Why is this recovery different from all others? Answer: not only is it jobless, but college-educated workers are bearing a disproportionate share of the brunt.
Amazingly, there are currently more unemployed workers with college degrees than there are unemployed high school dropouts. The available data series suggests this has never happened before. [See the Economic Policy Institute's recent monograph "Unemployment level of college grads surpasses that of high school dropouts"]
It's trendy, and apparently politically permissible, to blame this carnage among the college-educated on outsourcing. But immigration is a far more important cause. Foreigners represent a rapidly growing share of the total college-educated workforce—and a still larger share of the unemployed. [See table.]
From 2000 to 2002, a period roughly equivalent to the recent recession:
An often-cited study by economic consultants Forrester Research says that 3.3 million white-collar jobs will be lost to offshore outsourcing in the next 12 years. That comes to an average 275,000 jobs lost per year.
But, by comparison, the number of college-educated immigrants in the U.S. labor force jumped by 546,000 in 2002 alone. This influx must inevitably displace Americans in the short run, whatever its long-run benefits. And it is accelerating.
In 2002 (the latest year of available data) 14.2 percent of all college-educated workers in the U.S. were immigrants. Some 39.9 percent of high school drop-outs in the workforce were immigrants, but only 10.1 percent of workers with a high school degree or some college. One researcher calls this a case of the Disappearing Middle – immigrants today tend to fall into either very low or very high skill levels.
From 2000 to 2002, the number of immigrants in the workforce with a bachelor's degree or better grew 19.4 percent. The number of immigrant high school dropouts grew 15 percent. The number of intermediate immigrant workers with a high school degree or some college grew only 11.4 percent. This once again demonstrated the bipolar distribution of the current immigrant flow.
Many educated foreigners come here on student visas. Some 13 percent eventually obtain a "green card," the permanent–residence visa. Others stay here illegally. The H-1b program is another source of educated foreign workers, mainly in the high-tech IT industry. Until recently 195,000 H-1bs were admitted annually, contributing to a glut in an industry that has more than half a million un- or under-employed programmers. The H-1b cap was last raised in 2000—just as the high-tech bubble burst. U.S. employers are still hiring H-1bs and firing native techies.
But unemployment figures alone do not capture the full pain inflicted by immigrant workers. They also impact income. Displaced natives may find work in other fields, but at far lower pay levels. A recent pathbreaking paper by George Borjas, "The Labor Demand Curve Is Downward Sloping: Re-Examining The Impact of Immigration On the Labor Market." confirmed what elementary economic theory had long maintained: all other things being equal, when you increase the supply of something, its price will fall.
In particular, Borjas found that immigration reduced the wages of native-born college graduates by an average of 4.9 percent. The impact was greatest on college graduates with 11-15 years experience—i.e. most likely to have young families—where it amounted to 5.9 percent
Borjas findings' are based on immigration inflows through the year 2000. Today the foreign born share of the educated workforce is about 20 percent higher…….and rising without limit—at least if the Bush Administration gets its way.
[Number fans click here for tables.]
Edwin S. Rubenstein (email him) is President of ESR Research Economic Consultants in Indianapolis.