Presentation ECON 490 Have Undocumented Immigrants Caused Wages of The U.S. Unskilled Labor Force to Fall? By Oscar Orozco March 1, 2007

Are the wages of the unskilled being lowered by immigrants? Is this argument valid? OR Is productivity and competition from trade the main factor? TIME,October

The Productivity Factor History: Post WWII, European and Japanese economies were wrecked. U.S. became the only major producer of goods and services. This new economic environment 1950’s-1970’s was one where education was not necessary to obtain a well paying job in the U.S. (Flanigan) Competition from trade during this period as a Gross Domestic Product was less than 20%. (Boroughs)

Negative Long-Term results of this post WWII economic environment. U.S. did not make Capital Investments due to the lack of competition from Japan and Europe. This resulted in no rise of productivity and wages in the U.S. A new economic environment developed as European and Japanese economies were rebuilt. RESULTED IN BRAND NEW FACTORIES. Led to increased competition against U.S., and loss of market share for U.S. products. (Boroughs) Capital needs less workers pre unit of goods produced. Revenue (Boroughs)

U.S. News and World Report Jan 22, 1996

Productivity revived, but not gains. Gains rise 2% in the mid 1990’s. Compensation grows only by 0.6%. (Boroughs) Highly skilled Labor force is the only area where wages increase. Because of its ability to efficiently compete in trade. (Flanigan) This reduced the unskilled labor force to 29% of its previous number, and increased the Skilled labor force by 59%. The latter earns 70% more than the former. (Flanigan) TIME,

Examining The Immigration Factor. Positive Aspects of Undocumented Immigration. –Immigration in 2004 (70% undocumented) responsible for tremendous growth in employment. –Demand for immigrant labor was strong enough in generating 914,000 jobs (6% of U.S. employment --- 1/3 of ’04 job growth ) –Unemployment rate for Latinos fell more than 2% in ’04. –This also caused non-Latino employment to increase by 1.5 million. Despite Latinos making up only 13% of the labor force. –Native born Latino job growth equaled to 245,000, which was ¼ as high as newly arrived Latinos. (Kochhar)

Daily News New York Times

Wage Growth Decline for second consecutive year in 2004 for real wages for Latinos. Adding to 5%. This has been driven by the constant flow of newly arrived immigrant Latinos which are the ones who are filling these new jobs. IN 2004 median weekly wage (in 2004 prices) for Latinos fell by 2.6% in From $411 in 2003 to $400 in This amounted to erosion of over $20 between Overall for non-Latino workers wages stayed the same from (Kochhar pg 18)

Rekesh Kochhar. Latino Labor Report 2004 pg. 20, Pew Hispanic Center.

The large number of recently arrived Latino immigrants pull the wage level of all Latinos down by they’re being low wage earners in combined But Native born Latinos increased their earnings in both 2003 and ($473-$480 native) ($390-$384 foreign) (Kochhar)

Conclusion The main effect of the large numbers of low wage immigrant workers into the U.S. was that wages fell especially for the ones arriving in the last five years. This is most likely because of their concentration in low paying sectors of the labor market. As far as the unskilled Native labor force, there is no observable negative effect due to immigrants, however one could speculate the possible effects of immigrant labor being absent. This absence would increase scarcity of labor thus possibly pushing wages up.

Sources 1.Boroughs, Dan L. “Winter of Discontent” U.S. News and World Report, pgs Flanigan, James “For All of Us, the Future of Labor Lies in Learning” Los Angeles Times, Section D, pg Kochhar, Rakesh “Latino Labor Report 2004” Pew Hispanic Center. PewHispanic.org pgs. 2,4,6,7,8,18,20