ERIC Identifier: ED480918
Publication Date: 2003/10/00
Author: Fry, Richard
Source: ERIC Clearinghouse on Urban Education, Institute for
Urban and Minority Education
Labor Market Outcomes of Hispanics by Generation. ERIC
The Latino population is on the cusp of a major generational change.
For the past several decades its growth was fueled mostly by immigration.
Now, the extraordinary fertility rate of foreign-born Latinos living in
the United States is fueling Hispanic population growth at a faster rate
than the influx of new immigrants. The Hispanic population and labor force
is increasingly native-born (U.S. Census Bureau, 2001). The different Latino
generations, i.e., immigrants and their U.S.-born offspring, play markedly
different roles in the labor force, and they present dissimilar challenges
and opportunities to employers and policy-makers. This digest summarizes
the outcomes and determinants of Latinos in the workforce, with an emphasis
on outcomes by generation.
U.S. labor market outcomes vary significantly according to the age of
the worker. Earnings rise and employment stabilizes with experience. So,
for example, teen unemployment rates are often multiples of the rates experienced
by middle-aged adults.When it comes to Hispanics, labor market analysis
must recognize the unique age structure of Latino generations. Working-age
Latino immigrants tend to be mature adults; about 1 in 10 is between the
ages of 16 and 24. By contrast, 4 in 10 working-ages econd generation Latinos
are between the critical ages of 16and 24, reflecting the native-born youth
boom. Age sensitive labor market analysis reveals that the fortunes of
this second generation of Latinos appear very different, depending upon
whether we investigate outcomes for youth or focus on adults over the age
of 25 (Fry & Lowell, 2002).
Prime-Age Labor Market Outcomes
Latino wage outcomes are very sensitive to generation.Overall averages
suggest that Latino workers are the lowest paid workers in the U.S. labor
market. Among male full-time workers ages 35 to 64, Hispanic, African American,
and white weekly earnings average $410, $480, and $705, respectively. Native-born
Hispanic workers fare significantly better, however. Native-born Hispanic
workers are paid $550 per week ona verage, above the wage levels of African
Americans (Reimers,2000). Since native-born Hispanic and African American
adults have similar levels of educational attainment, the wage gap between
the two groups cannot be explained by differences in formal education.
In general, labor market attachment among prime-age persons increases
with education. Since educational attainment markedly improves among Hispanics
from the immigrant generation to the second generation (Chiswick &
DebBurman,2003), employment rates also improve among Hispanics from the
first generation to the second.
With the exception of Cubans, native-born Hispanic workers are paid
less than white workers. Recent statistical analyses reveal that a considerable
portion of the wage gap between third and higher generation Hispanic and
non-Hispanic white workers can be accounted for by differences in formal
schooling. After controlling for labor market experience and formal education,
there is not a statistically significant wage difference between third
and higher generation white workers and workers of either Puerto Rican
origin or Central/South American origin (Fry & Lowell, 2003). Third
and higher generation workers of Mexican origin, however, are paid about
11 percent less than otherwise similar white workers. English language
deficiencies may account for some of this wage gap (Trejo, 1997), but there
does appear to be a substantive wage gap between native-born Mexican workers
and white workers.
Job-holding and labor market participation comparisons are quite sensitive
to gender. Among men, Latino job-holding tends to slightly lag white job-holding,
but is substantially above African American job-holding. Puerto Ricans
are the only Hispanic subgroup with male employment rates trailing those
of African American men. Among women, Latino employment rates are substantially
below white and African American levels, with the employment deficits being
especially large for females of Mexican and Puerto Rican origin (Bean,
Trejo, Capps,& Tyler, 2001).
Labor Market Outcomes for Teens and Young Adults
Patterns among prime-age adults do not hold for youth. By some measures,
Latino youth tend to be the most successful youth in the labor market,
and immigrant Latino youth in particular stand out in the youth labor market.
This tends to reflec tthe work orientation of Latino youth in comparison
to white and African American youth. Whites and African Americans tend
to be more focused on schooling activities and not as heavily involved
in the labor market.
White youth tend to have the highest degree of labor market attachment,
with Latino youth squarely between white andAfrican American youth. In
2000, 52 percent of white 16-to-19-year-olds held jobs, in comparison to
38 and 30 percent of Hispanic and African American teens. But there is
considerable diversity among Latino youth. Almost half of recently arrived
immigrant Latino teens hold jobs, in comparison to 34 percent of second
generation teens (Fry & Lowell, 2002).
Recently arrived immigrant Latino teens are the highest paid teenage
workers. The average recently arrived immigrant Latino 16- to 19-year-old
worker is paid $260 per week, in comparison to $150 per week for white
and African American 16-to-19-year-olds and $180 per week for second generation
Latinot een workers. Recently arrived Hispanic teen workers have relatively
high incomes because they work a lot. They average nearly 38 hours of work
per week, whereas white teen workers work 25 hours per week on average
(Fry & Lowell, 2002).
Labor Market Participation and Schooling
The relative labor market success of immigrant Hispanic teens tends
to be at the expense of schooling activities. Less than a quarter of recently
arrived immigrant Latino teens are enrolled in school, in comparison to
nearly 70 percent of white, African American, and native-born Latino 16-to-19-year-olds.
Many of the recently arrived immigrant Latino teens did not finish high
school in their countries of origin (Fry, 2003) and though they may subsequently
enroll in school later in life (Betts & Lofstrom, 2000), evidence suggests
that they will fall far behind their native-born peers in educational attainment.
At best, 60 percent of immigrant Latino teen arrivals will complete high
school by adulthood, in comparison to high school completion rates above
80 percent for native-born Latinos and above 90 percent for whites and
African Americans (Fry &Lowell, 2002).
Second generation Latino teens are paid less, experience higher unemployment,
and have much lower rates of job-holding than recently arrived immigrant
Latino teens. Fewer of them are in the labor market at all. Instead, many
second generation Latino teens are engaged in what white and African Americans
teens do: investing in their skills by pursuing formal schooling.
Recently arrived immigrant Latino teens are tending not to pursue formal
schooling and many of them are not acquiring English fluency. Although
they tend to be relatively well-paid incomparison to other teen workers,
their earnings will remain quite flat as they age. That is, their earnings
do not grow significantly with experience (Schoeni, McCarthy, & Vernez,
1996). The lack of education and skills locks immigrants into the low-end
of the U.S. labor market through adulthood. Thus, the American economy’s
appetite for young, low-skilled immigrant labor inevitably produces a substantial
supply of adult workers with minimal qualifications.
Although the pay of second generation Latino teens lags that of immigrant
Latino teens during the teen years, their schooling pursuits ultimately
pay off. By adulthood, second generation Latino workers earn substantially
more than their immigrant counterparts that came to work in the United
States and did not enroll in school during their teen years (Fry &Lowell,
High School Dropouts
There are marked differences in the labor market outcomes of 16- to
19-year-old high school dropouts. This population typically experiences
very high rates of unemployment. In 2000, the white and African American
unemployment rates for high school dropouts were 28 and 42 percent, respectively.
The unemployment rate for immigrant Hispanic 16- to 19-year-old high school
dropouts, however, was 7.6 percent. Young white high school dropouts earned
$7,300 per year. Immigrant Hispanic high school dropouts earned $10,000
per year (Fry, 2003).
In terms of generational advancement and the broad question of whether
the second generation will go farther than the first, the news is good.
There are strong indications that most of the U.S.-born children of Latino
immigrants will move beyond the life of working-class poverty that is typical
of both their parents and their foreign-born contemporaries. Labor market
analyses document a substantial movement forward from the first generation
to the second, but they also find that this movement forward is not nearly
powerful enough to bring the second generation to parity with white workers.
Over the next several decades, as the second generation takes its place
in the labor market, the overall economic status of the Latino population
is likely to improve. This new cohort of workers will probably fill different
jobs than their immigrant forbearers, jobs that pay more for greater skills
or education and a greater mastery of English. Nonetheless, this large
and growing second generation, though it is native-born and the product
of U.S. schools, seems likely to fall short of enjoying the kind of employment
and the standard of living that most white Americans take for granted
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