National Data | Hispanics Saved New Orleans? Look again
August 30, 2007, 05:00 AM
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"Nor is there evidence that they are taking jobs from native New Orleanians. As of April, the last month for which data are available, unemployment in Orleans Parish was 4.0%, compared with 4.5% nationwide. By comparison, in July 2005, the Orleans Parish unemployment rate was 7%, two percentage points above the national figure."

—"The New Latin Quarter", (pay archive | free version) by Mario Villarreal [email] and Daniel M. Rothschild, [email], Wall Street Journal, August 28, 2007. 

Thus an op-ed in the Wall Street Journal (where else?) discussing the role Hispanic immigrants (allegedly) play in that city`s (alleged) comeback.

The piece, needless to say, is celebratory. One of the authors is a Mexican public policy academic (and scholar at the American Enterprise Institute). The other is a director of the George Mason University`s Global Prosperity Initiative.

Things are great now, they say, certainly compared to what pundits had anticipated when the post-Katrina Hispanic influx first became apparent.   

Really?

Yes, unemployment rates are lower in New Orleans today than before Katrina.  But so is native employment. Between July 1, 2005 and July 1, 2006 (the latest available Census data) the population of Orleans Parish fell by a stunning 228,782, or by 50.6%. [Table 1.]

Non-Hispanic Blacks took the biggest hit, their population dropping by 174,461, or 57% in those 12 months. The non-Hispanic white population declined by 36%.

Even Hispanics bailed out (so to speak)—their numbers declining by 37.1%.

Of course, it was a natural disaster, not an immigration tsunami, that displaced most Parish residents. But the secondary tsunami—the influx of Hispanic immigrants into areas vacated by natives—deserves a closer look.

Economists have spent countless hours studying the impact of immigration on native workers. The original starting point for most of these studies was the fact that immigrants cluster in a small number of cities and metro areas. If immigration is damaging, then cities with higher penetrations of immigration workers should experience higher rates of native unemployment and/or lower levels of native wages.

But most of the cross-city correlations cluster around zero—suggesting that immigrants have little or no impact on the economic fortunes of natives. At first glance, this seemed to confirm the "immigrants do the jobs that natives don`t want to do" mantra.

However, economists have more recently realized that this comforting result ignores two important points.

  • First, immigrants tend to gravitate to cities where wages and employment are high and growing. If so, then comparing changes in native unemployment rates and wage rates in high-immigration areas with other areas would understate immigration`s true impact.

 

With labor so mobile, the negative correlation between immigration and native well-being must be judged in a national framework. Harvard`s George Borjas has measured the negative slope. [Increasing the Supply of Labor Through Immigration Measuring the Impact on Native-born Workers, Center for Immigration Studies May 2004] His conclusion: wages fall by 3 to 4 percent for each 10 percent increase in the share of immigrants.

The post-Katrina story of Orleans Parish is not unlike that of other immigrant gateways throughout the United States. Unemployment is low and native wages do not seem to have suffered—until you look at the larger picture.

But don`t expect the Wall Street Journal Edit Page to do that anytime soon.

Edwin S. Rubenstein (email him) is President of ESR Research Economic Consultants in Indianapolis.