Virginia Parks, Ph.D. School of Social Service Administration University of Chicago June 29, 2011 Economic Effects of Immigration: Lessons from the Chicago Labor Market

Theories of Migration Push-Pull Factors Covers range of factors, economic to political Overly general; more recent theories specify these factors within more defined set of parameters Neoclassical Economic Theory Dual Labor Market Theory World Systems Theory

Theories of Migration Neoclassical Economic Theory Supply and demand Dominates public policy discussions Macro Migration from low-wage to high-wage markets Wages will eventually equalize between markets (i.e., countries) Micro Cost-benefit decision of individual Migration as investment in human capital Where will I get maximum return on my skills?

Theories of Migration Dual Labor Market Theory Migration stems from permanent, intrinsic labor demands of modern capitalist economies Segmented labor market Primary: stable jobs, good pay, opportunities for advancement, recognized social status Secondary: unstable, low pay, no or limited opportunities to advance (regardless of skill), low social status Natives shun jobs in secondary sector Immigrants needed as labor supply into secondary sector jobs

Theories of Migration World Systems Theory Positions migration within global economic system Dominant in academic fields outside of economics (sociology, anthropology, geography) Penetration of capitalist production relations beyond industrialized countries prompts migration flows In drive for higher profits, capitalist firms enter poor countries for cheap land, raw materials, and labor Entry disrupts internal socioeconomic systems Forces of globalization hasten penetration Transportation & communications technology Cultural homogenization

Economic Effects Firm-level production decisions Productivity and innovation Consumer markets: growth, prices, etc Labor market effects Yet economic effects only one consideration in larger policy debate about immigration

Economic Effects: Job Competition Public and scholarly discourse accents competition between immigrants and natives in labor market 28% of all Americans think immigrants take native jobs Half of all African Americans believe that immigrants reduce job opportunities for African Americans Fewer than 40% of Latinos agree

Empirical Research Findings have been divergent Body of literature does not point with certainty to predictable economic effects of immigration The cocktail-party summation: Small (positive & negative) to no wage effects Small effects on unemployment of lowest skilled native workers; probably exclusive to men Clearest wage and unemployment effects have been on other immigrants

Empirical Research Methodological differences characterize debate Card vs. Borjas National vs. local labor market analysis Where do we best see effects? Where do we most care about effects? Example: On workers that stay in metro area or those that move out? Muriel Boat Lift as “natural experiment” (David Card)

Empirical Research Strong empirical research on nature of low-wage labor market where immigrants dominate, but are not exclusive workforce Conditions of low-wage work dictated predominantly by political factors Erosion of real value of minimum wage Erosion of employment protections, e.g. overtime Minimal enforcement of wage & hour violations Routine illegal behavior of employers, e.g., non- payment of FICA/worker’s comp, “wage theft”

Chicago’s Population Resurgence

Immigration

Race/Ethnicity

Two Demographic Legacies Immigrant City Black Metropolis

Global City Narratives Globalization-driven restructuring brings about shift from manufacturing to services Global financial centers Tourism Bifurcated labor market High-end jobs Low-end jobs High-wage earners stimulate demand for low-wage services (housekeeping, dry cleaners, restaurants) “Pulls” immigrants to fill these jobs Native-born workers don’t want these jobs

Whose Jobs? “Immigrant Jobs” Low wage, low-skill, manual labor, service Example: Hotel Housekeeping Manual labor, service sector job; requires little to no formal education “Back of the house” work Dependent upon consumptive demand of high-end service workers Low-wage ($8.60/hr average wage)

Hotel Housekeeping Even in typical immigrant jobs, we see considerable employment of native-born blacks Immigrants = 61% Native-born women = 39% African-American women = 27% Both immigrant and African-American women count hotel housekeeping as a niche job Foreign-born Mexicans: 4 times overrepresented African-Americans: 2.5 times overrepresented

Immigrant Replacement of Blacks? Are African-American women losing out to immigrant workers over time? Share of housekeeping jobs fell from 32% to 27% between 1990 & 2000 Yet immigrant share grew more rapidly With stagnant growth in the hotel industry, vacancies had to be created to accommodate this immigrant growth Explained by exit of native-born whites

Competition or Coexistence? Industries in which both African American & immigrant women were overrepresented increased between 1990 and 2000 Mixed niche industries primarily those characterized by low-wage female-dominated employment: –Home health care –Child care –Nursing care –Outpatient care –Other industries, e.g., employment services, beauty salons, hotels, hospitals (an exception given higher wages)

Shared Spaces of Economic Inequality African American women gained jobs most dramatically in lower-paying de-professionalized, but expanding, health sectors (e.g., home health care) Immigrant women made gains in these jobs as well Both groups share an experience of inequality shaped by the devaluation of women’s work and the downgrading of care-work jobs

Working and Poor 34% of workers make less than $25,000/year 25% of full-time workers make less than $25,000/year Working Poverty: working but family income falls below 200% of the poverty line One in five workers living in poverty 70% of these are working full-time

Working and Poor Source: ACS 2008, IPUMS extract

Working and Poor Rates of working poverty by nativity, race, ethnicity: Immigrant Latinos39% All immigrants 29% African Americans 27% Native-born Latinos 24%

Working and Poor

Geography of Working Poverty 45.2%South Lawndale, Lower West Side 39.2%Humboldt Park, West Garfield Park, East Garfield Park, North Lawndale 39.1%South Chicago, Calumet Heights, Burnside, South Deering, East Side, Hegewisch

The Politics of Low-Wage Work

Thank You!