Working age population trends U.S., Germany, Canada and China

Between 2010 and 2020, the working age population (15-64) in Germany declined by 2% or one million, and increased in the U.S. by 0.5 % or nine million. Canada’s working age population rose by 4% or 800,000.  Canada likely had the highest rate of working age population increase among all advanced economies, thanks to its aggressive immigration policy that results in an immigration flow three times that of the U.S. on a comparable population basis.

This population increased in China by 6% or 75 million between 2010 and 2020. In China the working age population likely hit its peak in about 2015, and the 2030 figure is expected to be 880 million, a 110 million or 11% decline.

Immigration to keep up the size of the workforce, and avoid decline, is essential in most or all advanced countries.

 

Wealth in America by race / ethnicity: very recent trends

The Federal Reserve reports on the growth and distribution of wealth from 2019 through 2022, drawing from the 2022 Survey of Consumer Finances (SCF).  Note the relatively very high wealth of Asian households.  I have found no reliable analysis of why Asians are so wealthy. In the past 10 – 20 years, new Asian immigrants are far better educated that white and other groups in the U.S. which may have translated into higher incomes allowing for housing purchases and equity investments.

Two dominant drivers of wealth since the Great Recession are the stock market (Dow Jones 10/2009 was under $14,000, now over $33,000) and housing prices (median price October 2009 $214,000; October 2023, $416,000).  Any household who new ability to buy a home or invest in stocks rode these waves.  

I have posted on the economic rise of Hispanic households (here and here) and the educational powerhouse of Asians (here).

 

 

From the Fed’s report

[On real wealth—the difference between assets and liabilities in 2022]. Median wealth (the amount held by a typical family, shown in the top panel) among White families was $285,000 in 2022. By comparison, the typical Asian family—who we can split out for the first time in 2022 because of an oversample of certain non-White groups—held $536,000, nearly twice that of the typical White family. Meanwhile, the wealth of the typical Black family ($44,900) was only about 15 percent of the typical White family. The typical Hispanic family similarly held only about 20 percent of the wealth of the typical White family (about $61,600).

Between 2019 and 2022, wealth for the typical Black family rose 61 percent and for the typical Hispanic family it rose 47 percent….while the typical White family saw a 31 percent increase. However, despite faster growth in wealth for the typical Black and Hispanic family, the absolute dollar-value differences in wealth between the typical White and the typical Black and Hispanic family grew in 2022 because the typical Black and Hispanic family had less wealth in 2019. Both the White-Black and the White-Hispanic median wealth gaps increased by around $50,000 between 2019 and 2022, with each gap reaching over $220,000 in 2022.

Since the Great Recession the typical Black and Hispanic family has had between about $10 to $15 of wealth for every $100 held by the typical White family (Figure 3). This ratio has closed only modestly in the past two surveys. The typical Black family went from having about $9 in wealth for every $100 held by the typical White family in 2013 to around $16 in 2022; the typical Hispanic family went from having about $10 in wealth for every $100 held by the typical White family in 2013 to around $22 in 2022.

Most notable is the increase in net housing wealth—the market value of a family’s home minus any outstanding loans secured by the home—among all groups, but particularly for Black and Hispanic families. In part, the larger increase for Black and Hispanic families reflects the fact that these families tend to have higher leverage ratios, which amplifies the effect of rising prices on wealth, though it also reflects an increase in homeownership rates among these families.

Black and Hispanic families the gains in wealth were concentrated in housing, which is somewhat illiquid and may not be as useful as liquid wealth for covering recurring expenses. As shown in Figure 4, real average liquid wealth, which includes assets such as cash, checking, and savings accounts, did not grow much for Hispanic families and fell for Black families.

[Summary] Overall, the SCF depicts a complex account of families’ finances and disparities across race and ethnicity. Broad-based gains in wealth across race and ethnicity have narrowed wealth ratios somewhat over the past three years, but income ratios widened slightly. In particular, incomes for non-White families were propped up by temporary sources, like government support, that have ended, with real wages stagnant, on average, for Black and Hispanic families. While most families were able to meet their required payments, families, especially non-White families, have grown more pessimistic and uncertain about the current and future state of both their own finances and the economy. The recent improvements in wealth ratios across races is promising, but families’ increased financial uncertainty suggests continued improvements may not persist in the future.

The race for artificial intelligence talent

The October 30, 2023 White House “Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence” includes Section 5: a 774 word instruction for enhancing our immigration systems to provide more AI talent. I am digesting it now.

In 2021 I posted on AI talent: “The United States has a large lead over all other countries in top-tier AI research, with nearly 60% of top-tier researchers working for American universities and companies. The US lead is built on attracting international talent, with more than two-thirds of the top-tier AI researchers working in the United States having received undergraduate degrees in other countries.”

 

Foriegn born workers trends, 2010 – 2030

The growth rate of the foreign born employment has recovered from the pandemic and is about 3.5% annually vs. 0.6% annual growth for the U.S. born employment. The percentage of workers who are foreign born, based on these rates, is expected to grow from 16% in 2010 to 23% in 2030:

Why? First, the labor force participation rate of foreign born workers is higher at all levels of education:

Now, take into account not only first generation but second generation immigrants. Immigrants and their U.S. born children were responsible for 85% of the labor force growth between 2010 in 2018 at which point they comprised 28% of all workers [17% foreign born, 11% children of foreign born– PFR], up from 25% in 2010. And projection suggestions to 2035, all growth in the working age population will come from immigrant origin adults. (Go here.)

First and second generation workers are more concentrated in prime working age (25 – 54) – 70% vs. 62% for all other workers.

 

 

 

Are foreign born workers driving down labor force participation?

The Center for Immigration Studies asserts that the decline in labor force participation in the U.S. is in part a result of foreign-born labor, particularly at the lower part of the job market with respect to formal education.

CIS Executive Director Camarota says that “Using large-scale illegal immigration to fill jobs may please employers, but it allows policymakers to ignore the decades-long decline in labor force participation that contributes to profound social problems, from crime and drug overdoses, to welfare dependency and suicide.”

Here is a summary of the participation rate experiences of the U.S. and six other advanced countries. Some countries have aggressive pro-immigrant policies, such as Canada and Germany. One in particular, Japan, has a very small foreign-born workforce.

United States: Peaked at around 67% prior to the 2008 recession. As of 2021 it was around 62%, with declines driven by aging and health/disability reasons.

Canada: Labor force participation rate declined from around 67% in 2011 to around 65% in 2021. The drop is largely attributed to aging demographics.

Japan: Labor force participation has declined steadily from over 70% in the 1990s to under 63% in 2021. Japan has the oldest population which is a major factor.

Germany: Dropped from over 70% in the 1990s to under 68% in 2021. Driven by aging population, lower participation among women, and expanded welfare.

Italy: Fell from around 57% pre-2000 to under 56% in 2021. Aging population and poor economic growth play key roles.

France: Decreased from about 65% in 2003 to 64% in 2021. Aging demographics, unemployment, and increased school enrollment are contributors.

United Kingdom: Remained relatively steady around 63-64% over the past two decades. Less affected by aging than other European countries.

The labor force participation rate of Americans without a high school degree has been declining for 50 years, and I expect in all regions of the country, even those with small foreign-born workforces with little formal education.  This does not mean that foreign workers have not taken over jobs which U.S. born workers had done in the past – an example being meat processing plants. But it does mean that one has to look at the nuances of work, by industry and by region, to make sense of how foreign and U.S. born workforces interact.

The labor force participation rate for Americans without a high school degree: In the 1950s and 1960s, the labor force participation rate for this group was around 60-65%. It started declining in the 1970s and fell to around 55% by the 1980s. The decline accelerated in the 1990s, with the rate falling to around 45% by 2000. In the 2000s and 2010s, the rate continued to decline and reached around 30% by 2020.

One also needs to consider that the total number of U.S. born people without a high school degree has severely shrunk in the past few decades:  Between 1990 and 2020, the size of the U.S. born adult population over 25 without a high school degree declined by about 8.2 million (from 18.5 million to 10.3 million). As a percentage of the total U.S. born adult population over 25, this group declined from 13% in 1990 to 6% in 2020.

Help from Claude AI.

Temporary Protected Status

The Biden Administration has given temporary legal status to hundreds of thousands of persons through the use of the Temporary Protective Status program and through Humanitarian Parole. In this posting I address TPS. In 2019 there were about 400,000 persons covered by TPS. After action the Biden Administration in September, over a million will be covered. They will account for about 650,000 workers.

The Trump Administration attempted to terminate some authorizations but were frustrated by the courts. No immigration program since the passage of the 1986 has accelerated legal status in the U.S. more than TPS. It is, I believe, reasonable for a TPS benefiary to think that they have a very good chance of becoming a legal permanent resident.

(The best in depth reviews of TPS are here and here.)

Congress enacted the Temporary Protective Status program as part of the immigration act of 1990 to establish a uniform process and standard for granting temporary humanitarian protection in the United States, for non-citizens already in this country whose home countries are in crisis.  This provision was in part a response to a 1947 U.N. Protocol on refugees.

TPS designation can be for an initial period of anywhere from 16 to 18 months and extended indefinitely for periods for up to 18 months. The program is designed for people who cannot return safely due to their home countries due to ongoing armed conflict, environmental the disaster, or other extraordinary and temporary conditions. While the designation formally is temporary, the designation can lead to a more permanent status.

Nearly 93 percent of current TPS holders are from Latin American countries, particularly El Salvador, Haiti, and Venezuela, where a worsening humanitarian crisis has caused more than seven million people to flee the country. Hundreds of thousands of Salvadorans have been allowed to stay in the United States since devastating earthquakes rocked El Salvador in 2001. Haiti was first assigned TPS after a massive earthquake destroyed much of the country in 2010, and it received the designation again in 2021 and 2022 amid continued violence and a prolonged political crisis. Honduras and Nicaragua were given TPS after a hurricane battered the region in 1998. Countries that have previously received TPS include Angola, Bosnia and Herzegovina, Kuwait, Liberia, Rwanda, and Sierra Leone. (Go here).

In March 2019, some 400,000 citizens from 10 countries were covered by TPS, per the Congressional Research Service. As of March 2023, about 610,000 citizens of 16 countries have been granted TPS. In September 2023 the Biden Administration allowed 472,000 Venezuelans to be covered, adding to the some 250,000 Venezuelans already covered by TPS. Some arrived into the U.S. illegally, and they are prevented from moving to a more permanent status. Many have been here for years, integrating into the economy and raising children.

Countries which are promoting inbound remittances

Several developing countries have made efforts to increase remittances from citizens residing abroad in more advanced economies. In summary, reducing transfer costs, providing financial incentives, embracing mobile services and targeted marketing to diaspora communities have helped many developing countries tap into remittances.

Here is a study of the costs of remittances. Here is a study of “diaspora bonds.”

India – Has taken steps to reduce costs and make transferring funds back to India easier. Remittances make up around 3% of GDP.

Mexico – Provides tax breaks and encourages migrants to open Mexican bank accounts that make remitting funds easier. Receives the most remittances worldwide at around $35 billion annually.

Philippines – Heavily markets bonds and other financial products to diaspora Filipinos to encourage remittances. Makes up over 10% of GDP.

Bangladesh – simplified rules for remittances and offered incentives. Remittances are around 7% of GDP.

Egypt – Allows expatriates to open foreign currency accounts and get higher interest rates to encourage transfers.

Pakistan – Gives diaspora Pakistanis foreign currency accounts and housing incentives if they remit dollars.

Nepal – Partnered with money transfer companies to reduce fees and make digital transfers accessible globally.

Somalia – Encouraged innovative mobile money transfer services that diaspora Somalis use extensively.

Ethiopia – Issued diaspora bonds and identity cards to encourage remittances, which are about 5% of GDP.

Sri Lanka – Gives preferential exchange rates and operates a welfare fund for migrants to encourage remittances.

Source: Claude

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An example of private sponsorship to bring in immigrants

In this case, to fill empty job positions, with Ukrainians here on humanitarian parole, which is valid for only two years. This case study show how parole admissions will almost certainly turn into permanent residency. From the Wall Street Journal:

Two years ago, Veselka, a Ukrainian diner in Manhattan’s East Village renowned for its pierogi, was so short on cooks and wait staff that owner Jason Birchard was ready to cut the restaurant’s hours and end table service.

Veselka’s owner has sponsored 10 Ukrainians, mostly extended family members of his existing employees, and eight now work at the restaurant.

Veselka owner Jason Birchard, in black shirt, is a third-generation Ukrainian American.

Then last year, the war in Ukraine broke out. The Biden administration launched a program to sponsor Ukrainian refugees to live and work temporarily in the U.S. Birchard, who is third-generation Ukrainian American, immediately looked into the new program. He said he thought it was the right thing to do to bring Ukrainians to safety, but also hoped he could find some new cooks.

Since then, Birchard has sponsored 10 Ukrainians, mostly extended family members of his existing employees, and eight now work at his restaurant. “One of my biggest challenges postpandemic was hiring. Not so anymore,” he said. “It’s been a win-win for me.”

Venezuelan refugees and New York City’s workforce

The asylum system is in crisis (such as noted here), and New York City has become an epicenter of it, particularly with respect to asylum applicants from Venezuela.  Here look through some numbers and come with an estimate of the impact of Venezuelan migration on the New York City workforce.

According to an organization focusing of Venezuelan refugees, as of August 2023 host governments have recorded 7.7 million persons who have left Venezuela.  (Here is my first posting on Venezuelan refugees, in 2019. This is up from five million at the start of 2021. As of late 2022, the number of Venezuelan refugees in the U.S. was estimated that 545,000.

Since then, Venezuelans have streamed into the country, mainly across the Mexican border. In order to control the surge at this border, the Biden administration introduced a special “parole” program which allows Venezuelans, Nicaraguans, Cubans and Haitians enter legally.

The New York Times has covered the situation in New York City well. Writing about all migrants, it reports that “As of Sept. 10, more than 113,300 migrants had arrived in New York City since the spring of 2022. Officials have struggled to respond as people from all over the world have arrived, sometimes by the hundreds each week. Many have sought shelter with the city, which has a legal obligation to give beds to anyone who asks.”

“By June [2023], the city had counted more than 80,000 newcomers. Roughly half moved into public shelters, and the city’s shelter system reached 100,000 that month. City officials added up the costs of housing them: an estimated $4.3 billion by next summer. Mayor Eric Adams begged for federal help, disparaged President Biden and warned that the city was being “destroyed.”

There are now hundreds of thousands of recent immigrants in the city, residing under the color of either asylum applicants or parole beneficiaries.   About half are estimated to be from Venezuela.  In 2020, there were probably about 130,000 Venezuelans living in New York City. It is fair to guess that this number has more than doubled in the past two years.

On September 20, the Biden administration authorized 500,000 Venezuelans to obtain work permits. This permission covers the entire U.S.  To comply with law, the administration is granting Venezuelans “Temporary Protected Status” for 18 months; by this step work authorization is available.  According to this report, this new authorization is for 472,000 who have been in the U.S. on or before July 31.  In 2021, a TPS decision authorized 243,000 Venezuelans for 18 months, and this has been renewed.

Effect on the American and New York City workforce

There are about 50 million workers in the U.S. who earn under $35,000 a year. I expect that virtually all of these Venezuelans who work will earn under that amount. Assuming that 65% of the roughly 750,000 protect Venezuelans will work, that adds 1% to this under $35,000 workforce.

There are about five million workers in New York City.  Let’s guess that 1/3, or about 1.5 million, earn under $35,000. Let’s guess that in the past two years, the number of working age Venezuelans in the City has increased by 100,000. This implies that the workforce able to earn no more than $35,000 has grown by 100K / 1500K  = 7%.

Economists have debated for decades the impact of the “Mariel boatlift” on the workforce of Miami. What is happening today in New York City will also provoke a debate about the impact of a surge of immigrant workers.

 

 

 

 

 

 

 

 

 

Human development and the drive to emigrate: Costa Rica vs. Honduras

Costa Rica has the lowest rate of emigration of any Central American country, almost one quarter that of Honduras. Here are some socio-economic comparisons of the two countries.

Emigration: Costa Rica: 150,000 Costa Ricans, or 2.8% of its 5.3 million population, have emigrated (2/3rds to the U.S.) Honduras: about one million Hondurans, or 9.8% of its 10.2 million population, have emigrated (75% to the U.S.

Costa Rica: average life expectancy increased from 70 years in 1970 to 80 years in 2016. Honduras life expectancy increased from 57 years in 1970 to 73 years in 2016.

The adult literacy rate in Costa Rica grew from 80% in 1970 to 97.6% in 2015.  In Honduras, in 1970 the adult literacy rate in Honduras was 57.8%. By 2015, the literacy rate had increased to 89%.

In Costa Rica In 1970, the net primary enrollment rate was 75%. By 2015, the primary enrollment rate had risen to 93%. In Honduras, primary school enrollment rose from 67% in 1970 to 92% in 2015.

Costa Rican GDP per capita is $12,000 on a PPP basis, vs. $4,500 in Honduras.

Politics: Costa Rica has had relatively free and fair elections since 1953.  Corruption and weak governance in Honduras include the president participating in drug smuggling.