Economic Effects of Immigration: Lessons from the Chicago Labor Market

1. Virginia Parks, Ph.D. School of Social Service Administration University of Chicago June 29, 2011 Economic Effects of Immigration: Lessons from the Chicago Labor Market

2. Push-Pull Factors • Covers range of factors, economic to political • Overly general; more recent theories specify these factors within more defined set of parameters • Neoclassical Economic Theory • Dual Labor Market Theory • World Systems Theory Theories of Migration

3. Neoclassical Economic Theory • Supply and demand • Dominates public policy discussions • Macro • Migration from low-wage to high-wage markets • Wages will eventually equalize between markets (i.e., countries) • Micro • Cost-benefit decision of individual • Migration as investment in human capital • Where will I get maximum return on my skills? Theories of Migration

4. Dual Labor Market Theory • Migration stems from permanent, intrinsic labor demands of modern capitalist economies • Segmented labor market • Primary: stable jobs, good pay, opportunities for advancement, recognized social status • Secondary: unstable, low pay, no or limited opportunities to advance (regardless of skill), low social status • Natives shun jobs in secondary sector • Immigrants needed as labor supply into secondary sector jobs Theories of Migration

5. World Systems Theory • Positions migration within global economic system • Dominant in academic fields outside of economics (sociology, anthropology, geography) • Penetration of capitalist production relations beyond industrialized countries prompts migration flows • In drive for higher profits, capitalist firms enter poor countries for cheap land, raw materials, and labor • Entry disrupts internal socioeconomic systems • Forces of globalization hasten penetration • Transportation & communications technology • Cultural homogenization Theories of Migration

6. Firm-level production decisions Productivity and innovation Consumer markets: growth, prices, etc Labor market effects Yet economic effects only one consideration in larger policy debate about immigration Economic Effects

7. Public and scholarly discourse accents competition between immigrants and natives in labor market 28% of all Americans think immigrants take native jobs Half of all African Americans believe that immigrants reduce job opportunities for African Americans Fewer than 40% of Latinos agree Economic Effects: Job Competition

8. Findings have been divergent • Body of literature does not point with certainty to predictable economic effects of immigration • The cocktail-party summation: • Small (positive & negative) to no wage effects • Small effects on unemployment of lowest skilled native workers; probably exclusive to men • Clearest wage and unemployment effects have been on other immigrants Empirical Research

9. Methodological differences characterize debate • Card vs. Borjas • National vs. local labor market analysis • Where do we best see effects? • Where do we most care about effects? • Example: On workers that stay in metro area or those that move out? • Muriel Boat Lift as “natural experiment” (David Card) Empirical Research

10. Strong empirical research on nature of low-wage labor market where immigrants dominate, but are not exclusive workforce • Conditions of low-wage work dictated predominantly by political factors • Erosion of real value of minimum wage • Erosion of employment protections, e.g. overtime • Minimal enforcement of wage & hour violations • Routine illegal behavior of employers, e.g., non-payment of FICA/worker’s comp, “wage theft” Empirical Research

11. Chicago’s Population Resurgence

12. Immigration

13. Immigration

14. Race/Ethnicity

15. Immigrant City Black Metropolis Two Demographic Legacies

16. Globalization-driven restructuring brings about shift from manufacturing to services • Global financial centers • Tourism • Bifurcated labor market • High-end jobs • Low-end jobs • High-wage earners stimulate demand for low-wage services (housekeeping, dry cleaners, restaurants) • “Pulls” immigrants to fill these jobs • Native-born workers don’t want these jobs Global City Narratives

17. “Immigrant Jobs” • Low wage, low-skill, manual labor, service • Example: Hotel Housekeeping • Manual labor, service sector job; requires little to no formal education • “Back of the house” work • Dependent upon consumptive demand of high-end service workers • Low-wage ($8.60/hr average wage) Whose Jobs?

18. Even in typical immigrant jobs, we see considerable employment of native-born blacks • Immigrants = 61% • Native-born women = 39% • African-American women = 27% • Both immigrant and African-American women count hotel housekeeping as a niche job • Foreign-born Mexicans: 4 times overrepresented • African-Americans: 2.5 times overrepresented Hotel Housekeeping

19. Are African-American women losing out to immigrant workers over time? Share of housekeeping jobs fell from 32% to 27% between 1990 & 2000 Yet immigrant share grew more rapidly With stagnant growth in the hotel industry, vacancies had to be created to accommodate this immigrant growth Explained by exit of native-born whites Immigrant Replacement of Blacks?

20. Industries in which both African American & immigrant women were overrepresented increased between 1990 and 2000 • Mixed niche industries primarily those characterized by low-wage female-dominated employment: • Home health care • Child care • Nursing care • Outpatient care • Other industries, e.g., employment services, beauty salons, hotels, hospitals (an exception given higher wages) Competition or Coexistence?

21. African American women gained jobs most dramatically in lower-paying de-professionalized, but expanding, health sectors (e.g., home health care) Immigrant women made gains in these jobs as well Both groups share an experience of inequality shaped by the devaluation of women’s work and the downgrading of care-work jobs Shared Spaces of Economic Inequality

22. Working and Poor 34% of workers make less than $25,000/year 25% of full-time workers make less than $25,000/year Working Poverty: working but family income falls below 200% of the poverty line One in five workers living in poverty 70% of these are working full-time

23. Working and Poor Source: ACS 2008, IPUMS extract

24. Rates of working poverty by nativity, race, ethnicity: Immigrant Latinos 39% All immigrants 29% African Americans 27% Native-born Latinos 24% Working and Poor

25. Working and Poor

26. 45.2% South Lawndale, Lower West Side 39.2% Humboldt Park, West Garfield Park, East Garfield Park, North Lawndale 39.1% South Chicago, Calumet Heights, Burnside, South Deering, East Side, Hegewisch Geography of Working Poverty

27. The Politics of Low-Wage Work

28. Thank You!