The wages of immigrants have been falling relative to non-immigrant Americans for the last 60 years, and this pattern persists into the second generation of immigrants, according to a new study released July 25th. The mobility of second generation immigrants is strongly affected by education attainment, according to a report by the Economic Mobility Project, using U.S. Census Bureau data going back to 1940.
Another troubling concern in this report, entitled "Immigration: Wages, Education and Mobility," is that while immigrants as a whole are doing well in assimilating to the American economy, a large number of immigrants coming from Latin America with less than a high school diploma, and oftentimes less than even a 9th education, is making assimilation by the second and third generation much more difficult.
The reason is that low education—increasingly the key to economic success in America—makes it much more difficult in achieving the same measure of success that has been the natural course of immigrants in the past.
"This report explains that the American engine of economic assimilation continues to be a powerful force, but the engine is incorporating a fundamentally different and larger pool of immigrants… The shifting educational and economic profile of today's immigrants is provoking difficult… questions about the economic prospects for immigrants in America today," said Ron Haskins, from the Brookings Institution, and author of the report.
The ability to move up or down the economic ladder—economic mobility—is a defining characteristic of the American way of life. Scholars may differ on how to assess economic mobility, but the consensus among those who are involved in the discussion of economic mobility is that it is key to defining the "American Experience."
The Economic Mobility Project seeks to study the status of economic mobility in the U.S. This report, which focuses on immigrants, is their second report. Four leading policy institutes—The American Enterprise Institute, The Brookings Institution, The Heritage Foundation and the Urban Institute—are supplying the intellectual resources for this project; more papers in the next 18 months are planned.
America Absorbing 1.5 Million Immigrants Annually
Nearly one million immigrants entered the country legally per year throughout the 1990s and 2000s, compared to about 320,000 in the 1960s. Additionally, approximately 500,000 immigrants arrive and remain illegally in the United States each year according to estimates, which experts consider reasonable. As a result of the high immigration rates in recent decades, the percentage of U.S. residents who are foreign-born increased from 4.7% in 1970 to 12.7% in 2003.
The Census Bureau data in this study are based on their Current Population survey which does not ask whether the immigrant is documented or undocumented. Thus, legal and the illegal immigrants are grouped together on questions of wages, country of origin, etc. Breaking down the data by legal status is not possible.
The pool of immigrants is changing dramatically from the 1960s. Immigrants now mostly come from Asia, Latin America and the Caribbean nations, and relatively fewer from Canada and Europe. In the 1960s, new immigrants were split about even, 50% each between Europe and Canada, on the one hand, and Asia, Latin America and the Caribbean, on the other hand. Today, the breakdown is 18% and 73%, respectively.
Wide Variation in Education of Immigrants
"Relative to the average American worker, immigrants from Latin America and the Caribbean are poorly educated, largely unskilled, and earn low wages when they enter the United States," says Haskins.
About half of immigrants from Latin America arrive here with less than a high school education. By contrast, only 14% of immigrants from Europe lack a high school diploma. 50% of immigrants from Asia have a bachelor's degree or higher, which is more than immigrants from Europe (36%). Only 11% of immigrants from Latin America have college degrees or higher.
Despite the low level of education attainment of immigrants from Latin America, the proportion of immigrants with a bachelor's degree or higher has increased over the last 35 years, and especially during the last four years. Today, one third of first generation immigrants have a college degree or higher.
One can see the education attainment rise by the length of time the immigrant has been in this country. The second generation is more likely to complete high school than the first generation, and both have lower percentages with high school diplomas than non-immigrants. However, the second generation of immigrants exceeds non-immigrants with Bachelor's degrees (19% vs. 18%). The proportion of first generation immigrants with advanced degrees even exceeds that of non-immigrants.
Taking all this information together, that is, the low education attainment of the majority of immigrants from Latin America versus the higher education attainment from Asia and Europe, means that using averages to describe education and wage levels can be highly misleading. This statistical fact is not discussed in the report, but in a teleconference at the release of the report, Dr. Haskins said it well to think of the distribution as "bimodal," with many immigrants grouped at the low end and many other immigrants grouped at the high end.
Immigrant Wages Declining
One cannot stress too much of the importance of education as a determinant of income in the United States. Dr. Haskins cites Census Bureau data that in 2005, high school graduates earned about $8,000 more than high school dropouts, college graduates earned about $19,000 more than high school graduates with no college, and those with professional degrees earned about $36,000 more than those with a Bachelor's degree.
"Given the low education attainment of a large number of immigrants, it is not surprising that average immigrant wages are low and falling relative to those of non-immigrants," says Dr. Haskins.
Haskins makes use of analysis by George Borjas, from Harvard University, who is well-known in the area of immigrant wage analysis. In 1940, the average first generation immigrant earned 5.8% more than the average non-immigrant worker. By 1970, relative wages were nearly the same—immigrant wages were only 1.4% higher. By the year 2000, the relative immigrant wages had dropped precipitously to 20% less than those of the typical non-immigrant worker.
The second generation immigrants also show a dramatic decline in the relative wages during this period.
"…the country is now in the process of incorporating a distinctly different, and lower wage, immigrant population from that of previous generations," concludes Dr. Haskins.
With the importance of education to future income, the children of low wage, poorly educated immigrants will be challenged to match the success of previous generations of immigrants in reaching economic parity with non-immigrants.
The Executive Summary of the report and the full report can be read online.
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