rate of immigration is equivalent to 5 million persons immigrated to the U.S, compared to the roughly 1 million who do. In 2016, 67,000 persons, mostly from Syria, were granted asylum. That compares to about 45,000 refugees who will enter in the U.S. in 2918. In 2016, there were 163,000 asylum seekers in Sweden.

Because immigration to Sweden before the Syrian crisis was generally low, the total foreign population in Sweden (about 15% of total) is proportionally not much higher than in the U.S. (13%). Thus Sweden experienced in about a decade the rise in foreign persons in the U.S. that took several decades

In July, 2018, 3.6 native born Swedes were unemployed compared to 19.9% of foreign born workers. Per The Local, “Unemployment is clearly falling among both native and foreign born, but there are still major differences. To get more new arrivals into work, education and subsidized jobs are important,” Arbetsförmedlingen analyst Andreas Mångs said in a statement.

In 2017, Sweden had one of the highest unemployment rates among foreign-born workers (about 15% in its chart) and the U.S. had one of the lowest (about 5%). The low U.S. rate may be in part due to how Spanish speakers with low English proficiency find employment in Spanish speaking worksites.

According to the Bureau of Labor Statistics, the unemployment rate for foreign-born persons in the United States was 4.1 percent in 2017, down from 4.3 percent in 2016.  The jobless rate of native-born persons was 4.4 percent in 2017, down from 5.0 percent in 2016.

Lessons from past wave of refugees in Sweden: it’s jobs, stupid.

From The Local: Two decades ago thousands of refugees fled war in Yugoslavia and made Sweden their home, where today they are a well-integrated part of society. During the Yugoslav wars in the 1990s, many of those fleeing the conflict looked to Sweden for protection, with just over 100,000 coming to the Scandinavian nation at the time. In 1992 alone, 70,000 people from the former Yugoslavia applied for asylum in the country – a record high number for a calendar year until it was surpassed in 2015.

A 2016 study showed that a significantly higher proportion of Bosnians are employed. In the 20-24 age bracket, employment was at virtually the same level as native Swedes/

But what lessons can Sweden learn from its successful integration of Yugoslavian refugees? Perhaps the biggest takeaway from the experience is that a good match between the people coming in and the systems of their new home is worth its weight in gold. One thing was the harmony between the general makeup of those who came from former Yugoslavia to the Scandinavian country, and developments in Sweden, which was moving towards a knowledge-based economy at the same time.

Similarities in level of education was particularly vital to the long-term success: Yugoslavia’s education system, where primary schooling was compulsory until the age of 15 and students were encouraged to follow upper secondary education until the age of 19, was not dissimilar to Sweden’s, where school is compulsory until 16, and most pupils then go on to upper secondary school. But Sweden had a financial crisis in the 1990s. Of the Bosnians who were given a residence permit between 1993 and 1994, only 24 percent in the 20-59 age bracket had found employment after four years.

As the new millennium arrived things improved significantly, but with notable regional differences. So while by 1999, 90 percent of male and 80 percent of female Bosnian refugees aged 20-59 living in in Gnosjö, Gislaved, Vaggeryd and Värnamo were employed, the corresponding figure for Malmö was 37 percent and 28 percent respectively. The integration process for those who ended up in the southern Swedish city would have been quicker if they had been placed in regions with a better economic outlook from day one.

Can Mexico be more prosperous?

Thursday, September 6th, 2018

The supply of Mexican labor for the domestic U.S. economy is influenced by forces on both sides of the border, including the strength of the Mexican economy. The Economist recently analyzed the failure of the Mexican economy to perform better: “Between 1995 and 2015 real GDP per person increased by an annual average of 1.2%, less than in any Latin American country except Venezuela. Take into account the swelling labour force, and Mexico looks even worse: GDP per worker expanded by just 0.4% a year.”

This is despite an improvement in formal educational levels among Mexicans. As I posted recently, today a quarter for young people in their teens will end up going to college, three times a percentage of those who did in the early 1990s. The Mexican economy is now the 15th largest in the world and is projected to become the seventh or eighth largest by 2050.

The solution: change laws to make it relatively more attractive to hire salaried employees rather than to pay them as non-salaried self-employed workers.

Per the Economist, workers end up in jobs where they are less productive than they might be. Too many individuals who should be workers become entrepreneurs or are self-employed. Efficient businesses are taxed and penalised, while subsidies help sustain unproductive ones.

Mexico has a huge and disproportionate number of small businesses, and unusually wide variation in the productivity of its companies. More than 90% of the 4.1 million firms in the 2013 census had at most five workers. And 90% of the total were “informal”, absorbing 40% of workers.

Economist Santiago Levy distinguishes between firms that have salaried employees and those that do not. Four-fifths of the “informal” firms are in the second category: their staff are either self-employed or paid piece-rates or profit shares. These firms’ only legal obligation is to pay corporate tax, of just 2% of revenues. Firms with salaried workers, by contrast, must pay social insurance, deduct income tax and grapple with employment law (which doesn’t allow them to fire people if business drops).

Immigrants dropping out of support programs

Tuesday, September 4th, 2018

Politico reports that “Local health providers say they’ve received panicked phone calls from both documented and undocumented immigrant families demanding to be dropped from the rolls of WIC, a federal nutrition program aimed at pregnant women and children, after news reports that the White House is potentially planning to deny legal status to immigrants who’ve used public benefits. Agencies in at least 18 states say they’ve seen drops of up to 20 percent in enrollment, and they attribute the change largely to fears about the immigration policy.”

The Trump Administration is planning to expand the “public charge” criteria that is used to bar persons from permanent residence (green cards) if there is a risk of using public support programs –even though millions of low wage employees of Walmart, Amazon and other companies depend on SNAP (food stamps), Head Start and WIC to balance their budgets. The expected expansion of the criteria is a means to cut off permanent immigration of working class households. I have posted on this here.

Politico writes that in the past, if a mom was applying for a green card her own use of public benefits might be examined. Under the proposed change, her child’s enrollment in Medicaid or Head Start would weighed as a negative factor, even if that child is a U.S. citizen.

Politico goes on: Nutrition Program for Women, Infants, and Children — serves about half of all babies born in the U.S by providing vouchers or benefit cards so pregnant women and families with small children can buy staple foods and infant formula.

In some cases, immigration attorneys are recommending that families drop out of all government programs, including WIC, to avoid any chance that using the benefits could negatively affect their chances of getting a green card — or even prevent a family member from being able to get a visa to visit, according to caseworkers.

In January, the State Department instructed embassies and consulates to look at potential use of nutrition and health benefits when deciding whom to admit to the U.S.