Immigration in Times of Recession Implications 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 2010 César Chávez Institute, San Francisco State Univ.

Road Map Effects of recession on Foreign-born workers Foreign-born workers Foreign-born population Foreign-born population Regional differences Foreign-born vs. U.S.-born workers Foreign-born vs. U.S.-born workers Boom and bust Lessons for the recovery Lessons for the recovery Immigration policy: ready for recovery?

Job losses: Taking a toll

Current job losses worst since 1945 Source: Bureau of Labor Statistics

Employment declines broad based 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 2009 Source: Bureau of Labor Statistics

Immigrant unemployment rate rises above native rate Native Immigrant Source: Orrenius and Zavodny 2009; BLS

Foreign-born unemployment rates rise most for less-educated Percent Source: Orrenius and Zavodny 2009; BLS

Immigration: Slowing

The foreign-born population stagnates in 2008 Source: Census Bureau through

Unauthorized immigrant population falling? Note: *DHS estimates not available for Source: Department of Homeland Security; Pew Hispanic Center

New border fence 20 ft high Source: Wayne Cornelius (2009) “Evaluating US Immigration Control Policy”

More border enforcement, more port-of-entry attempts

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) Apprehensions Employment Thousands, SA Source: BLS; DHS; Authors’ own calculations

Geographic differences: Immigrant/native outcomes differ by state

Employment Growth by State Source: CIS, BLS OK LA WY MS ID VT TX AZ CA

Foreign-Born Populations Decline in Florida, California (2008/2007 percent change) 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 Helped more by expansions Immigrants are in different industries/occupations/states than natives Limits labor market competition Limits labor market competition

Immigrants key to the recovery Labor force growth Immigrants account for one-half labor force growth Immigrants account for one-half labor force growth

U.S. labor force participation rate has peaked Source: BLS

Labor force participation rate: Male, female rates falling since 2000 Men Women Source: BLS

Immigrants key to the recovery Labor force growth Immigrants account for one-half labor force growth Immigrants account for one-half labor force growth Efficiency gains Complement native workers at high, low ends of skill distribution Complement native workers at high, low ends of skill distribution Fill jobs natives shun Fill jobs natives shun Move to where jobs are Move to where jobs are Productivity growth High-skilled immigration instrumental in high-tech innovation, R&D High-skilled immigration instrumental in high-tech innovation, R&DDrawbacks Winners and losers Winners and losers Adverse fiscal impact of low-skilled immigration Adverse fiscal impact of low-skilled immigration

Immigration Policy: Ready for recovery?

Green cards go to family, not work- based immigrants Note: Data represent FY averages Source: DHS, 2008 Yearbook of Immigrant Statistics

So workers come on temporary, not permanent visas Note: Data represent 2004 to 2008 averages for new arrivals Source: State Department Visa Office; Passel and Cohn 2008, Pew Hispanic Center; DHS Yearbook of Immigration Statistics Thousands

Most skilled workers use temporary visas Thousands Note: Data from 1992 to 2008 Source: 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 Note: Data from 1992 to 2008 Source: Statistical Yearbook of the INS; DHS Yearbook of Immigration Statistics; visa office of the State Department

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

Family-based green card queue for Mexicans 60 years? Source: State Department Visa Bulletin, March 2009; Authors’ own estimates

Conclusion Immigration is slowing due to the economy U.S. long-run growth will still depend on immigrants Policy environment is completely inadequate to deal w/ legal, illegal immigration Amnesty alone is not enough; we need to address future flows

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 No-match program, Real ID Act, worksite raids, higher employer fines E-verify: immigration status verification E-verify: immigration status verification Obama policies: focus on labor regulations? Legalization? Legalization? Local, state ordinances reg. illegal immigrants; enforcement of federal law Interminable queues for green cards; running out of temporary visas