Immigration in Times of RecessionImplications for Policy

Pia Orrenius, Ph.D.

Federal Reserve Bank of Dallas

Disclaimer: The views expressed herein are those of the presenter; they do not necessarily reflect the views of the Federal Reserve Bank of Dallas or the Federal Reserve System.

Immigration Reform in 2010César Chávez Institute, San Francisco State Univ.

Road Map

Effects of recession on Foreign-born workers Foreign-born population

Regional differences Foreign-born vs. U.S.-born workers

Boom and bust Lessons for the recovery

Immigration policy: ready for recovery?

Job losses: Taking a toll

Current job losses worst since 1945

-4

-3

-2

-1

0

1

2

3

4

5

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

Dec/Dec % Change

U.S.

Source: Bureau of Labor Statistics

Employment declines broad based

-25

-20

-15

-10

-5

0

5

10

Nat. Resources and Mining

Financial Activities

Trade, Transp &

Util.

Mfg.Educ. & Health Services

Const. Leisure & Hosp.

Info.Prof &

Business Services

Govt. TotalOther

% Change

Note: Employment change from December 2007 to December 2009Source: Bureau of Labor Statistics

Immigrant unemployment rate rises above native rate

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2%

3%

4%

5%

6%

7%

8%

9%

10%

Native

Immigrant

Source: Orrenius and Zavodny 2009; BLS

Foreign-born unemployment rates rise most for less-educated

Less Than High School

High School Some College College0

5

10

15

Q3 2007 Q2 2009Percent

Source: Orrenius and Zavodny 2009; BLS

Immigration: Slowing

The foreign-born population stagnates in 2008

Source: Census Bureau through 2008

0

5

10

15

20

25

30

35

40

45

1850 1870 1890 1910 1930 1950 1970 1990 20070

2

4

6

8

10

12

14

16Millions Percent

Number

2008

2000 2001 2002 2003 2004 2005 2006 2007 20087

8

9

10

11

12

13 DHS* Pew

Millions

Unauthorized immigrant population falling?

Note: *DHS estimates not available for 2001-2004.Source: Department of Homeland Security; Pew Hispanic Center

New border fence 20 ft high

Source: Wayne Cornelius (2009) “Evaluating US Immigration Control Policy”

Source: Wayne Cornelius (2009) “Evaluating US Immigration Control Policy”

More border enforcement, more port-of-entry attempts

Q1 2006

Q2 2006

Q3 2006

Q4 2006

Q1 2007

Q2 2007

Q3 2007

Q4 2007

Q1 2008

Q2 2008

Q3 2008

Q4 2008

Q1 2009

Q2 2009

Q3 2009

100000

150000

200000

250000

300000

350000

400000

Thousands

Emigration from Mexico in steep decline

Source: INEGI 2009 (Mexican National Statistical and Geographical Institute)

Apprehensions a function of labor demand(De-trended employment; lagged apprehensions)

0

20

40

60

80

100

120

140

160

180

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009-2000

-1500

-1000

-500

0

500

1000

1500

2000

Apprehensions

EmploymentThousands, SA Thousands, SA

Source: BLS; DHS; Authors’ own calculations

Geographic differences: Immigrant/native outcomes differ by state

Employment Growth by State

Source: CIS, BLS

-60 -50 -40 -30 -20 -10 0 10 20 30 40 50 60-60

-40

-20

0

20

40

60

Native-Born

Fo

reig

n-B

orn

OK

LAWY

MS

ID

VT

TX

AZCA

Foreign-Born Populations Decline in Florida, California

(2008/2007 percent change)

U.S. California Florida New York Illinois Texas-2

-1.5

-1

-0.5

0

0.5

1

1.5

2

Percent

Source: Bureau of the Census

Boom and bust: Lessons for the recovery

Some lessons from the recession so far

Immigration is pro-cyclical

Immigrants are hurt more by recessions Helped more by expansions

Immigrants are in different industries/occupations/states than natives Limits labor market competition

Immigrants key to the recovery

Labor force growth Immigrants account for one-half labor force

growth

U.S. labor force participation rate has peaked

19501951195219531954195519561957195819591960196119621963196419651966196719681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921993199419951996199719981999200020012002200320042005200620072008200956

58

60

62

64

66

68

Percent

Source: BLS

Labor force participation rate:Male, female rates falling since 2000

19501951195219531954195519561957195819591960196119621963196419651966196719681969197019711972197319741975197619771978197919801981198219831984198519861987198819891990199119921993199419951996199719981999200020012002200320042005200620072008200930

40

50

60

70

80

90

100

Percent

Men

Women

Source: BLS

Immigrants key to the recovery

Labor force growth Immigrants account for one-half labor force growth

Efficiency gains Complement native workers at high, low ends of skill distribution Fill jobs natives shun Move to where jobs are

Productivity growth High-skilled immigration instrumental in high-tech innovation,

R&D

Drawbacks Winners and losers Adverse fiscal impact of low-skilled immigration

Immigration Policy: Ready for recovery?

Green cards go to family, not work-based immigrants

Immediate family44%

Other family19%

Employment16%

Others2%

Refugees and asylees

15%

Diversity4%

Note: Data represent FY 2005-2008 averagesSource: DHS, 2008 Yearbook of Immigrant Statistics

So workers come on temporary, not permanent visas

Temporary Visas

Illegals Family Based Green Cards

Employment Based Green

Cards

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

Note: Data represent 2004 to 2008 averages for new arrivalsSource: State Department Visa Office; Passel and Cohn 2008, Pew Hispanic Center; DHS Yearbook of Immigration Statistics

Thousands

Most skilled workers use temporary visas

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000Employment Based (Skilled) H-1B and H-1B1 TN L1

Thousands

Note: Data from 1992 to 2008Source: Statistical Yearbook of the INS; DHS Yearbook of Immigration Statistics; Visa office of the State Department

Almost all legal low-skilled workers use temporary visas

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

Unskilled Permanent H-2A H-2BThousands

Note: Data from 1992 to 2008Source: Statistical Yearbook of the INS; DHS Yearbook of Immigration Statistics; visa office of the State Department

0

200

400

600

800

1000

1200

1400

1600

Unauthorized Legal

Most low-skilled workers come illegally

Source: Jeffrey Passel and Roberto Suro, Pew Hispanic Center (2005); Passel and Cohn, Pew Hispanic Center (2008).

Absorbing temporary workers under current system is like

swallowing this fish…

Green card queues spell a decade-long wait in many cases

Source: State Department Visa Bulletin, March 2009; Wadhwa et al. 2007, Ewing Marion Kaufmann Foundation ; Authors’ own estimates

0

2

4

6

8

10

12

14

0

500

1,000

1,500

2,000

2,500

3,000

Employment Based Family Sponsored

Time

Visas

Thousands Years

Family-based green card queue for Mexicans 60 years?

Source: State Department Visa Bulletin, March 2009; Authors’ own estimates0

10

20

30

40

50

60

70

0

200

400

600

800

1,000

1,200

Time

Visas

Thousands Years

ConclusionImmigration is slowing due to the economyU.S. long-run growth will still depend on immigrantsPolicy environment is completely inadequate to deal w/ legal, illegal immigrationAmnesty alone is not enough; we need to address future flows

0

1000

2000

3000

4000

5000

6000

2002 2003 2004 2005 2006 2007 2008

Criminal Arrests

AdministrativeArrests

Worksite enforcement jumps

Source: DHS

Current policy environment in flux

Some Bush policies on hold No-match program, Real ID Act, worksite raids,

higher employer fines E-verify: immigration status verification

Obama policies: focus on labor regulations? Legalization?

Local, state ordinances reg. illegal immigrants; enforcement of federal law

Interminable queues for green cards; running out of temporary visas