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Turnaround in migrant employment in the US?
We had suggested earlier the bottoming out of remittances to Latin America in response to stabilizing construction activity in the US. The latest employment numbers for June 2009 from the Current Population Survey (CPS) hint at a turnaround in employment levels in the US, particularly for migrants.
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| *3 month moving averages Source: Current Population Survey |
The sectoral breakdown of employment data show that employment in the construction sector is picking up faster than other major occupations. Employment in other major occupations also seems to be stabilizing.
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| *3 month moving averages Source: Current Population Survey |
This turnaround in employment has significant consequences for remittance flows from the US, which is the largest destination of migrants from developing countries. The US was also the largest sender of remittance and sent an estimated $47 billion in 2008.
These employment numbers are also consistent with the latest US unemployment rate of 9.4% for July 2009. The unemployment rate is also based on CPS, which is an estimate of the labor force characteristics of the US population based on a monthly survey of about 50,000 households. The CPS also does not ask about the legal status of respondents.
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Why?
Why would jobs for migrants pick up faster than that of natives - because the migrants are willing to take 'worse' jobs? Or is it because in order to get in to the country the migrants need to have specific skills, which then gets them a job?
Matt
http://www.globalvisas.com
good question, but no good answer yet
Matt,
You raise a good question but I am not sure we know exactly why employment for migrants is picking up faster than for natives. It could be that migrants are more willing to work at a lower wage - thus still hanging on to their jobs. Like you suggest, perhaps they are a better fit for the remaining jobs in the markets than natives. We would have to do more research to find out what really is happening.
Ani.
Matt is probably right that
Matt is probably right that if migrants lose their job, they might be more willing (compared to natives) to take up "worse" jobs--even ones that pay less or require them to move across state lines or work in a different sector--in order to be able to stay on in the US. While new migration flows have slowed, those who are already in the host countries are most likely staying put (see the BBC report on Migration and the Global Recession http://news.bbc.co.uk/2/hi/business/8238527.stm and our Migration and Development brief http://siteresources.worldbank.org/INTPROSPECTS/Resources/334934-1110315015165/Migration&DevelopmentBrief10.pdf).
There are several reasons why migrants would try to stay on: first, tighter border controls and immigration enforcement have made it harder for migrants to come back to the US if they leave (see http://www.forbes.com/2009/07/17/mexico-illegal-immigration-business-oxford.html). Second, since the current crisis is global, the job situation in the home countries is likely to be equally bad or in some cases worse. Third, for most migrants, moving from a developing to a developed country represents a huge income gain even after controlling for education, skills etc. In a recent paper, Pritchett, Clemens and Montenegro (http://www.cgdev.org/content/publications/detail/16352) estimate that the gains for a moderately skilled worker moving to the US from a developing country is about $10,000 in purchasing power-adjusted terms, more than double the average income of a typical developing country. Since going back would reverse some of these income gains, it makes sense for migrants to try to stay on.
Migrants are also typically flexible and geographically mobile and willing to move across sectors to find jobs. As you can see from the second graph, migrant employment in hotels and restaurants and wholesale and retail trade has been relatively more stable, and even increased somewhat, likely because some migrants in sectors such as construction that have been the most severely affected have moved to services sectors.
In the short run, perhaps the most important factor for the turnaround is the emerging bottoming out of the decline in construction activity in the US. New housing started grew by 1.5 percent in August, a nine-month high (http://www.telegraph.co.uk/finance/newsbysector/constructionandproperty/6203493/US-shows-signs-of-recovery-as-housing-market-perks-up.html). Since this sector employs many migrants, this means that overall migrant employment would rise.
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